EPR Properties (NYSE: EPR) said Nov. 24 it has sold most of its charter school portfolio for approximately $454 million in cash and intends to rapidly redeploy the proceeds to fund investments in experiential real estate, including potential casino resort investments.
EPR President and CEO Greg Silvers explained that although the charter school market has produced “very attractive returns,” competitive financing alternatives have caused structural market changes that have increased earnings volatility that is “incompatible with our mandate as a REIT to provide long-term and predictable income.”
Silvers said EPR recognizes the strong consumer demand for location-based experiences, and the REIT’s decades of experience, longstanding relationships, and institutional knowledge will continue to provide it with a “sustainable competitive advantage.”
“We believe our diversified portfolio, with the ultimate addition of casino resorts, distinguishes us from other platforms and uniquely positions us to benefit from the strong tailwinds provided by changing consumer preferences and favorable demographics,” he said.
Experiential real estate represents an estimated $100 billion market opportunity, according to Silvers.
EPR also said it will reorganize its portfolio away from the current segments of entertainment, recreation, and education. Going forward, EPR’s experiential portfolio will be organized by the primary property types targeted for growth in experiential real estate.
Raymond James analyst Collin Mings said the proceeds from the sale leave EPR well-positioned for future investment activity. “We believe the company’s recent investment activity and investor communications have largely signaled that entertainment and recreation-related opportunities were already its highest priority,” he added.
The sale consists of 47 charter school related assets sold to a fund sponsored by Rosemawr Management, LLC. The sale does not include three charter schools that EPR previously sold in the fourth quarter of 2019 for $21.6 million and the one remaining charter school which it expects to sell during the fourth quarter of 2019.