EPR Properties (NYSE:EPR) Q1 2024 Earnings Name Transcript Might 2, 2024 8:30 AM ET
Firm Contributors
Brian Moriarty – Senior Vice President, Company Communications
Gregory Silvers – Chairman and Chief Government Officer
Gregory Zimmerman – Government Vice President and Chief Funding Officer
Mark Peterson – Government Vice President and Chief Monetary Officer
Convention Name Contributors
Joshua Dennerlein – Financial institution of America
Smedes Rose – Citi
Antara Nag-Chaudhuri – KeyBanc Capital Markets
Ray Zhong – JPMorgan
Rob Stevenson – Janney Montgomery Scott
Michael Carroll – RBC Capital Markets
Operator
Good day, and thanks for standing by. Welcome to the Q1 2024 EPR Properties Earnings Convention Name. Presently, all individuals are in a listen-only mode. After the speaker’s presentation, there shall be a question-and-answer session. [Operator Instructions] Please be suggested that immediately’s convention is being recorded.
I’d now like handy your convention over to your first speaker immediately, Brian Moriarty, Senior VP of Company Communications. Brian, the ground is yours.
Brian Moriarty
Thanks, Stacey. Thanks for becoming a member of us immediately for our first quarter 2024 earnings name and webcast. Contributors on immediately’s name are Greg Silvers, Chairman and CEO; Greg Zimmerman, Government Vice President and CIO; and Mark Peterson, Government Vice President and CFO.
I will begin the decision by informing you that this name might embody forward-looking statements as outlined within the Non-public Securities Litigation Act of 1995, recognized by such phrases as shall be intend, proceed, consider, might, anticipate, hope, anticipate, or different comparable phrases. The corporate’s precise monetary situation and the outcomes of operations might differ materially from these contemplated by such forward-looking statements. Dialogue of these elements that might trigger the outcomes to vary materially from these forward-looking statements, are contained within the firm’s SEC filings, together with the corporate’s reviews on Kind 10-Okay and 10-Q.
Moreover, this name will comprise references to sure non-GAAP measures we consider are helpful in evaluating the corporate’s efficiency. A reconciliation of those measures for probably the most straight comparable GAAP measures are included in immediately’s earnings launch and supplemental info furnished to the SEC below Kind 8-Okay. In the event you want to comply with alongside, immediately’s earnings launch, supplemental, and earnings name presentation are all obtainable on the Investor Heart web page of the corporate’s web site, www.eprkc.com.
Now, I will flip the decision over to Greg Silvers.
Gregory Silvers
Thanks, Brian. Good morning, everybody, and thanks for becoming a member of us on immediately’s first quarter 2024 earnings name and webcast.
Within the first quarter, we had been happy to proceed the momentum established throughout the fourth quarter of 2023, executing funding spending throughout our goal experiential property varieties. Our protection ranges stay sturdy, and we consider are indicative of the resiliency of the experiences our clients provide. The field workplace stays according to our expectations, and we stay up for seeing the outcomes of the approaching months as key titles come out.
Extra broadly, I would like to spotlight among the important strides made to our general worth proposition as we transfer into 2024. Strengthen experiential portfolio. Now we have continued to diversify and strengthen our portfolio of experiential properties. As evidenced by our protection metrics, we stay centered on rising an experiential portfolio that’s constructed for the long term and is ready to maintain varied financial cycles.
Expanded Funding Alternative Set. Whereas we’re at present constrained in our capital deployment, we’ve got been actively cultivating our distinctive relationships and exploring new potential investments that align with our experiential portfolio. This work offers a basis for future investments and development in our portfolio. Economically rationalized theater exhibition enterprise. We noticed a robust rebound within the field workplace final 12 months. And whereas we anticipate that the 2024 field workplace shall be barely down versus 2023, we all know that that is pushed by delays in titles versus client demand and that 2025 appears glorious.
Moreover, we firmly consider that the controversy round streaming versus theater exhibition for motion pictures has been resolved. As studios search for excessive potential ROI on film manufacturing prices, theater exhibition stays the important major distribution channel, with streaming complementing the ecosystem downstream. A top quality stability sheet, our stability sheet coupled with important free money circulate permits us to fund our anticipated funding spending, whereas additionally supporting a well-covered month-to-month dividend. And we’re dedicated to sustaining these necessary attributes as we work towards an improved value of capital.
Lastly, as we have acknowledged beforehand, we’re working diligently to regulate the elements that we are able to management. Whereas macroeconomic elements can and have had a big influence on our enterprise, we proceed to deal with being positioned for achievement.
Now, I will flip the decision over to Greg Zimmerman to go over the enterprise in better element.
Gregory Zimmerman
Thanks, Greg. On the finish of the quarter, our whole investments had been roughly $6.9 billion, with 358 properties which might be 99% leased, excluding properties we intend to promote. Through the quarter, our funding spending was $85.7 million. 100% of the spending was in our experiential portfolio. Our experiential portfolio includes 288 properties with 51 operators and accounts for 93% of our whole investments or roughly $6.4 billion. And on the finish of the quarter, excluding the properties we intend to promote was 99% leased. Our schooling portfolio includes 70 properties with eight operators. And on the finish of the quarter, excluding the properties we intend to promote was 100% leased.
Turning to protection, the latest knowledge offered relies on a December trailing 12 month interval. Total portfolio protection for the trailing 12 months continues to be sturdy at 2.2 instances. Trailing 12 month protection for theaters is 1.7 instances with field workplace at $8.9 billion for a similar interval. Our theater protection reporting assumes that the Regal deal was in place for all the trailing 12-month interval. Trailing 12-month protection for the non-theater portion of our portfolio is 2.6 instances.
Now I will replace you on the working standing of our tenants. Our theater protection is at 2019 ranges, though North American field workplace stays properly beneath 2019 ranges. We proceed to see sustained will increase in meals and beverage spending and spending on premium giant format screens. Our portfolio is properly positioned to learn from these traits and importantly the field workplace generated from our prime quality theater portfolio continues to outperform the trade.
Turning to field workplace within the state of the trade. Q1 North American field workplace was $1.6 billion. Whereas Q1 efficiency was down 6.6% from Q1 2023, because of sturdy performances by Dune: Half Two, Kung Fu Panda 4, Godzilla x Kong: The New Empire, and Ghostbusters: Frozen Empire, March’s $739 million gross exceeded March 2023 by 17.4%. So far, 10 movies have grossed greater than $60 million in 2024. These outcomes as soon as once more reveal customers wish to see good movies on the massive display screen. Field workplace gross is straight tied to the variety of titles launched and we stay optimistic that because the 12 months progresses extra titles than anticipated shall be launched as studios ramp up manufacturing popping out of the delays brought on by the writers and actor strikes.
April is down considerably due to an absence of titles, however we anticipate a return to stronger cadence in Might, persevering with all through the rest of the 12 months with titles together with IF, Inside Out 2, and Deadpool & Wolverine. With this, we reaffirm our earlier estimate of between $8 billion and $8.4 billion for calendar 12 months 2024. Whereas it is too early to supply estimates for 2025, we’re assured will probably be a big enchancment over each 2023 and 2024.
Turning now to an replace on our different main buyer teams. We proceed to see good ends in ongoing client demand throughout all segments of our drive-to value-oriented locations. As has been the case for a number of quarters, will increase in fastened prices, together with labor, insurance coverage, and taxes, proceed to strain EBITDARM for a lot of of our operators. Likewise, in some places, we proceed to see some pullback in attendance from post-COVID highs. Nonetheless, our non-theater protection stays wholesome at 2.6 instances, the identical as we reported on our Q3 and This autumn calls.
Our eat & play property proceed good efficiency, with portfolio EBITDARM up 6% in Q1 2024 over Q1 2023. After finishing 4 refreshes in 2023 that they funded, Topgolf will fund refreshes at three extra of our models in 2024. Plenty of our sights had been closed seasonally in Q1. Bavarian Inn in Frankenmuth, Michigan opened the primary section of its household leisure middle in This autumn with a rope course and climbing wall scheduled to open in Q2. The total mission, together with the 100,000 sq. foot indoor water park, will open in late 2024. The brand new choices are starting to drive income and EBITDARM development.
Our health property proceed to indicate membership development. Even whereas below building for an intensive enlargement mission scheduled to open in spring 2025, our Springs Resort in Pagosa Springs continues its ADR development. We’re assured the enlargement will drive development at this excellent asset. Ski outcomes for the season had been strong, regardless of weather-based attendance challenges all over the place however Alaska. Basically, move gross sales throughout a portfolio offset any climate points.
Our Alyeska Resort benefited from an above common snowfall and the introduction of the icon move. Lodge room renovations are full at Alyeska, with restaurant and foyer renovations anticipated to be accomplished by 12 months finish. Our important enlargement on the Jellystone Kozy Relaxation RV Park north of Pittsburgh is 90% full. And with the substantial enhancements, we anticipate will increase in income and EBITDARM. Each the Margaritaville Nashville Lodge and our Camp Margaritaville RV Resort and Lodge in Pigeon Forge proceed to carry out very properly. Now we have seen some softness in ADR on the St. Petersburg market, which was negatively impacted our Bellwether & Beachcomber Resorts.
Our schooling portfolio continues to carry out properly with year-over-year will increase throughout the portfolio by means of This autumn of 6% in income and 13% in EBITDARM. As we indicated final 12 months, our KinderCare portfolio was topic to a hire reset retroactive to January 1st, however calculated within the first quarter. Now we have reached in an general settlement with KinderCare to reset the hire. As we anticipated, our general hire elevated by roughly $1 million, and we are going to obtain one location again on the finish of the quarter, which we’re actively advertising. Now we have bought 4 of the 5 KinderCare places we took again final 12 months.
Throughout Q1 our funding spending was $85.7 million. We closed on the $33.4 million acquisition of Enchanted Forest – Water Safari in Outdated Forge, New York in a sale lease again transaction and established a relationship with sights operator new to EPR. Enchanted Forest – Water Safari is a four-season resort within the coronary heart of the Adirondacks with the most important water park in New York, amusement rides, a resort, non-public lake, RV websites and cabins, and entry to a whole bunch of miles of snowmobile trails.
We additionally prolonged our relationship with Andretti Karting, closing on two new build-to-suit places. As we introduced on the year-end name, we offered build-to-suit financing for our sixth Andretti Karting location, this one within the better Kansas metropolis space. The whole dedication is $35 million with $8.8 million funded at closing. After our year-end name, we additionally closed on a $5.8 million mortgage to Andretti to accumulate land in Schaumburg, Illinois for an additional build-to-suit Andretti Karting location. Upon finalization of a building contract and completion of due diligence objects, the mortgage shall be transformed to a triple internet lease with funding capped at $38 billion. Cap charges for these offers exceeded 8%, creating compelling long-term worth.
We’re sustaining funding spending steering for funds to be deployed in 2024 in a spread of $200 million to $300 million. Via quarter finish, we’ve got dedicated roughly $220 million for experiential improvement and redevelopment tasks which were closed however are usually not but funded to be deployed over the subsequent two years. We anticipate roughly $111 million of the $220 million shall be deployed in 2024, which quantity is included on the midpoint of our 2024 steering vary.
In most of our experiential classes, we proceed to see high-quality alternatives for each acquisition and build-to-suit redevelopment and enlargement. Now we have a strong pipeline with new and present clients and ideas. Given our value of capital, we are going to proceed to take care of self-discipline and to fund these investments primarily from money available, money from operations, proceeds from inclinations, and with our borrowing availability below our unsecured revolving credit score facility.
Turning to a fast replace on capital recycling. As we introduced on our year-end name, in Q1, we bought each of our Titanic Museums in Pigeon Forge, Tennessee, and Branson, Missouri, to a non-public fairness agency at a 6% cap fee on in-place revenue for a mixed $45 million in internet proceeds and a acquire on sale of roughly $17 million. The cap fee and acquire reveal the worth of our experiential investments. We additionally bought the third of our vacant former Regal theaters for $1.2 million and a acquire of roughly $900,000. Now we have eight remaining to promote with signed buy and sale agreements for 3 of these eight. Past the eight vacant former Regal theaters, we’ve got one remaining vacant AMC theater and a vacant Xscape theatre we terminated in This autumn. We’re sustaining our 2024 disposition steering within the vary of $50 million to $75 million.
I now flip it over to Mark for a dialogue of the financials.
Mark Peterson
Thanks, Greg. Right now I’ll talk about our monetary efficiency for the primary quarter, present an replace on our stability sheet, and shut with an replace on 2024 steering.
FFO as adjusted for the quarter with $1.13 per share versus $1.26 within the prior 12 months. And AFFO for the quarter was $1.12 per share in comparison with $1.30 within the prior 12 months. Word that, out-of-period deferral collections from money foundation clients included in revenue had been $0.6 million for the quarter versus $6.5 million within the prior 12 months, leading to a lower of $0.08 per share versus prior 12 months.
Now transferring to the important thing variances, whole income for the quarter was $167.2 million versus $171.4 million within the prior 12 months. Inside whole income, rental income decreased by $9.3 million versus the prior 12 months. The optimistic influence of internet funding spending within the present quarter and prior 12 months was greater than offset by the discount in out-of-period deferral collections that I simply talked about, in addition to a discount in rental income associated to the Regal restructuring that came about in August of 2023.
Moreover, proportion rents for the quarter elevated barely to $1.9 million versus $1.8 million within the prior 12 months. Recall that proportion hire is anticipated to be acknowledged for the primary time later this 12 months for theaters below the Regal Grasp Lease. Primarily based on the present movie slate, we anticipate that each one of this proportion hire shall be acknowledged in July of Q3, the final month of the lease 12 months. The rise in mortgage and different financing revenue of $2.4 million was as a consequence of further investments in mortgage notes within the present quarter and prior 12 months.
Each different revenue and different expense relate primarily to our consolidated working properties together with the Cartwright Lodge and Indoor Water Park and 7 working theaters. The rise in different revenue and different expense in comparison with the prior 12 months was due primarily to the extra 5 theaters surrendered by and beforehand leased to Regal, which have been operated by third events on EPR’s behalf since early August of 2023.
On the expense aspect, the next three objects are excluded from FFO’s adjusted, however I want to give some particulars on the will increase over prior 12 months. First, retirement and severance bills for the quarter of $1.8 million associated primarily to a beforehand introduced govt retirement. Second, the rise in provision for credit score losses of $2.2 million is because of making use of the credit score loss accounting commonplace to our portfolio mortgage notes, together with the influence from further investments funded within the quarter and commitments, in addition to the influence of modifications within the macroeconomic surroundings. And third, the acquire on sale of actual property of $17.9 million for the quarter is primarily attributable to the sale of the 2 cultural properties that Greg talked about in his feedback.
Lastly, FFOs adjusted from joint ventures for the quarter decreased by $1.3 million versus the prior 12 months as a consequence of softer efficiency at our experiential lodging properties in St. Petersburg, Florida. As well as, whereas the primary quarter of the 12 months is the low season for our RV parks, these properties had will increase in bills versus the prior 12 months.
Turning to the subsequent slide, I will reviewed among the firm’s key credit score ratios. As you possibly can see, our protection ratios proceed to be sturdy with fastened cost protection at 3.1 instances and each curiosity and debt service protection ratios at 3.6 instances. Our internet debt to adjusted EBITDAre was 5.5 instances for the quarter. Nonetheless, internet debt to annualized adjusted EBITDAre, a greater measure of leverage was 5.2 instances or about 30 foundation factors decrease. Annualized adjusted EBITDAre consists of the annualization of investments put in service acquired or disposed of throughout the quarter, in addition to the anticipated earnings on property below improvement, the annualization of proportion rents, and changes for different objects. Moreover, our internet debt to gross property was 39% on a e-book foundation at March thirty first.
Lastly, we elevated our widespread dividend by 3.6% starting with the dividend that was paid in April. Our widespread dividend continued to be very properly lined with an AFFO payout ratio for the primary quarter of 75%.
Now, let’s transfer to our stability sheet, which is in nice form. At quarter finish, we had consolidated debt of $2.8 billion, all of which is both fastened fee debt or debt that has been fastened by means of rate of interest swaps with a blended coupon of roughly 4.3%. Moreover, our weighted common consolidated debt maturity is 4 years with solely $136.6 million due in August 2024, which we anticipate paying off utilizing our line of credit score. We had $59.5 million of money available at quarter finish and no stability drawn on our $1 billion revolver, which positions us properly given the continued tough backdrop of the capital markets.
We’re confirming our beforehand introduced 2024 FFOs adjusted per share steering of 476 to 496, an funding spending steering of $200 million to $300 million. We’re additionally confirming the steering we beforehand offered for sure different classes. Word that about 75% to 80% of our whole anticipated proportion hire is anticipated to be acknowledged within the again half of the 12 months. Steerage particulars might be discovered on web page 24 of our supplemental.
On the subsequent slide, I needed as an example, as I did final quarter, the anticipated influence on development and FFOs adjusted per share for 2024 on the midpoint of steering while you take away the influence of out-of-period money foundation deferral collections from 2023 of $36.4 million, or $0.48 per share, and the quantity we collected of such quantities within the first quarter of $0.6 million, or $0.01 per share, which is all that we anticipate gathering for this 12 months. As you possibly can see on the schedule, FFOs adjusted per share development with out deferral collections from 2023 to 2024 is anticipated to be 3.2%. Efficient development is simply over 4% when additionally excluding the influence of lease termination charges acknowledged in 2023 of $3.4 million.
Now with that, I will flip it again over to Greg for his closing remarks.
Gregory Silvers
Thanks, Mark. As we’re all studying to function in a higher-for-longer surroundings, our portfolio continues to reveal the resilience of client demand for value-oriented experiential property. Moreover, we’re off to a strong begin for our funding spending and disposition targets.
In abstract, we proceed to be positioned to succeed for our shareholders with a well-covered dividend and a path for development.
Now let’s open it up for questions. Stacey?
Query-and-Reply Session
Operator
Thanks. Presently, we are going to conduct the question-and-answer session. [Operator Instructions] Our first query comes from Joshua Dennerlein of Financial institution of America. Joshua, go forward along with your query.
Joshua Dennerlein
Sure. Good morning, everybody. Greg, you talked about in your ready remarks your capital constraint, however I additionally seen you may have three classes of properties you wish to scale back, the early childhood schooling, non-public college theaters. How do you concentrate on tapping these for capital recycling?
Gregory Silvers
Once more, I feel, Josh, we clearly have and can proceed to discover that. Once more, our first precedence might be to deal as we are able to with vacant properties, as a result of not solely are they not revenue producing, however there’s value related to that. However as we transfer and see as markets and different alternatives turn into obtainable, we positively will proceed to take a look at these. I feel the plain selection — I imply there is not any doubt the theater market stays challenged. Greg and his group have executed an awesome job of executing on a few of these, however our schooling portfolio is one which as we begin to marry alternatives with capital wants we will discover additional. Greg, I do not know in case you have –
Gregory Zimmerman
Sure, Josh, it is a sturdy portfolio, clearly, 100% leased with income and EBITDARM persevering with to develop. So I feel it is actionable on the proper time.
Joshua Dennerlein
Okay. After which, Mark, I simply needed to go over the steering, among the steering line objects. Simply what will get you to the excessive and low finish of the share hire steering? After which may you remind us the place the working properties revenue flows by means of the steering traces and similar to, will get you a excessive and low finish this 12 months.
Mark Peterson
Certain. Most likely the most important variable on proportion rents might be the theater portfolio. Bear in mind with the Regal lease, we’ve got a low threshold, so we anticipate to be in proportion rents. And that is all going to be contingent on field workplace and extra particularly how our particular person properties carry out.
Past the theaters, there’s different proportion rents that may go up or down, definitely primarily based on the efficiency of different property varieties, however in all probability the most important variable is theatre proportion rents. So far as how working properties circulate by means of the revenue assertion, you may have — on the consolidated aspect you’ve got obtained the seven working theaters and Cartwright, and people are working properties that present up in different revenue and different expense. So we information to these. You possibly can see the steering on web page 24 of our supplemental the place we give a spread for different revenue and different expense. You get a way of what these numbers shall be.
Along with the working theaters there within the Cartwright, there may be another revenue and expense that may undergo there like FX and so forth. However the major factor is these working properties. After which the opposite working influence is absolutely on the JV aspect, which is reported as fairness — fairness and revenue or loss from joint ventures, and we additionally present steering on that together with the FFO influence from these joint ventures. In order that’s our properties within the St. Petersburg, after which the RV parks, and people are, once more, working properties that we’ve got a proportion curiosity in.
Joshua Dennerlein
Thanks, guys.
Gregory Silvers
Thanks, Josh.
Operator
Stand by for our subsequent query. Our subsequent query comes from Smedes Rose with Citi. Smedes, please go forward along with your query.
Smedes Rose
Hello, thanks. I am simply questioning while you discuss to your tenants, I suppose significantly perhaps on the working aspect, are they seeing any or voicing any issues round client propensity to spend? And as you realize, there’s been rising issues across the well being [indiscernible] economic system, significantly sort of a center market client. And I am simply questioning when you’re sort of having ideas alongside that entrance.
Gregory Silvers
Sure. Smedes, once more, we proceed to be as shut involved with them as we are able to. We’re not seeing — clearly the priority is being voiced, however we’re not seeing it circulate by means of to the numbers. I feel there is a common sort of concern broadly that’s within the media and within the dialogue level, however to date flowing by means of the numbers, as we talked about and Greg talked about in his feedback about EBITDARM’s up, particularly sort of within the rat & play space, which we’d see sort of sooner.
In the event you talked about, once more, even immediately when you noticed Cinemark’s report out earlier immediately, they’re speaking about energy within the continued meals and beverage spend with film going. So though there is not any doubt it is a concern, we simply have not seen it materialized. Greg?
Gregory Zimmerman
No, I feel that covers it, Greg.
Smedes Rose
Thanks. After which I am simply questioning, on the vacant theaters remaining on the market, are you able to simply remind us — remind me, I suppose, what kind of the progress for the reason that final quarter? Is it nonetheless the identical standing by way of like buy and sale agreements, or has there been any incremental progress I suppose?
Gregory Silvers
Sure, Smedes. So, clearly, we introduced we bought one theater in Q1 and we’ve got three of the eight remaining Regal’s below contract of sale. That is about the identical as final quarter. Now we have had some ins and outs on LOIs, which, as we report each quarter, is often a perform of whether or not people wish to get a zoning variance or make modifications to the underlying actual property. So generally they really feel like it may take longer than they thought. We do have curiosity in all these remaining Regal’s. We even have important curiosity within the AMC, which is in Hamilton, New Jersey. After which we’re beginning to get curiosity within the Escape theater, which we simply terminated on the finish of This autumn. So we really feel fairly good.
Basically, since COVID, we have bought our terminated leases for 16 theaters. And we common round six a 12 months, plus or minus, and we really feel fairly good about that cadence this 12 months.
Smedes Rose
Okay. Thanks. Admire it.
Gregory Silvers
Thanks, Smedes.
Operator
Stand by for our subsequent query. Our subsequent query comes from Todd Thomas of KeyBanc. Todd, go forward along with your query.
Hello, good morning. That is Antara Nag-Chaudhuri on for Todd Thomas. I used to be simply questioning, on the investments entrance, may you discuss in regards to the pipeline for brand spanking new acquisitions and sale lease backs? I do know the tempo is working somewhat forward in your steering, however is there potential to deploy extra capital? And are you seeing yields pattern greater above the 8% that you simply mentioned for brand spanking new offers that you simply’re underwriting?
Gregory Silvers
I’d say — I will let Greg remark as properly. I feel as at all times, proper now our alternatives that exceeds our obtainable capital, so we’re being selective in what we’re doing. I feel on the cap fee, there’s clearly strain to maneuver these yields. It is that high quality line of danger versus reward and high quality. So I feel what we’d say is we’re comfortably within the eights, however that it is — there continues as increasingly more capital is constrained that transferring these numbers up is one thing that I feel all people’s coping with. However Greg?
Gregory Zimmerman
Sure, I agree. I would say there’s upward strain on cap charges. And we nonetheless proceed to see alternatives in most of our verticals which might be actionable and we’ll proceed to work on these all year long.
Antara Nag-Chaudhuri
Okay. And if I may simply comply with up again to the theater portfolio and the share hire dialogue, You talked about that your theater portfolio is outperforming the general trade. Does that change the maths round field workplace targets and the Regal proportion hire as we take into consideration how the remainder of the 12 months might play out?
Gregory Zimmerman
No, that is Greg Zimmerman. Basically, as we are saying, we’ve got 3% of the screens within the nation and we generate 8% of the field workplace. In our theater portfolio, the huge proportion of our proportion hire is with the regal portfolio and Mark mentioned that. We anticipate to have proportion hire in Q3 and we’re monitoring the field workplace efficiency of these particular person theaters.
Gregory Silvers
I’d say, and Greg you possibly can touch upon that is, our Regal portfolio is performing as anticipated. I imply, once more, their market share is as we sort of underwrote it. Once we say we’re outperforming, we had been outperforming final 12 months, we’re nonetheless persevering with to outperform. However what is going on to influence the share hire is these subsequent three or 4 months. In the event you have a look at the movie calendar, it was at all times closely weighted to the second half of the 12 months and the summer time sort of season. That sort of actually kicks off as Greg mentioned sort of in Might with the title begin — actually beginning to circulate then and the upside-downside is absolutely going to be ruled by these subsequent three or 4 months. We’re hopefully optimistic. Issues are monitoring as we’ve got projected them. And we’ll simply need to see how the titles play out.
Gregory Zimmerman
Sure. And we’ll see, beginning this weekend, The Fall Man opens. And at present, our projections are that we should always have no less than 4 movies in Might which might be round $100 million or better.
Antara Nag-Chaudhuri
Thanks.
Gregory Silvers
Thanks.
Operator
Stand by for our subsequent query. Our subsequent query comes from Ray Zhong with JP Morgan. Ray, please go forward along with your query.
Ray Zhong
Hello, good morning. Thanks for taking my query. I suppose my first one is comply with up on the remaining spending for the 12 months. I used to be including all of the issues that you simply guys already teed up for the remainder of the 12 months with the precise [indiscernible] printed this quarter. It appears that evidently you guys are roughly already on the low finish of the vary. You guys talked about there’s some strain on the yield. So simply curious to know, are the negotiations taking a pause with the speed arising previously two months or is constant at this — proper now, simply attempt to [indiscernible] is it extra back-end loaders for the rest [indiscernible] or it may occur any time as properly.
Gregory Silvers
Properly, I feel it is attempting to be measured. Once more, as we’ve got restricted capital, we’re at all times attempting to stability the wants of a superb deal proper now versus what we would see within the third quarter. So I feel Greg and his group try to do a superb job of at all times holding again some extent of capital in order that we’ve got alternatives to fulfill the wants of both our present tenants or one thing opportunistically that comes ahead, whereas additionally balancing among the issues {that a} query was requested earlier, can we speed up a few of our inclinations to make the most of that? And Greg and his group are at all times attempting to take a look at that stability and say, okay, what have we obtained proper now? What you noticed this quarter was a very nice mixture of, A, we have got a brand new sights tenant, which is nice. We have got a brand new relationship and a relationship settlement to take a look at future offers with them. However we additionally supported present tenants with the tip readies, and we obtained actually what we expect are sturdy offers there.
So it is looking for that proper stability inside a world of restricted capital and placing that stability for all the 12 months. As a result of if we spend every thing within the first quarter, whereas that is nice for earnings, that challenges us to be opportunistic because the 12 months runs by means of. So, Ray, it is attempting to hit that stability.
Ray Zhong
Obtained you. That is smart. And on the capital supply aspect, you guys talked about the precedence is to take care of the vacant theaters for now. Something you guys are considering on the theaters which might be properly lined and any guess on the cap fee, if ever, that may be useful. Is there any shade on that?
Gregory Silvers
Sure. I imply, the problem is, because the trade has recovered we actually nonetheless haven’t seen lots of transactions on what we’d name very sturdy theaters. I feel that market is getting higher. There is no doubt. Clearly the overhang of the trade is behind us. Persons are seeing. And when you have a look at two of our main three operators, they’ve nearly as good or higher stability sheets than they’d in 2019. Clearly Regal’s is significantly better, and Cinemark is simply as sturdy as they retired a few of their largest — a few of their bonds earlier this quarter.
So I feel that market is growing, however Greg?
Gregory Zimmerman
I agree, and I would not be capable to hazard a guess on cap charges as a result of, as Greg mentioned, we simply have not seen any trades of theaters which might be money flowing. As a result of if it is a first rate theater, persons are holding on, betting on the restoration, which clearly is enjoying out and can proceed to play out by means of the tip of the 12 months and into 2025.
Ray Zhong
Obtained you. That is it for me. Thanks.
Gregory Silvers
Thanks, Ray.
Operator
Stand by for our subsequent query. Our subsequent query comes from Rob Stevenson with Janney Montgomery Scott. Rob, please go forward along with your query.
Rob Stevenson
Good morning. Greg or Greg, you indicated that Topgolf was going to refresh some extra places within the portfolio. What does that appear to be by way of greenback invested on these kind of refreshes and what do they do? And are you guys funding that? And in that case, what are the anticipated returns and any modifications to the lease time period or bumps, and many others?
Gregory Silvers
Sure, Rob. I would not know precisely how a lot it’s as a result of they fund 100% themselves, they work out which of them they wish to refresh. So we do not — there is not any change to the lease time period, and we do not get a return on it. However we’re comfortable, clearly, when our tenants are investing in our actual property. What the refresh consists of is, changing the outfield grass turf, after which additionally paint and polish on the present asset, the restrooms, that form of factor. So once more, we’re at all times thrilled when our tenants are investing in our actual property.
Gregory Zimmerman
Sure, I imply, I feel it is secure to say, Rob, it is hundreds of thousands of {dollars}. And so what we take that on is, dedication to the present location. If somebody is spending hundreds of thousands of {dollars} to proceed to refurbish an present location, two, it talks in regards to the put on and tear and the way busy they’re. And B, it talks in regards to the dedication of the tenant to the continuing operations of that location. However now we do not make investments, we do not spend any of our bucks on that. It’s very Topgolf’s funding.
Rob Stevenson
Is that due to their value of capital or is that since you guys would relatively that they do it? I imply, are you turning down one of these stuff? As a result of lots of instances it is the owner that does this and then you definitely prolong the lease, and many others on enhancements. And so it is — to your level, it is uncommon that the tenants go in and invests cash on their very own.
Gregory Silvers
Once more, they haven’t approached us, however it will be our indication that this very similar to we see in our theater enterprise and every thing as [FF&E] (ph) and different issues must be changed that it is their duty. Now we have sure requirements that we put in our lease that they’ve to take care of too and we might simply see this as a part of an ongoing duty that we see with all of our tenants.
Gregory Zimmerman
Sure, and it isn’t distinctive. I imply, Vail has refreshed their property of ours and in order Six Flags. So, not distinctive.
Mark Peterson
We usually put money into actual property, not FF&E, in form of refurbishment or portray and form of for the perfect use of the tenant.
Rob Stevenson
Okay. After which how are you guys serious about incremental funding in California today? There’s been some speak about doubtlessly increasing the $20 minimal wage to different industries with a number of places nationally and questioning how that may influence your forms of tenants and your want to put money into that state going ahead?
Gregory Silvers
Properly, clearly, we’re within the midst of opening the Murrieta Sizzling Springs Resort in Murrieta, California. We had a smooth opening in February, and it will be totally open this summer time. So we proceed to really feel like good places in California are price investing in. I’d say, as a common proposition, we’re investing in bigger property. So trying on the worth over time.
Rob Stevenson
Okay. Thanks, guys. Admire the time this morning.
Gregory Silvers
Thanks, Rob.
Operator
Stand by for our subsequent query. Our subsequent query comes from Michael Carroll with RBC. Michael, go forward along with your query.
Michael Carroll
Sure, thanks. I suppose, Greg, earlier in your ready remarks you talked somewhat bit about some new potential funding alternatives that you simply’re persevering with to sort of mine your relationships to outline these offers. I imply, ought to we take into consideration these as completely different property varieties that you simply’re at present not investing in? I suppose, what are these discussions and what kind of properties are we speaking about?
Gregory Silvers
I feel they’re all strong throughout the verticals, Michael, however I will provide you with an instance, a few examples. We did the deal on the finish of the 12 months with Miraval, which is a household enterprise, nice health asset, and we’ve got a relationship settlement with them. So we really feel like that is serving to to develop our health and wellness class.
As Greg and I each talked about, we’re actually proud of Water Safari in Outdated Forge. It has been round for in all probability 50 years. It is an awesome asset in central New York within the Adirondack’s. And once more, we’ve got a brand new operator. And as Greg talked about, a relationship settlement with them. After which, clearly, we have had an ongoing relationship with Andretti, so we’re thrilled to have the ability to do a few extra Andretti offers. So we’re at all times trying throughout the verticals. And what I like to inform my group is, we’re increasing the aperture of the vertical.
Michael Carroll
Okay, after which I suppose what are you doing particularly to sort of strengthen these relationships? Is it simply sort of like speaking to these stakeholders throughout the area and deploying capital and these smaller offers that you could make sense after which when your value of capital improves, then you definitely might be ready to be extra aggressive deploying capital into these verticals.
Gregory Zimmerman
And I will soar in on this. I feel Greg and his group have executed an awesome job and we talked and also you hear him speak about this phrase, relationship settlement. What we take into consideration a relationship settlement is, not solely are we going to do that deal, however we will see each deal that you simply’re concerned in as we go ahead, and we’ve got a proper to do these offers. So it isn’t an obligation, nevertheless it’s creating pipeline for us as they develop their companies, we’re their most well-liked capital accomplice. So after we are in an surroundings the place we’ve got restricted capital, it isn’t ok for us to have this deal. We wish this deal and a possibility to develop with that tenant going ahead.
And each one of many cases that Greg simply talked about, not solely did we do a transaction, however we obtained a relationship deal which is able to give us a pipeline to future development. So it isn’t solely about deploying capital immediately, it is about creating that chance to deploy capital for years into the long run. And Greg and his group have executed an awesome job of doing that.
Michael Carroll
Thanks, Greg. After which I suppose simply final one for me, traditionally the place do these tenants sometimes get financing? I am assuming that that market is fairly dried up proper now they usually’re seeking to create these relationships with individuals such as you to allow them to develop their enterprise?
Gregory Silvers
Once more, I’d say that for many of those teams that they’ve grown with banking relationships and at this time limit they’ve both outgrown these banking relationships as a result of they’ve gotten to a subsequent tier of measurement, or as at all times, the regional banks are usually not as aggressive on doing extra actual property loans. So I’d say it is primarily in that world.
Gregory Zimmerman
Sure, and I’d additionally say, Michael, look, if you wish to develop and perhaps not inside a sure jurisdiction, then a regional financial institution’s in all probability going to be much less useful than we’re as a result of we’ll go wherever over the US so long as our underwriting helps the situation. So — and I feel as soon as individuals begin to take care of this, they be taught that we carry loads to the desk, that your typical banking relationship [Technical Difficulty] by way of recommendation and issues that we see traits throughout the trade.
Gregory Silvers
And I feel as you get to that subsequent measurement, like in Andretti’s. Candidly, lots of our triple internet opponents have executed Andretti’s offers, however as soon as once more, we’ve got these sort of relationship agreements that permit us to see sure issues so we might be selective in the place we’re doing it after which others within the triple internet world could also be doing offers with them, however we’re conscious that a number of of our opponents have executed offers with them.
Michael Carroll
Okay, nice. Thanks.
Gregory Silvers
Thanks you.
Operator
I am exhibiting no additional questions presently. I would now like to show it again over to Greg Silvers for closing remarks.
Gregory Silvers
Properly, thanks everybody for becoming a member of us immediately. We stay up for in all probability assembly with all of you and buyers in NAREIT arising shortly. Have an awesome day and thanks for attending. Bye-bye.
Operator
Thanks in your participation in immediately’s convention. This does conclude this system. Chances are you’ll now disconnect.