Kansas City-based EPR Properties added $700m of high-quality ski and attraction properties to its portfolio during the first quarter, tapping into a move toward experiential retail. “We’re a long-term believer that communal experiences are fundamental to society – additionally, consumers have increased discretionary time available because they are shopping online,” said Greg Silvers, ceo.
The real estate investment trust invests in three distinct property segments – education, recreation, and entertainment. “Two of our segments are consumer discretionary, while one, our education segment, is disconnected from the others. ” said Silvers. “What makes properties successful is research-driven decisions, supported by strong demographic trends, the two largest of which in existence are Millennials and Baby Boomers – both generations value experiences over accumulation of stuff.”
EPR’s portfolio includes 142 megaplex theaters, eight entertainment-retail centers, eight family entertainment centers, 67 public charter schools, 53 early education centers, 13 private schools, 11 ski areas, 25 golf-entertainment complexes, five recreation facilities, and land under ground lease for the Adelaar casino and resort project in Sullivan County, N.Y.
Silvers believes that more investors, particularly international players, are turning to real estate as yields have trended downward. “There has been a continued inflow of international funds as foreign countries have experienced depressed bond and fix income yields. In 2017, the inflows have slowed down a little bit; however, we still have strong access to capital to support growing businesses, as investors are discerning in what’s working with regard to various property types. We’ll be the beneficiary as investors embrace the movement to the experiential economy,” he said.
EPR targets ski properties that are two to four hours’ driving time from gateway cities, as destinations that can only be accessed via flight tend to see travel cut-backs during difficult economic times. Mindful of its commitment to keep its ski portfolio at approximately 10% of assets, EPR structured a sale of a portion of the CNL ski portfolio to a subsidiary of Och-Ziff Real Estate. The REIT is the largest landlord for AMC, Regal, and Cinemark brands – its movie theater assets are dispersed through 43 states. The company’s amusement park spaces include the Santa Monica Pier.
Meanwhile, the REIT’s school properties include both public charter schools with public state level reimbursement and private schools. “Our private school properties are targeted at gateway cities that have an underserved need for quality private school education,” said Silvers. “There is an underlying macro-economic demand for this product type.”