Entertainment Properties: movies and more
This real-estate investment trust generates high income from movie theaters, golf courses and even charter schools.
We are adding Entertainment Properties Trust (EPR) to our model portfolio. This is a REIT that pays 6.5% -- unusually high for a property REIT with solid growth prospects.
When it started in 1997, EPR's business plan was to purchase megaplex theater complexes from owners and operators and then lease the theaters back to the operators. That is still its main business, and EPR owns a portfolio of 112 megaplex multi-screen theater complexes with stadium seating that has been consistently 100% leased.
In recent years, EPR has expanded beyond theaters and now also owns entertainment retail centers that house restaurants and retail stores in addition to movie theaters.
EPR has further diversified by building ski and snowboarding parks in urban areas, and charter school properties that it leases to school operators.
One venture that did not work was EPR's investments in wineries and vineyard properties. It is attempting to sell those properties.
EPR cut its quarterly dividend in March 2009 by 23% to 64 cents per share in March 2009, but raised it by 8% in March 2011, and by 7% in March 2012.
Entertainment Properties recently said it would spend $27 million to build three new megaplex movie theater properties, $30 million to build three new "expanded amenity" theater properties, and $35 million to build two new family entertainment properties.
The company will also spend $38 million to construct four new charter school properties, and $20 million to construct two urban golf centers. EPR has already leased 100% of those new properties.
Entertainment Properties is paying a 6.5% dividend yield and we expect around 7% annual dividend growth.
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