Good day, and thank you for standing by. Welcome to the Q2 2024 EPR Properties Earnings Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today, Brian Moriarty, Senior Vice President of Corporate Communications. Please go ahead.

All right. Thank you. Thanks for joining us today for our second quarter 2024 earnings call and webcast. Participants on today's call are Greg Silvers, Chairman and CEO; Greg Zimmerman, Executive Vice President and CIO, and Mark Peterson, Executive Vice President and CFO. I'll start the call by informing you that this call may include forward-looking statements as defined in the Private Securities Litigation 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 the results of operations may vary materially from those contemplated by such forward-looking statements. Discussion of those factors that could cause results to differ materially from these forward-looking statements are contained in the company's SEC filings, including the company's reports on Form 10-K and 10-Q. Additionally, this call will contain references to certain non-GAAP measures, which we believe are useful in evaluating the company's performance. A reconciliation of these measures to the most directly comparable GAAP measures are included in today's earnings release and supplemental information furnished to the SEC under Form 8-K. If you wish to follow along, today's earnings release, supplemental and earnings call presentation are all available on the Investor Center page of the company's website, www.eprkc.com. Now I'll turn the call over to Greg Silvers.

Thank you, Brian. Good morning, everyone, and thank you for joining us on today's second quarter 2024 earnings call and webcast. For the quarter, we are pleased to deliver solid results that demonstrate continued momentum and progress in building [technical difficulty] sorry about that guys. In building -- demonstrate continued momentum and progress in building the leading diversified experiential REIT. Our sustained rent coverage numbers illustrate broad consumer demand across our customer industries in both our triple net leased and mortgage portfolios. In our managed operating properties, we are working to recapture market share of the previously closed managed theaters, and aligned with the broader industry, we're seeing some demand normalization from post-COVID highs and expense pressures in our experiential lodging. Greg will provide more details in these areas. Box office continues to show its time-tested resiliency. Whether it's surprising the industry by over delivering with a film like Twisters or meeting high expectations with the greatly anticipated Deadpool & Wolverine, the box office is maintaining momentum. We look forward to additional titles making their way to the big screen for the remainder of the year. Additionally, last week, AMC announced several refinancing transactions that extend the majority of their 2026 debt maturities to 2029 and 2030, while also providing the potential to reduce their overall net debt position. We view this as a very positive event as it substantially mitigates their near-term debt maturity risk. While theater exhibition remains a vital part of our business, it's important to remind everyone that our growth in experiential real estate is focused outside of theaters. We remain committed to acquiring creative, compelling, and often award-winning experiential properties. Our recent investments in natural hot springs, resorts, spas, climbing gyms and indoor karting exemplify such investments. We remain confident that consumer spending on experiential activities will continue to consistently grow, and we have proven our ability to identify enduring concepts and capture that growth for the benefit of our shareholders. As we move into the second half of 2024 and into 2025, we feel very optimistic about our potential. At a macro level, we're seeing a moderation of inflation and the expectation of interest rate reductions. We are also very well positioned with strong liquidity and significant financial flexibility. Additionally, while improved, our multiple remains historically low and we offer a well-covered strong dividend. As we continue to execute our plan and perceived risks such as the AMC refinancing are mitigated, we are confident we will see multiple expansion. We look forward to rewarding our investors with the strong total shareholder returns that we've historically delivered. Now I'll turn the call over to Greg Zimmerman to go over the business in greater detail.

Thanks, Greg. At the end of the quarter, our total investments were approximately $6.9 billion with 354 properties that are 99% leased excluding properties we intend to sell. During the quarter, our investment spending was $46.9 million. 100% of the spending was in our experiential portfolio. Our experiential portfolio comprises 284 properties with 51 operators and accounts for 93% of our total investments or approximately $6.4 billion, and at the end of the quarter, excluding the properties we intend to sell, was 99% leased. Our education portfolio comprises 70 properties with eight operators, and at the end of the quarter, excluding the properties we intend to sell, was 100% leased. Turning to coverage, the most recent data provided is based on a March trailing 12-month period. Overall portfolio coverage remains strong at 2.2 times, unchanged from last quarter. Trailing 12-month coverage for theaters is 1.7 times with box office at $8.8 billion for the same period. Our theater coverage reporting assumes that the Regal deal was in place for the entire trailing 12-month period. Trailing 12-month coverage for the non-theater portion of our portfolio is 2.6 [technical difficulty]. Now I'll update you on the operating status of our tenants. Our theater coverage is at 2019 levels, even though North American box office remains well below 2019 levels. Turning to box office and state of the industry, North American box office was $1.9 billion for Q2 and $3.6 billion for the first half of the year. The first six months of 2024 were down 19% over the same period in 2023 due to the impact of the actors and writers strikes, but led by strong performances by Inside Out 2 and Bad Boys: Ride or Die, June's $965 million gross was only down 4% from June 2023. Inside Out 2 dramatically outperformed expectations to become the highest grossing animated movie ever, earning over $613 million to date in North America and outgrossing both Barbie and Top Gun: Maverick worldwide. July's box office gross exceeded $1.1 billion and serves as a solid kickoff for the second half of the year. Despicable Me 4 grossed $291 million to date, and the eagerly anticipated Deadpool & Wolverine grossed $211 million on its opening weekend, substantially outpacing estimates, delivering the highest grossing opening weekend ever for an R-rated movie and the biggest domestic opening weekend since Spider-Man: No Way Home in December 2021. Through Monday and Tuesday of this week, Deadpool added an additional $50 million. Despite the encouraging uptick in box office results since June, we estimate box office for the Regal lease year, the trailing 12-month period ending July 31st, will be around $7.9 billion, which is approximately $400 million less than our original forecast. The impact on the release schedule from the writers and actors strikes made predicting box office results for this period extremely challenging. On the plus side, we expect the shortfall in Regal percentage rent to be made up by outperformance from other tenants. So we have not adjusted our percentage rent guidance. As we have said repeatedly, box office gross is directly tied to the number of titles released. To date, 12 films have grossed more than $100 million in 2024; another 11 have grossed between $60 million and $100 million, and an increase in major releases is already underway. Titles currently projected to gross over $150 million in the second half of the year include Deadpool & Wolverine, Beetlejuice 2; Joker: Folie a Deux; Venom 3; Gladiator II, Wicked; Moana 2, and Mufasa: The Lion King. The June and July results demonstrate that we have finally reached the end of the negative impact on content from the writers and actors strikes and have returned to box office growth. And more importantly, they show that when there is a strong cadence of good movies to see, consumers will go to see them on the big screen. We are optimistic that the quantity and quality of the slate for the second half of the year and into 2025 and 2026 will continue to propel an upward trajectory in box office. Based on the results in June and July, we are increasing our guidance for box office in calendar year 2024 from between $8 billion and $8.4 billion to between $8.2 billion and $8.5 billion. Turning now to an update on our other major customer groups, we continue to see good results across our drive-to, value-oriented destinations. Our Eat & Play assets were down slightly in revenue and EBITDAre quarter-over-quarter, but continue to perform well. Andretti Karting is under construction in Kansas City and Oklahoma City and finalizing entitlements and plans for Schaumburg, Illinois. Six Flags and Cedar Fair concluded their merger as of July 1st. We do not expect any changes to operations at our parks in the near-term and continue to believe that longer term, this strengthens the credit and operating profile of the company. Our attractions are now open for the summer season, but it's too early to draw conclusions about performance for the season. Construction on the extensive expansion at The Springs Resort in Pagosa Springs continues with opening scheduled for spring 2025. We're confident this expansion will drive growth at this outstanding asset. Percentage rent from a ski tenant exceeded our expectations following a strong ski season. During the offpeak summer season, our Alyeska Resort in Alaska will complete lobby renovations. Both the Margaritaville Hotel, Nashville and our Camp Margaritaville RV Resort and Lodge in Pigeon Forge continue to perform well. Our education portfolio continues to perform well with year-over-year increases across the portfolio through Q1 of 2% in revenue and 5% in EBITDAre. Turning to our operating properties, as with many in the lodging industry, in our joint venture operating properties, we are seeing some softness in ADR and cost pressures are negatively impacting EBITDAre. Also, we continue to face expense pressures in the operating theaters as we attempt to recapture market share loss as part of the Regal bankruptcy and transition to Cinemark and Phoenix. During Q2, our investment spending was $46.9 million, and year-to-date, is $132.7 million. We closed on a third new build-to-suit location for Andretti Karting in Oklahoma City, providing $5 million for the acquisition of land and a total commitment of $32 million for completion of the build-to-suit project. As previously announced, we are providing build-to-suit financing for Andretti Karting locations in the greater Kansas City area and Schaumburg, Illinois. We're maintaining investment spending guidance for funds to be deployed in 2024 in a range of $200 million to $300 million. Through quarter-end, we have committed approximately $180 million for experiential development and redevelopment projects that have closed, but are not yet funded to be deployed over the next two years. We anticipate approximately $96 million of this $180 million will be deployed in the remainder of 2024, which amount is included at the midpoint of our 2024 guidance range. In most of our experiential categories, we continue to see high-quality opportunities for both acquisition and build-to-suit redevelopment and expansion. Given our cost of capital, we will continue to maintain discipline and to fund those investments primarily from cash on hand, cash from operations, proceeds from dispositions, and with our borrowing availability under our unsecured revolving credit facility. In Q2, we sold four theaters; three vacant former Regals and a Cinemark that was reaching the end of term. The combined net proceeds were $10.3 million with a gain of approximately $1.5 million. For the first six months of the year, disposition proceeds totaled $56.5 million. Subsequent to the end of the quarter, we sold another vacant Regal theater for $1.9 million. Less than one year after the conclusion of the Regal bankruptcy and taking possession of eleven former Regal theaters, we have sold seven of them. We have signed purchase and sale agreements in place for two of the remaining four vacant former Regal theaters. Beyond those four vacant former Regal theaters, we have a vacant Xscape theater we terminated in Q4, which is under a signed purchase and sale agreement, and one remaining vacant AMC theater. We are pleased with our overall disposition cadence and particularly pleased with the pace of selling the vacant former Regal theaters. Based on that progress, we are updating our 2024 guidance for dispositions to $60 million to $75 million. Finally, we have made the decision to close one of the four former Regal theaters managed for us by Cinemark. We anticipate closure around Labor Day and are already underway with marketing to sell the theater. We constantly review the performance of our operating assets, and in consultation with Cinemark, came to this decision based on theater level performance. The asset required significant deferred maintenance and capital expenditure to meet ours and Cinemark's operating standards and to recapture and grow market share. After careful evaluation and consultation, we jointly concluded the level of expenditures did not make economic sense and that it was better to close the theater. I now turn it over to Mark for a discussion of the financials.

Thank you, Greg. Today I will discuss our financial performance for the second quarter, provide an update on our balance sheet, and close with an update on our 2024 guidance. FFO as adjusted for the quarter was $1.22 per share versus $1.28 in the prior year, and AFFO for the quarter was $1.20 per share compared to $1.31 in the prior year. Note that there were no out-of-period deferral collections from cash basis customers included in income for the quarter versus $7.3 million in the prior year, resulting in a decrease of nearly $0.10 per share versus prior year. Now, moving to the key variances, total revenue for the quarter was $173.1 million versus $172.9 million in the prior year. Within total revenue, rental revenue decreased by $6.8 million versus the prior year. The positive impact of net investment spending over the past year was more than offset by the reduction in out-of-period deferral collections that I just mentioned as well as a reduction in rental revenue related to the Regal restructuring that took place in August of 2023. Within rental revenue, percentage rents for the quarter were $2 million versus $2.1 million in the prior year. Recall that percentage rent for theaters under the Regal master lease is expected to be recognized in July of Q3, the last month of the lease year. Additionally, within rental revenue, straight-line rent increased by $1.6 million sequentially versus last quarter, primarily due to a fitness and wellness property that was placed in service in March. Per the terms of the lease for this asset, rent for the first six months of the lease, which represents March to August, is being accrued into the basis for determining future cash rent. Thus, straight-line rent will remain a bit elevated into Q3, but then is expected to go back down in Q4. Note that straight-line rent is included in FFO as adjusted, but is excluded from AFFO. The increase in mortgage and other financing income of $2.7 million was due to additional investments in mortgage notes over the past year. Both other income and other expense relate primarily to our consolidated operating properties, including The Kartrite Resort & Indoor Waterpark and seven operating theaters. The increase in other income and other expense compared to the prior year was due primarily to the additional five theaters surrendered by and previously leased to Regal, which have been operated by third parties on EPR's behalf since early August of 2023. On the expense side, G&A expense for the quarter decreased to $12 million versus $15.2 million in the prior year due primarily to lower professional fees, including those related to the Regal resolution as well as lower payroll costs, including non-cash share-based compensation expense and a decrease in franchise taxes due to a state legislative change. During the quarter, we recognized impairment charges of $11.8 million related to one operating theater property that we intend to sell that Greg discussed. This charge is excluded from FFO as adjusted. Interest expense net for the quarter increased by $1.2 million compared to prior year, primarily due to a decrease in interest income on short-term investments and a decrease in capitalized interest on projects under development. Turning to the next slide, I'll review some of the company's key credit ratios. As you can see, our coverage ratios continue to be strong with fixed charge coverage at 3.2 times and both interest and debt service coverage ratios at 3.8 times. Our net debt to adjusted EBITDAre was 5.2 times for the quarter. Additionally, our net debt to gross assets was 39% on a book basis at June 30th and our common dividend continued to be very well covered with an AFFO payout ratio for the second quarter of 71%. Now let's move to our balance sheet, which is in great shape. At quarter-end, we had consolidated debt of $2.8 billion, all of which is either fixed rate debt or debt that has been fixed through interest rate swaps with a blended coupon of approximately 4.3%. Additionally, our weighted average consolidated debt maturity is just under four years with only $136.6 million maturing in 2024, which we anticipate paying off using our line of credit. We had $33.7 million of cash on hand at quarter-end and no balance drawn on our $1 billion revolver, which positions us well going forward. We are confirming our 2024 FFO as adjusted per share guidance of $4.76 to $4.96 and investment spending guidance of $200 million to $300 million. We are updating our disposition proceeds guidance to a range of $60 million to $75 million from a range of $50 million to $75 million. Additionally, we are confirming our percentage rent and participating interest guidance of $12 million to $16 million. We are lowering our general and administrative guidance to a range of $49 million to $52 million from a range of $52 million to $55 million. This decrease is due to lower anticipated professional fees and payroll and benefit costs as well as the recent state legislative change that reduced franchise tax expense. On the next slide, we have detailed the guidance we are providing on our wholly-owned operating properties and those held in joint ventures. We are revising the guidance in -- for other income to a range of $55 million to $65 million from a range of $57 million to $67 million and confirming our guidance for other expense of $54 million to $64 million. The reduction in other revenue is due primarily to the decision to close one of our operating theaters around Labor Day. However, we do not expect the reduction in other expense due to increased costs at our other operating properties. Lastly, we are revising our equity and loss from JVs to a range of $10 million to $7 million from a range of $9 million to $6 million and the FFO and -- the FFOAA from JVs to a range of zero to $3 million from a range of $1 million to $4 million. As Greg mentioned, this reduction is due to some expense pressures, mostly insurance related and demand normalization, consistent with the broader experiential lodging industry. Guidance details can be found on page 24 of our supplemental. On the next slide, I wanted to illustrate that the last quarter, the anticipated impact on growth in FFO as adjusted per share for 2024 at the midpoint of guidance, when you remove the impact of audit period cash basis deferral collections for 2023 of $36.4 million or $0.48 per share and the amount we have collected in 2024 of $0.6 million or $0.01 per share. As you can see on the schedule, FFO as adjusted per share without deferral collections from 2023 to 2024 is still expected to grow by 3.2%. Now with that, I'll turn it back over to Greg for his closing remarks.

Thank you, Mark. As we've discussed today, our business remains solid and consumer demand continues to support our experiential properties. As Greg mentioned, we're further encouraged that we've gotten past the lack of theatrical content that was caused by the strikes and impacted the first half of the year. We view these developments as well as the AMC refinancing as catalysts to continue to propel us forward to a more reasonable equity multiple. We look forward to this progression as it allows us to once again capitalize on the many opportunities that our experiential platform offers and to continue to deliver outstanding results for our shareholders. With that, let's open it up for questions. Carine?

[Operator Instructions] Our first question comes from Joshua Dennerlein of Bank of America. Your line is now open.

Hi, good morning. This is Farrell Granath on behalf of Josh. Thanks for the question. I wanted to just first ask, how are you seeing, currently in your investment pipeline, one, how it is in the competition, the market set as well as cap rates that you're seeing going forward compared to what you're seeing today and what you may be seeing going forward?

Yes, and I'll let Greg add some color to this, but I think in our world, which we've said, to a large degree, is acquisitions in that kind of $25 million to $125 million range in the experiential area. We're still seeing not a tremendous amount of competition. And while I think our operators are being thoughtful about their growth, they're still growing, as indicated by our recent kind of Andrettis undertaking, as we've said, we've opened some recent top golfs in the last year. So they continue to grow and we continue to be supportive of that. But Greg?

Yes. And to also answer the cap rate question, the cap rates we're seeing are solid in the 8s, and I don't see a lot of change in that over the near term. The other thing I would add with respect to competition in the marketplace is, we're just very good at finding deals that other people probably don't find. So in the first quarter, we were able to acquire a waterpark in upstate New York. And again, I don't know that there was much competition for that. So those are the kind of deals that we're able to find based on our experience and the quality of our portfolio.

Great. Thank you. And also, I guess, kind of bigger picture, we're thinking about the consumer, many especially on the lower end are facing higher pressures. Are you seeing that flow through to your tenant base or is there an area that is maybe being impacted the most?

Like I said, and as we talked about coverage being a quarter delayed, we're still not seeing that. And I would say, I think anecdotally what we're hearing is at the very low end of the consumer, where there's probably more pressure, our properties are generally solid, middle-class kind of offerings. And what we're seeing is everyone has been dealing with cost pressure, whether it's insurance or wages. Those are starting to work their way through the system and kind of dissipate a little bit, but so far we've seen continued solid results. Greg?

Also, I think if you look at our portfolio, probably the most value-oriented proposition we have is theater tickets. And you can see from Deadpool & Wolverine this weekend, people are not shy about going to the theater. So yes, I would agree with Greg. We're not really seeing that yet.

Great. Thank you so much.

Thank you.

Thank you. One moment for our next question. Our next question comes from Smedes Rose of Citi. Your line is now open.

Hi. Thank you. I just wanted to ask a little bit more about the Regal percentage rents falling short. And I guess that's really just a function of their fiscal year, including the back half of last year, so they wouldn't get the sort of incremental improvement you're seeing in the box office. I just want to see if I'm thinking about that correctly. And I guess what gives you confidence that your other tenants will be able to make up the shortfall. Like where are you seeing kind of incremental strength, I guess, that would offset the Regal shortfall?

Again, Smedes, thanks. I think remember, the lease year for Regal runs from August 1st to July 31st. So again, what we saw this year was they're kind of right in the heart of the strikes and the impact of the strikes. We do -- as Greg mentioned, we are getting some recovery of that in June and July. So we got a solid couple of months as we pick up out of that, but I think it's truly about the lease year. And if you look at kind of where the estimates are for the balance of the year relative to what we did in the first half of the year, meaning we, the theater industry, you can see the strength is really in the second half of this year. And so I think that reflects kind of the impact from the strikes and the ability to get that back. As far as how we're going to make it up, again, we already talked about, and I think in Greg's comments and in Mark's comments, we talked about we had other percentage rent that we didn't anticipate in our ski industry. We're seeing some other strengths in various places. So we feel confident of our ability to recover that and therefore did not change our guidance.

Okay. I guess when you say other strengths in various places, I think last quarter you just talked about some of the JVs having percentage rents as part of their structure, including like some St. Petersburg exposure, some RV exposure. And I know you're a quarter lagged, but the consumer is clearly weakening and we're seeing that kind of across the board. And I'm just wondering, you're -- so you're not yet, I guess, seeing -- are you still so confident that in those areas where you'll likely see weakness, you won't see any shortfalls on the percentage rent side?

Again, I get what we're saying is -- you're saying the consumer is clearly weakening, but like I said, we just had a ski tenant that paid above what our estimates were in that, and we just had a theater opening that was $200 million. So while there may be some weakening, we're still seeing some strength in some areas.

Yes, I think in those JVs we don't get percentage rents from those. So that doesn't impact the percentage rents, the St. Petersburg and the RV parks.

It would be in our net lease.

Yes. We did acknowledge a couple of times in our scripts the fact that there is some industry weakness that we're seeing as well, impacting the experiential lodging somewhat in ADR, kind of coming off of COVID highs, and there is some expense pressures, particularly in things like insurance and particularly in Florida insurance, where we have two of our JV hotels. And that's part of the reason why we've taken down that guidance a bit, but no, it does not -- none of those impact percentage rents.

Okay, okay. So thank you. Thank you for clarifying. I wanted to just ask you one last question. When you close theater, it sounds like due to lack of CapEx investment, I mean, is that something in your -- I guess, your contracts going forward now that would be avoided? Are the operators required maybe to continue to invest in order to keep a theater up to operating standards?

Yes. Remember, those were in an operating theater that we had taken back. So again, part of that lack of maintenance CapEx was probably a direct result. Now, like Greg of -- Regal being in bankruptcy and some things they should have done during that period of time, but did not. So our normal kind of lease provisions do require kind of ordinary maintenance and upkeep, but these were, Smedes, in our -- in one of the operating properties for which we had taken back.

Yes, Smedes. The other thing I would say is it wasn't just maintenance CapEx. It was also CapEx to improve the experience because during the Regal bankruptcy, some competing theaters had substantially upgraded in the trade area, and we just found it was going to be very expensive to try to keep up. So again, one of the things we value about Cinemark is they look at the portfolio and tell us what they really think and we came to a joint conclusion about it.

Okay. All right. Thank you, guys.

Thanks, Smedes.

Thank you. Our next question comes from John Kilichowski from Wells Fargo. Your line is now open.

Hi. Thank you. If we could circle back to the opening remarks, you talked about AMC putting out that 8-K, detailing some of the refinancing they did with two creditor groups. It sounded like a positive pushing out some of those maturities to '29 and '30, but maybe could you talk about the structure a little bit more? I'm just curious your thoughts on the execution there. I'm looking at the 8-K now. It's a bit complicated, very lengthy. I'm seeing things like 10% cash, 12% pick on some of this. And I'm just curious what you think about the execution overall or if this is just giving them a little bit of breathing time before inevitable issues down the road.

I mean, I think anybody would say, John, that it's giving them breathing time. I mean, they've had the ability to continue to raise capital to deploy. I think we would still say their balance sheet is too leveraged, but the immediacy of hitting a debt maturity was the concern that was voiced most often to us about our relationship with them. They continue to be able -- and seem to be able to meet their debt obligations. And I think, again, it gives them time to get to a -- as we've talked about today, in the strength of '25 and '26 in the film calendar, to get to a period that may allow them to further execute that. It also doesn't eliminate, as they've done over the past few years, of their continued ability to raise equity and pay down debt. So again, it -- I would think your characterization of breathing room is accurate, but Greg or Mark, maybe you guys have anything further to add to that.

No, I think, as Greg said, we got an improving box office going forward and now they've set themselves up to make it through that period in good shape without the -- alleviating the risk of bankruptcy. And from our perspective, we have our master lease; we have the best properties. We feel good about our collateral and feel good about the situation kind of no matter what happens.

Got it. Thank you. And then maybe just jumping over to the transaction market, I guess, more generally, have you seen seller willingness change as we approach a potential fed cut?

I think we -- I think there's no doubt that people are definitely thinking about what the impact of that is. As we keep reminding people, a 25 basis fed cut is probably not as much of an impact as people may think. But I would say we are -- we have entered in a time where everybody is painfully aware of the 10-year yield as most of us in this industry price off of, and they pay attention to it more. I think what drives people more now is simply growing their business. And I think what this does is it eliminates the marginal projects. They're really strong projects that tenants have commitment to. We're seeing them go forward with. As these are kind of, like I said, marginal projects, I think those are challenging. But Greg?

Yes. I completely agree and the fact that we were able to execute NNN ready [ph] deals this year shows that people are still in the market growing. I agree with Greg. Obviously, people are being cautious, as are we, given our cost of capital.

Got it. Thank you.

Thank you.

Thanks, John.

Thank you. Our next question comes from Michael Carroll of RBC. Your line is now open.

Yes. Thanks. I wanted to touch on the -- what's driving the drop in other income and other expenses this quarter. I believe that relates to your TRS business. And I think, Mark, in your prepared remarks, I think you mentioned something about expense pressure at experience lodging. I'm not sure -- I'm sorry if I missed this, but if you can provide some details on what kind of drove that drop in earnings for those line items.

Yes, sure. So if you look at for the quarter and year-to-date, what we have running through the consolidated financials, other income and other expense, is the seven operating theaters in Kartrite. If you think about two of those operating theaters were operated in both periods, and obviously box office was lower both for the quarter and for the six months versus the prior year. So you had lower results there versus the prior year. On the other operating theaters we took back from Regal, those two were -- had lower box office than expected due to the impact of the strikes. So we think it is -- and then we got an offset at expense, but maybe not as much as expected. And I think part of the expense pressure in that area was spending by the new operators to kind of regain market share as they continue to manage those theaters post Regal. And then a third thing on Kartrite, Kartrite revenue in line. They've had a bit of cost pressures on insurance and utilities and a couple other line items. So I think, all in all, if you look at the kind of year-to-date sort of theater, lower box office and a bit of expense pressures. The good news as you move into guidance for the year though, we expect that the operating theaters perform significantly better in the back half of the year, as box office rises. We're still going to have a reduction in revenue just because of the fact we're shutting down one of the theaters. So overall revenue is still down, but a lot due to that shutting down of the one theater. On the expense side, you're not seeing the reduction there, just because of what I just mentioned, some of the elevated expenses of theater transition and management and some of the Kartrite expenses. So that's on the consolidated. We're down about $2 million in our guidance net with respect to that. The experiential lodging comment relates to Kartrite, but it also relates to the unconsolidated JVs. So that's our St. Petersburg hotels and the RV water -- sorry, and the RV parks. And there the pressures are kind of industry wide in the experiential lodging relating to -- on the expense side, again, insurance, particularly, like I said in my remarks, in Florida, insurance has gone up a lot on the St. Petersburg hotels, and then there's been a little bit of softness in ADR industry wide in experiential lodging across the hotels and the RV parks. So that's really the kind of the impact for the quarter and sort of the outlook for the year in both the consolidated and the JVs.

Okay. And then within the operating theater bucket, I know that you decided to kind of shut one down. I guess, what about the other assets within those buckets? I mean, how are they performing and how are they positioned in the market? I mean, is there any concern or thought that you're going to need to kind of shift strategies in any of those specific theaters?

I think -- and this is Greg, Michael. I think we're constantly looking at those things right now. Clearly, we don't think that. I think it's market by market. You look at kind of what -- as Greg talked about, do you have to make investment in it to compete? Again, if you look at the other, several of the other theaters, they're much newer, more modern. So there's not -- it doesn't mean though that if we get offers or we consider and there's a real estate play that makes more money, I mean, our job is to drive value. So we will constantly be evaluating kind of what the best option is. And when we look at the property that we shut down in Los Angeles relative to the idea, it made sense to pursue that as a real estate solution.

Yes. Michael, the other thing I would add is, obviously the box office recovery will weigh into this. I mean, we just made the decision before Deadpool, not that it would have changed it, because we didn't see a path, but it'll be interesting to see how the others perform with the box office recovering as strongly [technical difficulty].

Okay, great. And then just last one from me is, I know you increased your box office guidance for this year. What specifically drove that increase? Was it just the performance that you've seen over the past few months, or is it the expectation of better performance in the back half of the year? So I guess what drove that increase? And then also, can you kind of touch on what you're expecting for 2025, if you have any early read-throughs on what you think the box office can do next year?

Yes. We don't have any guidance for 2025 yet. I would say the calendar is shaping up very nicely. So on a general proposition, we think it'll clearly exceed this year's box office, and I would hope that it's solidly in the $9 billion range. So we'll probably have more to talk about that toward the end of the year, Michael. With respect to this year, it's both. One, the complete outperformance of the past handful of titles. I mean, if you look at Deadpool's at $261 million, Despicable Me, $293 million; Twisters, kind of out of nowhere, $159 million, and Inside Out 2, $615 million. So these all outperformed dramatically. And then, as I mentioned, there are a number of $150 million titles projected for the end of the year. So we're very comfortable with the increase in the guidance. And again, I think it comes back to the fact that there is a cadence of solid releases when -- the more movies there are in theaters, the more reason people have to go, and they will return, even if they weren't planning on seeing a movie because they saw it on the marquee or maybe the other one was sold out, whatever. The point is people are returning to the theaters.

Okay. Great. Thank you.

Thank you, Michael.

Thank you. The next question comes from Rob Stevenson of Janney Montgomery Scott. Your line is now open.

Good morning, guys. Greg or Greg, have you seen any solid income-producing theaters with term left and leased to one of the major operators trade in the marketplace over the last quarter or two?

Again, it's still rare, but we have -- there have been some reported things that are at lease discussions. And I think that market's starting to open up as people start to see the visibility and the return of that. I think there are a couple of data points that are helping people; Cinemark's recent debt deal where they did a debt deal at 7% and reaffirmed their kind of credit rating. So I think you're starting to see a little bit of the thawing of that. And hopefully, as we move through the balance of this year and especially into next year where the recovery is more robust, I think you'll start to see a further thawing of that. But Greg?

Yes, I agree. I can't say that we've seen an actual transaction, but I agree. There's certainly thawing.

Okay. And then Mark, I know you said that the $137 million of debt coming due in a few weeks is going to be done on the line. If you had to do that or the $300 million that's coming due in April in the unsecured market today, where are you -- where would you be pricing debt today in the current environment and the uncertainty?

Yes. The good news is spreads are low, and for us, I think the latest quote I got is a little over 210 as far as the spread. So it would put us under 6.25 to do a 10-year right now. As I mentioned, the $136 million, we have cash in the bank, nothing drawn on the lines. We'd intend to take that out with the line of credit. As we move to next year and have that $300 million maturity and start to grow our investments, we'll start to look at the debt market as we move into 2025 to term out what's on the line of credit. But it'd be, like I said, a little over 200 spread right now. Hopefully, treasuries come down as people's hopes and so that we're maybe a little lower when we go to need to issue in 2025.

Okay. And then last one for me, in the prepared remarks, you guys talked about the 71% payout ratio of AFFO. How much cushion do you guys have right now to keep the dividend at that $0.285 per month and not have to raise it to keep it in REIT compliance? Or is that something the Board's going to have to address here in the near term?

I mean, we always look at taxable income relative to our dividend. We're in good shape with respect to that. I think we're going to keep on the cadence of keeping in that range of AFFO per share payout ratio. And I think as we move forward, we can comfortably do that with our taxable income. So I don't think there's pressure, but I think we will grow the dividend, can measure it with increase in AFFO per share and kind of keep at that same percentage.

Okay. That's helpful. Thanks, guys.

Thanks.

Thanks, Rob.

Thank you. Our next question comes from Upal Rana. Your line is now - of KeyBanc Capital Markets. Your line is now open.

Great. Thank you for taking my questions. With most of the vacant dispositions largely complete, what's the next bucket of dispositions that you may be targeting?

I would say, and we've always maintained that the education is not strategic long term for us, and we'll look at that. And likewise, we've said, as that market returns, we want to lower exposure to theater. So I would say those two buckets, operating theaters, meaning those that have leased and have an income stream and our education, if we're looking to recycle.

Great. Thank you. And then appreciate your comments on the AMC restructuring, but I'm assuming this now takes any kind of risk off the table with AMCs escalator slated to hit next year.

We didn't think there was any risk to it anyway, so yes. We feel very confident with the strength of our portfolio that there was no risk to that, but yes, I mean, I think what this does is those people who were worried about bankruptcy risk or a wall of maturity hitting, forcing that, that has removed that issue.

Okay, great. Thanks. And then I was wondering, who's buying the vacant theaters? And what are the plans with that kind of space? Will that space, you can get redeveloped into updated theaters or other uses? I just want to kind of see if there's any read-through on the ongoing consolidation across the theater industry.

Yes. I don't think -- this is Greg. I don't think you can take much of a read-through. So over the past -- since COVID, we've sold 21 theaters. About a third of them are being used as theaters, and they tend to be a local smaller operator that sees an opportunity because it's already a theater and they can buy some of the equipment. We've had others used for industrial, office space, multifamily, retail, so redevelopment plays. It really does depend on the location of the real estate, and that's the way we market them. We never market them solely as theaters. We just put out a marketing piece and the market decides what the highest and best use is for the theater.

Okay. Great. Thank you.

Thank you.

Thank you. This concludes the question-and-answer session. I would now like to turn it over to Greg Silvers, Chairman and CEO.

Thank you, everyone. We appreciate your time and attention, and look forward to talking to you in the near future. Thanks, everyone.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.