0001045450epr:McHenryMDSkiAreaMember2020-12-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ý☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20182020
or
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-13561
EPR PROPERTIES
(Exact name of registrant as specified in its charter)

Maryland43-1790877
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)
909 Walnut Street,
Suite 200
Kansas City, Missouri
64106
Kansas City,Missouri64106
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (816) 
Registrant’s telephone number, including area code:(816)472-1700
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common shares, of beneficial interest, par value $.01$0.01 per shareEPRNew York Stock Exchange
5.75% Series C cumulative convertible preferred shares, of beneficial interest, par value $.01$0.01 per shareEPR PrCNew York Stock Exchange
9.00% Series E cumulative convertible preferred shares, of beneficial interest, par value $.01$0.01 per shareEPR PrENew York Stock Exchange
5.75% Series G cumulative redeemable preferred shares, of beneficial interest, par value $.01$0.01 per shareEPR PrGNew York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.      Yes  ý☒    No  ¨☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.     Yes   ¨☐    No  ý☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes  ý☒    No  ¨☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ý☒    No  ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ý☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerý☒Accelerated filer¨☐
Non-accelerated filer
¨
☐		Smaller reporting company¨☐
Emerging growth company
¨

☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark ifwhether the registrant has elected notfiled a report on and attestation to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)its management's assessment of the Exchange Act. ¨effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes  ¨☐    No  ý☒
The aggregate market value of the common shares of beneficial interest (“common shares”) of the registrant held by non-affiliates, based on the closing price on the last business day of the registrant’s most recently completed second fiscal quarter, as reported on the New York Stock Exchange, was $4,853,135,832.$2,477,018,949.
At February 27, 2019,24, 2021, there were 74,905,631 common74,766,645 common shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement for the 20192021 Annual Meeting of Shareholders to be filed with the Commission pursuant to Regulation 14A are incorporated by reference in Part III of this Annual Report on Form 10-K.



CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
With the exception of historical information, certain statements contained or incorporated by reference herein may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), such as those pertaining to our acquisition or dispositionthe uncertain financial impact of properties,the COVID-19 pandemic, our capital resources future expenditures for development projects,and liquidity, our expected cash flows and liquidity, continuing waivers of financial covenants related to our bank credit facilities and private placement notes, the performance of our customers, including AMC and Regal, our expected cash collections, expected use of proceeds from dispositions and our results of operations and financial condition. The estimates presented herein are based on the Company's current expectations and, given the current economic uncertainty, there can be no assurances that the Company will be able to continue to comply with other applicable covenants under its debt agreements, which could materially impact actual performance. Forward-looking statements involve numerous risks and uncertainties, and you should not rely on them as predictions of actual events. There is no assurance the events or circumstances reflected in the forward-looking statements will occur. You can identify forward-looking statements by use of words such as “will be,” “intend,” “continue,” “believe,” “may,” “expect,” “hope,” “anticipate,” “goal,” “forecast,” “pipeline,” “estimates,” “offers,” “plans,” “would,”“would” or other similar expressions or other comparable terms or discussions of strategy, plans or intentions in this Annual Report on Form 10-K. In addition, references to our budgeted amounts and guidance

Forward-looking statements necessarily are forward-looking statements.

Factors that could materially and adversely affect us include, but are not limited to, the factors listed below:

Global economic uncertainty and disruptions in financial markets;
Reduction in discretionary spending by consumers;
Adverse changes in our credit ratings;
Fluctuations in interest rates;
Defaults in the performance of lease terms by our tenants;
Defaults by our customers and counterpartiesdependent on their obligations owed to us;
A borrower's bankruptcyassumptions, data or default;
Our ability to renew maturing leases on terms comparable to prior leases and/or our ability to locate substitute lessees for these properties on economically favorable terms;
Risks of operating in the entertainment industry;
Our ability to compete effectively;
Risks associated with a single tenant representing a substantial portion of our lease revenues;
The ability of our public charter school tenants to comply with their charters and continue to receive funding from local, state and federal governments, the approval by applicable governing authorities of substitute operators to assume control of any failed public charter schools and our ability to negotiate the terms of new leases with such substitute tenants on acceptable terms;
The ability of our build-to-suit tenants to achieve sufficient operating results within expected timeframes and therefore have capacity to pay their agreed upon rent;
The ability of our early childhood education tenant, Children's Learning Adventure, to successfully transition our properties to one or more third party operators;
Risks associated with potential criminal proceedings against one of our waterpark mortgagors and certain related parties, which could negatively impact the likelihood of repayment of the related mortgage loans secured by the waterpark and other collateral;
Risks relating to our tenants' exercise of purchase options or borrowers' exercise of prepayment options related to our education properties;
Risks associated with our dependence on third-party managers to operate certain of our recreation anchored lodging properties;
Risks associated with our level of indebtedness;
Risks associated with use of leverage to acquire properties;
Financing arrangements that require lump-sum payments;
Our ability to raise capital;
Covenants in our debt instruments that limit our ability to take certain actions;
The concentration and lack of diversification of our investment portfolio;
Our continued qualification as a real estate investment trust for U.S. federal income tax purposes and related tax matters;
The ability of our subsidiaries to satisfy their obligations;
Financing arrangements that expose us to funding or purchase risks;
Our reliance on a limited number of employees, the loss of which could harm operations;

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Risks associated with the employment of personnel by managers of our recreation anchored lodging properties;
Risks associated with security breaches and other disruptions;
Changes in accounting standardsmethods that may adversely affect our financial statements;
Fluctuations in the value of real estate income and investments;
Risks relating to real estate ownership, leasing and development, including local conditions such as an oversupply of spacebe incorrect or a reduction in demand for real estate in the area, competition from other available space, whether tenants and users such as customers of our tenants consider a property attractive, changes in real estate taxes and other expenses, changes in market rental rates, the timing and costs associated with property improvements and rentals, changes in taxation or zoning laws or other governmental regulation, whether we are able to pass some or all of any increased operating costs through to tenants or other customers, and how well we manage our properties;
Our ability to secure adequate insurance and risk of potential uninsured losses, including from natural disasters;
Risks involved in joint ventures;
Risks in leasing multi-tenant properties;
A failure to comply with the Americans with Disabilities Act or other laws;
Risks of environmental liability;
Risks associated with the relatively illiquid nature of our real estate investments;
Risks with owning assets in foreign countries;
Risks associated with owning, operating or financing properties for which the tenants', mortgagors' or our operations may be impacted by weather conditions and climate change;
Risks associated with the development, redevelopment and expansion of properties and the acquisition of other real estate related companies;
Our ability to pay dividends in cash or at current rates;
Fluctuations in the market prices for our shares;
Certain limits on changes in control imposed under law and by our Declaration of Trust and Bylaws;
Policy changes obtained without the approval of our shareholders;
Equity issuances that could dilute the value of our shares;
Future offerings of debt or equity securities, which may rank senior to our common shares;
Risks associated with changes in foreign exchange rates; and
Changes in laws and regulations, including tax laws and regulations.

Ourimprecise. These forward-looking statements represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Many of the factors that will determine these items are beyond our ability to control or predict. For further discussion of these factors see "Summary Risk Factors" below and Item 1A - "Risk Factors" in this Annual Report on Form 10-K.


For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K or the date of any document incorporated by reference herein. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except as required by law, we do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances after the date of this Annual Report on Form 10-K.



SUMMARY RISK FACTORS


Our business is subject to varying degrees of risk and uncertainty. You should carefully review and consider the full discussion of our risk factors in Item 1A - “Risk Factors” in this Annual Report on Form 10-K. If any of these risks occur, our business, financial condition or results of operations could be materially and adversely affected. Set forth below is a summary list of the principal risk factors relating to our business:

•Risks associated with the current outbreak of the novel coronavirus, or COVID-19, or the future outbreak of any other highly infectious or contagious diseases;
•Global economic uncertainty and disruptions in financial markets;
•Reduction in discretionary spending by consumers;
•Covenants in our debt instruments that limit our ability to take certain actions;
•Adverse changes in our credit ratings;
•Fluctuations in interest rates;
•Defaults in the performance of lease terms by our tenants;
•Defaults by our customers and counterparties on their obligations owed to us;
•A borrower's bankruptcy or default;
•Our ability to renew maturing leases on terms comparable to prior leases and/or our ability to locate substitute lessees for these properties on economically favorable terms;
•Risks of operating in the experiential real estate industry;
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•Our ability to compete effectively;
•Risks associated with four tenants representing a substantial portion of our lease revenues;
•The ability of our build-to-suit tenants to achieve sufficient operating results within expected time-frames and therefore have capacity to pay their agreed upon rent;
•Risks associated with our dependence on third-party managers to operate certain of our properties;
•Risks associated with our level of indebtedness;
•Risks associated with use of leverage to acquire properties;
•Financing arrangements that require lump-sum payments;
•Our ability to raise capital;
•The concentration and lack of diversification of our investment portfolio;
•Our continued qualification as a real estate investment trust for U.S. federal income tax purposes and related tax matters;
•The ability of our subsidiaries to satisfy their obligations;
•Financing arrangements that expose us to funding and completion risks;
•Our reliance on a limited number of employees, the loss of which could harm operations;
•Risks associated with the employment of personnel by managers of certain of our properties;
•Risks associated with the gaming industry;
•Risks associated with gaming and other regulatory authorities;
•Delays or prohibitions of transfers of gaming properties due to required regulatory approvals;
•Risks associated with security breaches and other disruptions;
•Changes in accounting standards that may adversely affect our financial statements;
•Fluctuations in the value of real estate income and investments;
•Risks relating to real estate ownership, leasing and development, including local conditions such as an oversupply of space or a reduction in demand for real estate in the area, competition from other available space, whether tenants and users such as customers of our tenants consider a property attractive, changes in real estate taxes and other expenses, changes in market rental rates, the timing and costs associated with property improvements and rentals, changes in taxation or zoning laws or other governmental regulation, whether we are able to pass some or all of any increased operating costs through to tenants or other customers, and how well we manage our properties;
•Our ability to secure adequate insurance and risk of potential uninsured losses, including from natural disasters;
•Risks involved in joint ventures;
•Risks in leasing multi-tenant properties;
•A failure to comply with the Americans with Disabilities Act or other laws;
•Risks of environmental liability;
•Risks associated with the relatively illiquid nature of our real estate investments;
•Risks with owning assets in foreign countries;
•Risks associated with owning, operating or financing properties for which the tenants', mortgagors' or our operations may be impacted by weather conditions, climate change and natural disasters;
•Risks associated with the development, redevelopment and expansion of properties and the acquisition of other real estate related companies;
•Our ability to pay dividends in cash or at current rates;
•Fluctuations in the market prices for our shares;
•Certain limits on changes in control imposed under law and by our Declaration of Trust and Bylaws;
•Policy changes obtained without the approval of our shareholders;
•Equity issuances that could dilute the value of our shares;
•Future offerings of debt or equity securities, which may rank senior to our common shares;
•Risks associated with changes in foreign exchange rates; and
•Changes in laws and regulations, including tax laws and regulations.

Market and Industry Data
This Annual Report on Form 10-K contains market and industry data and forecasts that have been obtained from publicly available information, various industry publications, and other published industry sources. We have not
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independently verified the information from third party sources and cannot make any representation as to the accuracy or completeness of such information. None of the reports and other materials of third party sources referred to in this Annual Report on Form 10-K were prepared for use in, or in connection with, this Annual Report on Form 10-K.
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TABLE OF CONTENTS
 
Page
Page
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.

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PART I


Item 1. Business


General


EPR Properties (“we,” “us,” “our,” “EPR” or the “Company”) was formed on August 22, 1997 as a Maryland real estate investment trust (“REIT”), and an initial public offering of our common shares of beneficial interest (“common shares”) was completed on November 18, 1997. Since that time, the Company has grown intowe have been a leading specialty REIT with an investment portfolio that includes primarily entertainment,net lease investor in experiential real estate, venues which create value by facilitating out of home leisure and recreation experiences where consumers choose to spend their discretionary time and education properties. Themoney. We focus our underwriting of ourexperiential property investments is centered on key industry and property cash flow criteria, as well as the credit metrics of our tenants and customers. As further explained under “Growth Strategies” below,

In 2019, we began the implementation of a strategy focused solely on future growth in experiential properties. We believe experiential is an enduring sector of the real estate industry and that our investments are also guided by a focus on inflection opportunitiesproperties in this sector, industry relationships and the knowledge of our management, provide us with a competitive advantage in providing capital to operators of these types of properties. We believe this focused niche approach aligns with long-term trends in consumer demand and offers the potential for higher growth and better yields. In pursuit of this strategy, we sold our remaining charter school portfolio in the fourth quarter of 2019, as well as a portion of our private school and early education portfolios in the fourth quarter of 2020. Our remaining Education portfolio, consisting of early childhood education centers and private schools, continues as a legacy investment and provides additional geographic and property diversity.

The outbreak of the COVID-19 pandemic severely impacted global economic activity during 2020 and caused significant volatility and negative pressure in financial markets, which is expected to continue into 2021. The global impact of the outbreak rapidly evolved and many jurisdictions within the United States and abroad reacted by instituting quarantines, mandating business and school closures and restricting travel. As a result, the COVID-19 pandemic severely impacted experiential real estate properties, given that such properties involve congregate social activity and discretionary consumer spending. During 2020, the COVID-19 pandemic negatively affected our business, and could continue to have a material adverse effect on our financial condition, results of operations and cash flows. The continuing impact of the COVID-19 pandemic on our business will depend on several factors, including, but not limited to, the scope, severity and duration of the pandemic, the actions taken to contain the outbreak or mitigate its impact, the development and distribution of vaccines and the efficacy of those vaccines, the public’s confidence in the health and safety measures implemented by our tenants and borrowers, and the direct and indirect economic effects of the outbreak and containment measures, all of which are associated with or supportuncertain and cannot be predicted.

While the pandemic has created a very challenging environment, consumers have historically demonstrated an enduring uses, excellent executions, attractive economicsdesire for out-of-home congregate experiences. We expect that as COVID-19 vaccinations reach critical mass, business and an advantageous market position.school closures will be lifted and consumers will return to the leisure and recreation activities our properties offer. We believe that this is further supported by the fact that our customers offer popular and affordable entertainment and social outlet options, particularly through our theatres, eat & play and cultural venues. Additionally, we offer regional destinations (experiential lodging, ski, attractions and gaming properties) which are drive-to locations that do not require air travel.


We are a self-administered REIT. As of December 31, 2018,2020, our total assets were approximately $6.1approximately $6.7 billion (after accumulated depreciation of approximately $0.9$1.1 billion). Our investments are generally structured as long-term triple-net leases that require the tenants to pay substantially all expenses associatedassociated with the operation and maintenance of the property, or as long-term mortgages with economics similar to our triple-net lease structure.


Our total investments (a non-GAAP financial measure) were approximately $6.9approximately $6.5 billion at December 31, 2018.2020. See "Non-GAAPItem 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures" for the calculation of total investments and reconciliation of total investments to "Total assets"
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in the consolidated balance sheet at December 31, 20182020 and 2017.2019. We currently group our investments into fourtwo reportable operating segments: Entertainment, Recreation, EducationExperiential and Other. Our total investments atEducation. As of December 31, 2018 consisted of interests in the following:

$3.02020, our Experiential investments comprised $5.9 billion, or 43% related to entertainment properties, which includes megaplex theatres, entertainment retail centers (centers typically anchored by an entertainment component such as a megaplex theatre91%, and containing other entertainment-related or retail properties), family entertainment centers and other retail parcels;

$2.3our Education investments comprised $0.6 billion, or 33% related to recreation properties, which includes ski properties, attractions, golf entertainment complexes and other recreation facilities;

$1.4 billion or 21% related to education properties, which consists9%, of our total investments in public charter schools, early education centers and K-12 private schools; and

$194.9 million or 3% related to other properties, which relates to the Resorts World Catskills (formerly Adelaar) casino and resort project in Sullivan County, New York.

We believe entertainment, recreation and education are highly enduring sectors. A more detailed description of the real estate industry and that, as a result of our focus on properties inproperty types included within these sectors, industry relationships and the knowledge of our management, we have a competitive advantage in providing capital to operators of these types of properties. We believe this focused niche approach, particularly as it relates to experiential real estate, aligns with the trends in consumer demand, and offers the potential for higher growth and better yields.segments is provided below.


We believe our management’s knowledge and industry relationships have facilitated favorable opportunities for us to acquire, finance and lease properties. Historically,Prior to the pandemic, our primary challenges have beenwere locating suitable properties, negotiating favorable lease or financing terms, and managing our real estate portfolio as we have continued to grow. During the pandemic, our focus has been addressing all challenges brought on by the pandemic including monitoring customer status and working with customers to help ensure long-term stability and assisting them in establishing re-opening plans.


WeGoing forward, we are particularly focused on property categories which allow us to use our experience to mitigate some of the risks inherent in a changing economic environment. We cannot provide any assurance that any such potential investment or acquisition opportunities will arise in the near future, or that we will actively pursue any such opportunities.



Although we are primarily a long-term investor, we may also sell assets if we believe that it is in the best interest of our shareholders or pursuant to contractual rights of our tenants or our customers.


EntertainmentExperiential


As of December 31, 2018, our Entertainment segment consisted of investments in megaplex theatres, entertainment retail centers, family entertainment centers and other retail parcels totaling approximately $3.0 billion with interests in:
152 megaplex theatres located in 35 states;
seven entertainment retail centers (which included seven additional megaplex theatres) located in three states, and Canada;
11 family entertainment centers located in six states;
land parcels leased to restaurant and retail operators adjacent to several of our theatre properties;
$20.0 million in construction in progress primarily for real estate development and redevelopment of megaplex theatres as well as other retail redevelopment projects; and
$4.5 million in undeveloped land inventory.

As of December 31, 2018,2020, our Experiential segment included total investments of approximately $5.9 billion in the following property types (owned or financed):
•178 theatre properties;
•55 eat & play properties (including seven theatres located in entertainment districts);
•18 attraction properties;
•13 ski properties;
•six experiential lodging properties;
•one gaming property;
•three cultural properties; and
•seven fitness & wellness properties.

As of December 31, 2020, our owned Experiential real estate portfolio of megaplex theatres consisted of approximately 11.319.3 million square feet and was 100%93.8% leased and our remaining owned entertainment real estate portfolio consisted of 2.1included $57.6 million square feetin property under development and was 90% leased. The combined owned entertainment real estate portfolio consisted of 13.4$20.2 million square feet and was 98% leased. Our owned theatre properties are leased to 15 different leading theatre operators. A significant portion of our total revenue was derived from rental payments by American Multi-Cinema, Inc. ("AMC"). For the year ended December 31, 2018, approximately $115.8 million or 16.5% of the Company's total revenues were derived from rental payments by AMC.in undeveloped land inventory.


Theatres
A significant portion of our entertainment assets consistExperiential portfolio consists of modern megaplex theatres. The COVID-19 pandemic has had a severe impact on the theatre industry. Many theatre locations remain closed due to local restrictions or operator decision to close as a result of the impact of the COVID-19 pandemic, specifically the decision by many major studios to delay the release of blockbuster movies in hopes that larger audiences will be available as additional markets open. Due to these closures and the lack of content to exhibit, our tenants have required significant rent deferrals and, in some circumstances, restructured lease agreements. While studios pushed the majority of movie content to 2021, certain studios chose hybrid content release strategies in support of their direct-to-consumer streaming services. In these cases, the standard movie release strategy referred to as “release windows” was set aside as movies were either simultaneously released in theatres and through streaming services, or simply released directly through streaming services. While these decisions were made as a result of the pandemic, it is yet to be determined how the industry will again coalesce around a standard release strategy in a post-pandemic environment.

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Several theatre tenants have been placed on a cash-basis for revenue recognition purposes due to the ongoing uncertainty. During 2020, we experienced vacancies at certain theatre properties and have determined to either sell these properties or manage them through a third-party manager. As theatres continue to be impacted by the pandemic, we will evaluate the best strategy for any future vacancies on a property-by-property basis.

The modern megaplex theatre provides a significantlygreatly enhanced audio and visual experience for patrons. Prior to the patrons versus other formats. A significantpandemic, there was a trend currently exists among national and local exhibitors to further enhance the customer experience. These enhancements include reserved, luxury seating and expanded food and beverage offerings, including the addition of alcohol and more efficient point of sale systems. The evolution of the theatre industry over the last 20 years from the sloped floor theatre to the megaplex stadium theatre to the expanded amenity theatre has demonstrated that exhibitors and their landlords are willing to make investments in their theatres to take the customer experience to the next level.


Moviegoing has been a dominant out-of-home entertainment option for decades, with over 1.2 billion tickets sold in North America during 2019 according to the Motion Picture Association (MPA) 2019 Theme Report. We believe that the evolution in theatres and enhanced customer experience will bring customers back to enjoy film exhibition in a post-pandemic environment. While consumers have the option of watching streaming content at home, data has shown that theatre exhibition and streaming options have successfully coexisted. In fact, a survey published by EY (The Relationship Between Movie Theater Attendance and Streaming Behavior - February, 2020) illustrated that the most frequent moviegoers also spend the most time streaming. This is in part likely due to the fact that the majority of content streamed in-home is series-based content. Additionally, theatre exhibition remains a critical initial distribution platform for studios to fully monetize titles.

Ultimately, the pace of recovery and stabilization of theatre exhibition will be dependent upon several factors including the success of the deployment of vaccines, consumer confidence in attending theatres and studios' willingness to broadly release content to theatres.

While theatres are the largest property type in our Experiential segment currently, it is expected that over time it will become a smaller percent of the portfolio. We expect this to occur as we grow in other target experiential property types and possibly through dispositions of theatre properties.

As exhibitors improveof December 31, 2020, our owned theatre properties were leased to 17 different leading theatre operators. A significant portion of our total revenue was from Cinemark USA, Inc. ("Cinemark"), American Multi-Cinema, Inc. ("AMC") and Regal Entertainment Group ("Regal"). For the customer experienceyear ended December 31, 2020, approximately $42.1 million or 10.1%, $30.0 million or 7.2% and $13.1 million or 3.1% of the Company's total revenue was from Cinemark, AMC and Regal, respectively.

Eat & Play
The emergence of the "eatertainment" category has inspired an increasing number of successful concepts that appeal to consumers by providing good food and high-quality entertainment options all at one location. Our eat & play portfolio includes golf entertainment complexes, entertainment districts and family entertainment centers.

Our golf entertainment complexes combine golf with more spaciousentertainment, competition and comfortable seating options, they are required to make physical changes to the existing seating configurations that typically result in a significant loss of existing seats. It was once a concern that such seat loss would be a negative to theatres that thrive on opening weekend business of new movie releases; however, customers have responded favorably to these changes. Exhibitors are learning that enhanced amenities are changing the patrons’ movie-going habits resulting in significantly increased seat utilization and increased food and beverage revenue.

As exhibitors pursue the renovation of theatresservice, and are leased to, or we have mortgage receivables from, Topgolf USA ("Topgolf"). By combining interactive entertainment with enhanced amenities, we are working with our tenants, generally toward the end of their primary lease terms, to extend the terms of their leases beyond the initial option periods, finance improvements where applicablequality food and to recapture land where seat count reductions alleviate parking requirements. In conjunction with these changes, we may also make changesbeverage and a long-lived recreational activity, Topgolf provides an innovative, enjoyable and repeatable customer experience. Due to the rental ratespandemic, our TopGolf locations were closed for a portion of 2020 based on local restrictions. However, these locations have reopened and are recovering quickly as customers return to better reflect the existing market demands and additional capital invested. In addition to positioning expiring theatre assets for continued success, the renovation of these assets creates an opportunity to diversify the Company's tenant base into other entertainment or retail uses adjacent to a movie theatre.

The theatre box office had a record year in 2018 with revenues of approximately $11.9 billion per Box Office Mojo, an increase of over 7% versus the prior year and an increase of over 4% versus the previous record year set in 2016.experience this interactive activity. We expect the development of new megaplex theatres and the conversion or partial conversion of existing theatres to enhanced amenity formats to continue in the United States and abroad over the long-term. As a resultto pursue select opportunities related to golf entertainment complexes. A significant portion of our total revenue was from Topgolf, which totaled approximately $80.7 million, or 19.5%, of the significantCompany's total revenue for the year ended December 31, 2020.

capital commitment involved in building new megaplex theatres and redeveloping existing theatres, as well as the experience and industry relationships of our management, we believe we will continue to have opportunities to provide capital to exhibition businesses in the future.


We also continue to seek opportunities for the acquisition, financing or development of additionalentertainment districts. Entertainment districts are restaurant, retail and other entertainment venues around our existing portfolio.typically anchored by a megaplex theatre. The opportunity to capitalize on the traffic generation of our existing market-dominant theatres to create
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entertainment retail centers (“ERCs”)districts not only strengthens the execution of the megaplex theatre but adds diversity to our tenant and asset base. We have and will continue to evaluate our existing portfolio for additional development of entertainment, retail and retailrestaurant density, and we will also continue to evaluate the purchase or financing of existing ERCsentertainment districts that have demonstrated strong financial performance and meet our quality standards. The leasing and property management requirements of our ERCsentertainment districts are generally met through the use ofusing third-party professional service providers.


Our family entertainment center operators offer a variety of entertainment options including bowling, bocce ball and karting.

We will continue to seek opportunities for the acquisition, financing or development of or acquisition of, other entertainment relatedsuch properties that leverage our expertise in this area.


Recreation

As of December 31, 2018, our Recreation segment consisted of investments in ski properties, attractions, golf entertainment complexes and other recreation properties totaling approximately $2.3 billion with interests in:
12 ski properties located in seven states;
21 attractions located in 13 states;
34 golf entertainment complexes located in 19 states;
13 other recreation properties located in six states; and
$249.9 million in construction in progress primarily for the development of an indoor waterpark hotel at the Resorts World Catskills casino and resort project located in Sullivan County, New York and golf entertainment complexes.
As of December 31, 2018, our owned recreation real estate portfolio was 100% leased.

Attractions
Our attractions portfolio consists primarily of waterparks and amusement parks, each of which draw a diverse segment of customers. Prior to the pandemic, outdoor waterparks had historically experienced attendance growth since their inception in 1977. Consumer demand for indoor waterparks was also increasing pre-pandemic, making a trip to the waterpark accessible in all four seasons. Today’s amusement parks offer themed experiences designed to appeal to all ages.

Our attraction operators continue to deliver innovative and compelling attractions along with high standards of service, making our attractions a day of fun that is accessible for families, teens, locals and tourists. These attractions offer experiences designed to appeal to all ages while remaining accessible in both cost and proximity. As the attractions industry continues to evolve, innovative technologies and concepts are redefining the attractions experience.

Due to the pandemic, our attraction properties were closed for all or a portion of 2020 based on local restrictions with certain properties still required to be closed. We believe that demand for attractions will normalize in a post-pandemic environment. Our attraction properties are leased to, or we have mortgage notes receivable from, five different operators. We expect to continue to pursue opportunities in this area.

Ski
Our ski properties provideportfolio provides a sustainable advantage for the experience consciousexperience-oriented consumer, providing outdoor entertainment in the winter and, in some cases, year-round. All of the ski properties that serve as collateral for our mortgage notes in this area, as well as our five owned properties, offer snowmaking capabilities and provide a variety of terrains and vertical drop options. We believe that the primary appeal of our ski properties lies in the convenient and reliable experience consumers can expect. Given that all of our ski properties are located near major metropolitan areas, they offer skiing, snowboarding and other activities without the expense, travel, or lengthy preparations of remote ski resorts. Furthermore, advanced snowmaking capabilities increase the reliability of the experience during the winter versus other ski properties that do not have such capabilities. Our ski properties were minimally impacted by the pandemic in 2020 because the ski season was substantially over when pandemic restrictions began. Additionally, in 2021, due to the outdoor nature of the activity and the convenient location of our properties, we believe that our ski portfolio will perform well through the pandemic. Our ski properties are leased to, or we have mortgage notes receivable from,from, five differentdifferent operators. We expect to continue to pursue opportunities in this area.


Our attraction portfolio consistsExperiential Lodging
Experiential lodging meets the needs of waterparks (including related lodging), amusement parks and an interactive museum, each of which drawconsumers by providing a diverse segment of customers. Our attraction operators continue to deliver innovative and compelling attractions along with high standards of service, making our attractions a day of fun that's accessible for families, teens, locals and tourists. These attractions offer experiences designed to appeal to all ages while remaining accessible in both cost and proximity. As many waterparks are growing from single-day attendance to a destination getaway, we believe indoor waterpark hotels increase the four-season appeal at many resorts. Our attraction properties are leased to, or we have mortgage notes receivable from, eight different operators. We expect to continue to pursue opportunities in this area.


Our golf entertainment complexes combine golfconvenient, central location that combines high-quality lodging amenities with entertainment, competitionrecreation and foodleisure activities. The appeal of these properties attracts multiple generations at once. Due to the pandemic, our experiential lodging property in Sullivan County, New York has been closed by state mandate since March of 2020 and beverage service, and are leasedour two locations in Florida were required to or under mortgage with, Topgolf. By combining an interactive entertainment and food and beverage experience withbe closed for a long-lived recreational activity, weportion of the second quarter of 2020. Additionally, travel restrictions negatively impacted our locations in Florida when they were able to reopen. We believe Topgolf provides an innovative, enjoyable and repeatable customer experience. We expect to continue to pursue opportunities related to golf entertainment complexes.

Our other recreation portfolio consists of both classic and innovative activities and includes investmentsthat demand for experiential lodging will return in fitness and wellness properties, recreation anchored lodging and indoor sky-diving facilities.a post-pandemic environment. Our investments in recreation anchoredexperiential lodging (including lodging associated with indoor waterparks included in our attraction portfolio) have been typically structured using triple-net leases, or morehowever, we currently operate these three properties (two of which are included in an unconsolidated joint venture) through a traditional REIT lodging structures.structure. In the traditional REIT lodging structure, we hold qualified
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lodging facilities under the REIT and we separately hold the operations of the facilities in taxable REIT subsidiaries ("TRSs") which are facilitated by management agreements with eligible independent contractors. We expect to continue to pursue opportunities for investments in recreation anchored lodging under either triple-net leases or more traditional REIT lodging structures.experiential lodging.


We will continueGaming
Our strategic focus in our gaming portfolio is on casino resorts and hotels leased to leading operators with a strong regulatory track record that seek opportunities forto drive consumer loyalty and value through quality customer experiences, superior service, world-class affinity programs and continuous innovation on and off the development of, or acquisition of, other recreation related properties that leverage our expertise in this area.

Education

As of December 31, 2018, our Education segment consisted of investments in public charter schools, early education centersgaming floor. Additionally, we focus on casino resorts and K-12 private schools totaling approximately $1.4 billion with interests in:
59 public charter schools located in 19 states;
69 early education centers located in 21 states;
15 private schools located in nine states;
$17.6 million in construction in progress for real estate development or expansions of public charter schools and early education centers; and
$9.6 million in undeveloped land inventory.

As of December 31, 2018, our owned education real estate portfolio consisted of approximately 4.7 million square feet and was 98% leased. This includes properties operated by Children's Learnings Adventure USA, LLC (“CLA”) as 100% leased, as further discussed in Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Recent Developments”.

Public charter schools are tuition-free, independent schools that are publicly funded by local, state and federal tax dollars based on enrollment. Driven by the need to improve the quality of public education and provide more school choices in the U.S., public charter schools are one of the fastest growing segments of the multi-billion dollar educational facilities sector, and we believe a critical need exists for the financing of new and refurbished educational facilities. To meet this need, we have established relationships with public charter school operators, authorizers and developers across the country. Public charter schools are operated pursuant to charters granted by various state or other regulatory authorities and are dependent upon funding from local, state and federal tax dollars. Like public schools, public charter schools are required to meet both state and federal academic standards. We have 44 different operators for our owned public charter schools.

Various government bodieshotels that provide educational funding have pressurea wide array of experiential offerings outside of lodging and state-of-the-art gaming. Through live entertainment, various recreational opportunities, dining options and night clubs, the combination of amenities appeals to reduce their spending budgetsa broader demographic. In 2020, regional gaming properties demonstrated stronger resilience versus Las Vegas strip casinos, as they are not dependent on air travel and have reduced educational funding in some cases and may continue to reduce educational funding in the future. This can impact our tenants' operations and potentially their ability to pay our scheduled rent. However, these reductions differ state by state and have historically been more significant at the post-secondary education level than at the K-12 level that our tenants serve. Furthermore, while there can be no assurance as to the level of these cuts, we analyze each state's fiscal situation and commitment to the charter school movement before providing financing in a new state, and also factor in anticipated reductions (as applicable) in the states in which we do decide to do business.


As with public charter schools, the Company's expansion into both early education centers and private schools is supported by strong unmet demand, and we expect to increase our investment inconventions, both of these areas.

Early education centers continue to see demand due to the proliferation of dual income families and the increasing emphasis on early childhood education, beyond traditional daycare. There is increased demand for curriculum-based, child-centered learning. We believe this property type is a logical extension of our education platform and allows us to increase our diversity and geographical reach with these assets. We have 11 different operators for our owned early education centers.

We believe K-12 private schools havewhich saw significant growth potential when they have differentiated, high quality offerings. Many private schools in large urban and suburban areas are at capacity and have large waiting lists making admission more difficult. The demand for nonsectarian private education has increased in recent years as parents and students become more focused on the comprehensive impact of a strong school environment.

We will continue to seek opportunities for the development of, or acquisition of, other education related properties that leverage our expertise in this area.

Many of our education lease and mortgage agreements contain purchase or prepayment options whereby the tenant or borrower can acquire the property or prepay the mortgage loan for a premium over the total development cost at certain pointsdeclines during the terms of the agreements. If these properties meet certain criteria, the tenants may be able to obtain bond or other financing at lower rates and therefore be motivated to exercise these options. We do not anticipate that all of these options will be exercised but cannot determine at this time the amount of such option exercises. Additionally, it is difficult to forecast when these options will be exercised, which can create volatility in our earnings. In accordance with GAAP, prepayment penalties related to mortgage agreements are included in mortgage and other financing income and are included in Funds From Operations ("FFO") as adjusted (See Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Funds From Operations” for a discussion of FFO and FFO as adjusted ("FFOAA"), which are non-GAAP measures). However, if a tenant exercises the option to purchase a property under lease, GAAP requires that a gain on sale be recognized for the amount of cash received over the carrying value of the property and gains on sale are typically excluded from FFOAA. Accordingly, for consistency in presentation and with the wording and intent of the lease provisions, we treat the premium over the total development cost (i.e. the undepreciated cost) as a termination fee and include such fees in FFOAA, and only the difference between the total development cost and the carrying value is treated as gain on sale and excluded from FFOAA.year.


During the year ended December 31, 2018, we received prepayment of $38.1 million on five mortgage notes receivable that were secured by four public charter schools and land located in Arizona and we received associated prepayment fees of $3.4 million. In addition, pursuant to a tenant purchase option, we completed the sale of one public charter school located in California for net proceeds of $12.0 million. In connection with this sale, we recognized a gain on sale of $1.9 million, which has been included in termination fees in FFOAA per the methodology discussed above.


As of December 31, 2018, an estimate of the number of education properties potentially impacted by option exercises, the total development cost and the total potential amount of the prepayment penalties or lease termination fees2020, our investments in the option period by year are as follows (dollars in thousands):
Year Option Exercisable Number of Education Properties Total Development Cost Total Potential Termination Fees/Prepayment Penalties in Option Period
2019 10 $122,833
 $19,152
2020 15 126,896
 22,967
2021 13 131,709
 22,103
2022 4 40,160
 8,915
2023 — —
 —
Thereafter 4 155,888
 22,746

Other

As of December 31, 2018, our Other segmentgaming consisted primarily of land under ground lease property under development and land held for development totaling approximately $194.9 million related to the Resorts World Catskills casino and resort project in Sullivan County, New York, which we previously referred to as the Adelaar casino and resort project.York. Our ground lease tenant is expected to ultimately investhas invested in excessexcess of $925.0$930.0 million in thethe construction of the casino and resort project, and the casino first opened for business in February 2018. We will continue to pursue opportunities for investment in gaming under triple net lease structures or mortgages.


Cultural
Our cultural investments seek to engage consumers and create memorable experiences and are evolving to offer immersive and interactive exhibits that encourage repeat visits. Combining an opportunity to experience animals, art or history with a congregate social experience, cultural venues, such as zoos, aquariums and museums, are reemerging as an entertainment option. As appreciation for the importance of leisure time is growing, cultural venues are broadening their appeal to reach a variety of customers.

Desiring to be a preeminent choice in what is now known as location-based experiences, several trends have developed among cultural venues. Many are utilizing new technology, personalizing the guest experience and implementing an element of play that was previously absent. In making new investments in this property type, we will continue to identify the locations and tenants that execute well on these trends and have a history of strong attendance. City Museum in St. Louis is one of our properties and is a great example of an emerging category called “artainment” which is an art display that invites guests to interact and explore.

Due to the pandemic, our cultural investments were closed for a portion of 2020 based on local restrictions but all locations have reopened. Although City Museum is experiencing a slower recovery, our two other cultural investments are recovering quickly. We believe that demand for cultural activities will return in a post-pandemic environment and we expect to continue to pursue opportunities in this area.

Fitness & Wellness
In recent years, consumers have begun to spend more time and money on their well-being. The diverse offerings of boutique and larger fitness centers have caught the interest of many consumers, driving an expansion of both fitness and more broadly, the wellness industry. By allowing fitness club members to focus on their individual interests and goals in a community setting, operators gain loyalty and retention which are essential elements in the ongoing success of a facility. Commercial fitness centers have stayed at the forefront of the industry by offering personalization within congregate settings. Our tenants make it their goal to motivate, educate, and to help consumers look and feel better.

We will continue to seek opportunities for the acquisition, financing or development of other experiential properties that leverage our expertise in this area.

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Education

As of December 31, 2020, our Education segment included total investments of approximately $0.6 billion in the following property types (owned or financed):
•65 early childhood education center properties; and
•10 private school properties.

As of December 31, 2020, our owned Education real estate portfolio of approximately 1.4 million square feet was 100% leased and included $3.0 million in undeveloped land inventory.

Private schools were minimally impacted by the pandemic as students were still learning in a remote environment in areas where closures were required. Most of our early education centers have experienced mandated closures and a drop in revenue that we believe is temporary and will continue to recover as people return to work. As discussed above, our growth going forward will be focused on Experiential properties and therefore we do not expect to seek additional opportunities for Education properties.

Business Objectives and Strategies


Our vision is to becomecontinue to build the leading specialty REIT by focusing our unique knowledge and resourcespremier experiential REIT. We focus on select real estate segmentsvenues which providecreate value by facilitating out of home leisure and recreation experiences where consumers choose to spend their discretionary time and money. These are properties which make up the potential for outsized returns.social infrastructure of society.


Our long-term primary business objective is to enhance shareholder value by achieving predictable and increasing FFOFunds From Operations As Adjusted ("FFOAA") and dividends per share (See Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures - Funds From Operations”Operations (FFO), Funds From Operations As Adjusted (FFOAA) and Adjusted Funds From Operations (AFFO)” for a discussion of FFO,FFOAA, which is a non-GAAP financial measure). Our prevailinggrowth strategy is to focusfocuses on long-term investments in a limited number of categoriesacquiring or developing experiential properties in which we maintain a depth of knowledge and relationships, and which we believe offer sustained performance throughout allmost economic cycles. We intend to achieve this objective by continuing to execute the Growth Strategies, Operating Strategies and Capitalization Strategies described below.


Growth Strategies


Central to ourOur strategic growth is remaining focused on acquiring or developing properties in our primary investment segments: Entertainment, Recreationexperiential real estate venues which create value by facilitating out of home leisure and Education.recreation experiences where consumers choose to spend their discretionary time and money. We may also pursue opportunities to provide mortgage financing for these investment segmentsinvestments in certain situations where this structure is more advantageous than owning the underlying real estate.


Our segment focus on Experiential properties is consistent with our strategic organizational design which is structured around building centersa center of knowledge and strong operating competencies in each of our primary segments.the experiential real estate market. Retention and building of this knowledge depth creates a competitive advantage allowing us to more quickly identify key market trends.


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To this end, we will deliberately apply information and our ingenuity to identify properties which represent potential logical extensions within each of our segments,existing experiential property types, or potential future investment segments.additional experiential property types. As part of our strategic planning and portfolio management process, we assess new opportunities against the following five key underwriting principles:



    Industry
Inflection•Experiential Alignment
•Proven Business Model
•Enduring Value
•Addressable Opportunity
Specialty versus commodity    Property
•Location Quality
•Competitive Position
•Location Rent Coverage
•Cash Flow Durability
Tenant
•Demonstrated Success
•Commitment
•Reputable Management
•Solid Credit Quality

We believe that our over 20 years of experience and knowledge in the experiential real estate
New or emerging generation of real estate as a result of age, technology or change in consumer lifestyle or habits

Enduring Value
Underlying activity long-lived
Real estate that supports commercially successful activities
Outlook for business stable or growing

Excellent Execution
Best-of-class executions that create market-dominant properties
Sustainable customer demand within market gives us the category despite a potential change in tenancy
Tenants with a reliable track record of customer service and satisfaction

Attractive Economics
Initially accretive with escalating yield over time
Rent participation features which allow for participation in financial performance
Scalable depth of opportunity
Strong, stable rent coverage and to be the potential for cross-default features

Advantageous Position
First mover advantage and/or dominant player in real estate ownership or financing
Preferredthis area. Additionally, we have tenant orand borrower relationshiprelationships that providesprovide us with access to sitesinvestment opportunities.

The pandemic has impeded our growth in the near term while our focus has been addressing challenges brought on by the pandemic including monitoring customer status and development projectsworking with customers to help ensure long-term stability and assisting them in establishing re-opening plans. We expect to return to growth as our customers' businesses continue to recover and, in turn, our cash flows stabilize.
Data available to assess and monitor performance


Operating Strategies


Lease Risk Minimization
To avoid initial lease-up risks and produce a predictable income stream, we typically acquire or develop single-tenant properties that are leased under long-term leases. We believe our willingness to make long-term investments in properties offers our tenants financial flexibility and allows tenants to allocate capital to their core businesses. Although we will continue to emphasize single-tenant properties, we have acquired or developed, and may continue to acquire or develop, multi-tenant properties we believe add shareholder value.


Lease Structure
We have structured our leasing arrangements to achieve a positive spread between our cost of capital and the rents paid by our tenants. We typically structure leases on a triple-net basis under which the tenants bear the principal portion of the financial and operational responsibility for the properties. During each lease term and any renewal periods, the leases typically provide for periodic increases in rent and/or percentage rent based upon a percentage of the tenant’s gross sales over a pre-determined level. In our multi-tenant property leases and some of our theatre leases, we generally require the tenant to pay a common area maintenance (“CAM”) charge to defray its pro rata share of insurance, taxes and maintenance costs.


Mortgage Structure
We have structured our mortgages to achieve economics similar to our triple-net lease structure with a positive spread between our cost of capital and the interest paid by our tenants. During each mortgage term and any renewal
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periods, the notes typically provide for periodic increases in interest and/or participating features based upon a percentage of the tenant’s gross sales over a pre-determined level.


Traditional REIT Lodging Structure
We may from time to time useIn certain limited instances, we have utilized traditional REIT lodging structures, where we hold qualified lodging facilities under the REIT and we separately hold the operations of the facilities in TRSs which are facilitated by management agreements

with eligible independent contractors. However, we do not currently anticipate that these investments will exceed 10% of our total assets.migrating over time what we hold in such structures to more traditional net lease or mortgage arrangements.


Development and Redevelopment
We intend to continue developing properties and redeveloping existing properties that are consistent with our growth strategies. We generally do not begin development of a single-tenant property without a signed lease providing for rental payments that are commensurate with our level of capital investment. In the case of a multi-tenant development, we generally require a significant amount of the development to be pre-leased prior to construction to minimize lease-up risks. In addition, to minimize overhead costs and to provide the greatest amount of flexibility, we generally outsource construction management to third-party firms.


We believe our build-to-suit development program is a competitive advantage. First, we believe our strong relationships with our tenants and developers drive new investment opportunities that are often exclusive to us, rather than bid broadly, and with our deep knowledge of their businesses, we believe we are a value-added partner in the underwriting of each new investment. Second, we offer financing from start to finish for a build-to-suit project such that there is no need for a tenant to seek separate construction and permanent financing, which we believe makes us a more attractive partner. Third, we are actively developing strong relationships with tenants in our select segmentsthe experiential sector leading to multiple investments without strict investment portfolio allocations. Finally, multiple investments with the same tenant allows us in most cases to include cross-default provisions in our lease or financing contracts, meaning a default in an obligation to us at one location is a default under all obligations with that tenant.
We will also investigate opportunities to redevelop certain of our existing properties. We may redevelop properties in conjunction with a lease renewal or new tenant, or we may redevelop properties that have more earnings potential due to the redevelopment. Additionally, certain of our properties have excess land where we will proactivelypro-actively seek opportunities to further develop.
Tenant and Customer Relationships
We intend to continue developing and maintaining long-term working relationships with entertainment, recreation, education and other specialty businessexperiential operators and developers by providing capital for multiple properties on a regional, national and international basis, thereby creating efficiency and value for both the operators and the Company.


Portfolio Diversification
We will endeavor to further diversify our asset base by property type, geographic location and tenant or customer. In pursuing this diversification strategy, we will target entertainment, recreation, education and other specialtyexperiential business operators that we view as leaders in their market segmentsproperty types and have the ability to compete effectively and perform under their agreements with the Company.


Dispositions
We will consider discretionary property dispositions for reasons such as creating price awareness of a certain property type, opportunistically taking advantage of an above-market offer or reducing exposure related to a certain tenant, property type or geographic area.


Capitalization Strategies


Debt and Equity Financing
Our ratio of net debt to adjusted EBITDA,We believe that our shareholders are best served by a non-GAAP measure (see "Non-GAAP Financial Measures" for definitions and reconciliations), is our primary measure to evaluate our capital structure and the magnitude of our debt against our operating performance. Additionally, we utilize our ratio of net debt to gross assets as a secondary measure to evaluate ourconservative capital structure. We expectTherefore, we seek to maintain a conservative debt level on our balance sheet as measured primarily by our net debt to adjusted EBITDA ratio between 4.6x to 5.6x. SeeEBITDAre, a non-GAAP measure (see Item 7 – “Management’s Discussion and Analysis of Financial Condition - Non-GAAP
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Financial Measures" for definitions and Results of Operations - Liquidityreconciliations). We also seek to maintain conservative interest, fixed charge, debt service coverage and Capital Resources” for a further discussion of this ratio.net debt to gross asset ratios.


We rely primarily on an unsecured debt structure. In the future, while we may obtain secured debt from time to time or assume secured debt financing obligations in acquisitions, we intend to issue primarily unsecured debt securities to

satisfy our debt financing needs. We believe this strategy increases our access to capital and permits us to more efficiently match available debt and equity financing to our ongoing capital requirements.


During the year ended December 31, 2020, we amended our Consolidated Credit Agreement, which governs our unsecured revolving credit facility and our unsecured term loan facility, and our Note Purchase Agreement, which governs our private placement notes. The amendments modified certain provisions and waived our obligation to comply with certain covenants under these debt agreements during the Covenant Relief Period, subject to certain conditions. These waivers to comply with certain covenants were obtained in light of the uncertainty related to impacts of the COVID-19 pandemic on us and our tenants and borrowers. The amendments also imposed additional restrictions on us during the Covenant Relief Period, including limitations on making investments, incurring indebtedness, making capital expenditures, paying dividends and making other distributions, repurchasing our shares, voluntarily prepaying certain indebtedness, encumbering certain assets and maintaining a minimum liquidity amount, in each case subject to certain exceptions. The term "Covenant Relief Period," as used in this Annual Report on Form 10-K, generally means the period of time beginning on June 29, 2020 and ending on (i) December 31, 2021, in the case of our Consolidated Credit Agreement, or (ii) October 1, 2021 (subject to extension to January 1, 2022 at our election, subject to certain conditions), in the case of our Note Purchase Agreement governing our private placement notes. We have the right under certain circumstances to terminate the Covenant Relief Period earlier.

Our sources of equity financing consist of the issuance of common shares as well as the issuance of preferred shares (including convertible preferred shares). In addition to larger underwritten registered public offerings of both common and preferred shares, we have also offered shares pursuant to registered public offerings through the direct share purchase component of our Dividend Reinvestment and Direct Share Purchase Plan (“DSP Plan”). While such offerings are generally smaller than a typical underwritten public offering, issuing common shares under the direct share purchase component of our DSP Plan allows us to access capital on a more frequent basis in a cost-effective manner. We expect to opportunistically access the equity markets in the future and, depending primarily on the size and timing of our equity capital needs, may continue to issue shares under the direct share purchase component of our DSP Plan. Furthermore, we may issue shares in connection with acquisitions in the future.

Joint Ventures
We will examine and may pursue potential additional joint venture opportunities with institutional investors or developers if the investments to which they relate meet our guiding principles discussed above. We may employ higher leverage in joint ventures.ventures and be more inclined to use secured financing at the property level.


Payment of Regular Dividends
We pay dividend distributions to our common shareholders on a monthly basis (as opposed to a quarterly basis). We expecttemporarily suspended our monthly cash dividend to continuecommon shareholders after the common share dividend payable May 15, 2020. Our plan is to pay dividend distributionsreinstitute such dividends to common shareholders, when conditions allow, however, there can be no assurances as to our preferred shareholders on a quarterly basis.ability to do so or the timing thereof. Our Series C cumulative convertible preferred shares (“Series C preferred shares”) have a dividend rate of 5.75%, our Series E cumulative convertible preferred shares (“Series E preferred shares”) have a dividend rate of 9.00% and our Series G cumulative redeemable preferred shares ("Series G preferred shares") have a dividend rate of 5.75%. Among the factors the Company’s board of trustees (“Board of Trustees”) considers in setting the common share dividend rate are the applicable REIT tax rules and regulations that apply to dividends, the Company’s results of operations, including FFO and FFOAA per share, and the Company’s Cash Available for Distribution (defined as net cash flow available for distribution after payment of operating expenses, debt service, preferred dividends and other obligations).

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Competition


We compete for real estate financing opportunities with other companies that invest in real estate, as well as traditional financial sources such as banks and insurance companies. REITs have financed, and may continue to seek to finance, entertainment, recreation, educationexperiential and other specialty properties as new properties are developed or become available for acquisition.


EmployeesHuman Capital


Our strategy is specializing in investments in select enduring experiential properties in the real estate industry, and our people are vital to our success in executing on this strategy. As a human-capital intensive business, the long-term success of our firm depends on our people. Our Vice President, Human Resources and Administration works in conjunction with our Executive Vice President and General Counsel, who reports directly to our Chief Executive Officer, to develop and oversee our human capital management objectives, programs and initiatives. In addition, our Board of Trustees is actively involved in our human capital management in its oversight of our long-term strategy and through its Compensation and Human Capital Committee and engagement with management. Our management regularly reports to the Compensation and Human Capital Committee regarding management's human capital objectives, programs and initiatives.

Our key human capital objectives are to attract, retain and develop the highest quality talent to ensure that we have the right talent, in the right place, at the right time. To achieve these objectives, our human capital programs are designed to develop talent to prepare them for critical roles and leadership positions for the future; reward and support employees through competitive pay, benefit, and perquisite programs; enhance our culture through efforts aimed at making the workplace more engaging and inclusive; acquire talent and facilitate internal talent mobility to create a high-performing, diverse workforce; and evolve and invest in technology, tools, and resources to enable employees at work. As of December 31, 2018,2020, we had 6453 full-time employees.


Examples of key programs and initiatives that are focused to attract, develop and retain our diverse workforce include:

•Development. We provide opportunities for our associates to learn and thrive as professionals, including educational reimbursement, mentorship, executive coaching and ongoing professional development. Annually, EPR hosts leadership development sessions for all levels of our organization. In 2020, we hosted and facilitated virtual sessions with an external professional, focused on building our “Feedback Rich Culture.”

•Diversity, equity and inclusion (DE&I). Our DE&I objectives are to ensure our culture is evolving and inclusive, and build teams that reflect the life experiences of our customers and the ultimate consumers of our customers’ services. Specific steps we have taken to address our commitment to DE&I include:
▪Hosting in 2020 multiple culture-changing and learning opportunities regarding DE&I with external experts and the response was overwhelmingly positive;
▪Adopting in 2020 the “Rooney” rule with respect to our recruiting processes to ensure an active approach to diversification at all areas of our organization;
▪Establishing a partnership with a local charter school to provide internship opportunities to diverse alumni as a means to invest in a future and local diverse talent pipeline; and
▪Sponsoring since 2015, the EPR Women’s Initiative Network, or EWIN, that represents and supports our diverse communities within our workforce. EWIN facilitates networking and connections with peers, outreach and mentoring, leadership and skill development. Most of our employees regularly participate in EWIN programs.

•Compensation and Benefits. Our benefits include competitive base pay, performance-based restricted stock awards and a 401(k) with a robust company match. We support our employees’ physical and mental health through paid parental leave, industry-leading health care benefits, unlimited sick leave, flexible paid time
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off and employee assistance programs. In addition, we offer yearly wellness reimbursements, an on-site fitness center and fully stocked kitchens.

•Community & Social Impact. Giving back is one of our core values. We demonstrate this through our charitable giving program, EPR Impact, a key cornerstone of our social responsibility. Through a number of employees actively engaged in nonprofits and our commitment to donating to and sponsoring charitable causes and events, we are fortunate to partner with amazing organizations both locally and nationally. As a benefit to employees, EPR Impact’s annual budget includes a pool of funds to support employee-directed contributions to nonprofit organizations where an employee is personally involved. Additionally, EPR will match employee contributions annually up to a given amount for contributions from their personal funds to nonprofit organizations that meet the criteria of the program. In response to the COVID-19 pandemic, “EPRcares” was formed as a way to raise employee funds to provide relief to local front-line workers. This initiative raised over $47,000 and aided 51 organizations in 2020. Additionally, EPR Impact launched a giving initiative, “The Amazing Giving Race,” to support local companies.

Regulation

To maintain our status as a REIT for federal income tax purposes, we must distribute to our shareholders at least 90% of our taxable income for a calendar year, as well as satisfy certain assets, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. In addition, we are subject to numerous federal, state and local laws and regulations applicable to owners of real property. For instance, under federal, state and local environmental laws, we may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, on, in or under our properties, as well as certain other potential costs relating to hazardous or toxic substances (including government fines and penalties and damages for injuries to persons and adjacent property). These laws may impose liability without regard to whether we knew of, or were responsible for, the presence or disposal of those substances. In addition, most of our properties must comply with the Americans with Disabilities Act ("ADA"). The ADA requires that public accommodations reasonably accommodate individuals with disabilities and that new construction or alterations be made to commercial facilities to conform to accessibility guidelines. The ownership, operation, and management of our gaming facilities are also subject to pervasive regulation. These gaming regulations impact our gaming tenants and persons associated with our gaming facilities, which in many jurisdictions include us as the landlord and owner of the real estate.

Our properties are also subject to various other federal, state and local regulatory requirements. We do not know whether existing requirements will change or whether compliance with future requirements will involve significant unanticipated expenditures. Although these expenditures would be the responsibility of our tenants in most cases and for our managers to oversee at our properties, if these tenants or managers fail to perform these obligations, we may be required to do so. For additional information regarding regulations applicable to our business, and risks associated with our failure to comply with such regulations, see Item 1A – "Risk Factors" in this Annual Report on Form 10-K.

Principal Executive Offices


The Company’s principal executive offices are located at 909 Walnut Street, Suite 200, Kansas City, Missouri 64106; telephone (816) 472-1700.



Materials Available on Our Website


Our internet website address is www.eprkc.com. We make available, free of charge, through our website copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the “Commission” or “SEC”). You may also view our Code of Business Conduct and Ethics, Company Governance Guidelines, Independence Standards for Trustees and the charters of our Audit, Nominating/Company Governance, Finance and Compensation and Human Capital Committees on our website. Copies of these documents are also
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available in print to any person who requests them. We do not intend for information contained in our website to be part of this Annual Report on Form 10-K.


Item 1A. Risk Factors
There are many risks and uncertainties that can affect our current or future business, operating results, financial performancecondition or share price. The following discussion describes important factors which could adversely affect our current or future business, operating results, financial condition or share price. This discussion includes a number of forward-looking statements. See “Cautionary"Cautionary Statement Concerning Forward-Looking Statements.”"


Risks That May Impact Our Financial Condition or Performance


The current outbreak of the novel coronavirus, or COVID-19, has negatively impacted and caused disruption to, and the continued COVID-19 outbreak or the future outbreak of any other highly infectious or contagious diseases could materially and adversely impact or cause disruption to, our performance, financial condition, results of operations and cash flows.
The outbreak of COVID-19 has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. In the United States, governmental authorities have instituted quarantines, mandated business and school closures and restricted travel. As a result, the COVID-19 pandemic continues to severely impact experiential real estate properties given that such properties rely on social interaction and discretionary consumer spending. Most of our tenants and borrowers announced temporary closures of their operations during this pandemic. Many experts predict that the outbreak will trigger a period of global economic slowdown or a global recession. The COVID-19 pandemic has negatively affected, and the COVID-19 pandemic (or a future pandemic) could have material and adverse effects on, our ability, and the ability of our customers, to successfully operate and on our financial condition, results of operations and cash flows due to, among other factors:

•complete or partial closures of, or other operational issues at, our properties resulting from government, tenant or borrower action;
•the reduced economic activity has severely impacted our tenants' and borrowers’ businesses, financial condition and liquidity and caused most of our tenants and borrowers to obtain modifications of their obligations to us;
•most of our tenants obtained varying levels of deferral of rent since the outbreak of COVID-19 and may have difficulty repaying those deferrals as they become due;
•the reduced economic activity could result in a recession, which could negatively impact consumer discretionary spending;
•difficulty accessing debt and equity capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis and our tenants' and borrowers’ ability to fund their business operations and meet their obligations to us;
•a general decline in business activity and demand for real estate transactions would adversely affect our ability or desire to grow our portfolio of experiential real estate properties;
•a deterioration in our and our tenants' and borrowers’ ability to operate in affected areas or delays in the supply of products or services to us and our tenants and borrowers from vendors that are needed for our and our tenants' and borrowers’ efficient operations has adversely affected our operations and those of our tenants and borrowers; and
•the potential negative impact on the health of our personnel, particularly if a significant number of them are impacted, would result in a deterioration in our ability to ensure business continuity during a disruption.

The ultimate extent to which the COVID-19 pandemic impacts our operations and those of our tenants and borrowers will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the outbreak, the actions taken to contain the outbreak or mitigate its impact, the development and distribution of vaccines and the efficacy of those vaccines, the public’s confidence in the health and safety measures implemented by our tenants and borrowers, and the direct and indirect economic effects of the outbreak and containment measures, among others. The financial impact of the COVID-19 pandemic
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could negatively impact our future compliance with financial covenants of our credit facility and other debt agreements and result in a default and potentially an acceleration of indebtedness. Such non-compliance could negatively impact our ability to make additional borrowings under our revolving credit facility, pay dividends and repurchase common shares under our share repurchase program. As discussed below under "Management's Discussion and Analysis of Financial Condition and Results of Operations," we entered into amendments to our bank credit facilities and agreements regarding certain private placement notes that provide a temporary suspension or modification of certain of our financial covenants during the Covenant Relief Period. The Covenant Relief Period may be terminated earlier at our election at the end of a fiscal quarter if we would have been in compliance with financial covenants at the end of the quarter if the Covenant Relief Period had not been in effect. In connection with obtaining these covenant modifications, we temporarily suspended our monthly cash dividend to common shareholders and our share repurchase program. There can be no assurances as to our ability to reinstitute cash dividend payments to common shareholders or share repurchases or the timing thereof. The rapid development and fluidity of the COVID-19 pandemic precludes any prediction as to the ultimate adverse impact of the pandemic. Nevertheless, the COVID-19 pandemic has negatively affected, and presents additional material uncertainty and risk with respect to, our performance, financial condition, results of operations and cash flows.

Global economic uncertainty and disruptions in the financial markets may impair our ability to refinance existing obligations or obtain new financing for acquisition or development of properties.
There continues to beexists a high level of global economic uncertainty. Increased uncertainty, inincluding uncertainty regarding the wakeimpact of the "Brexit" referendum inCOVID-19 pandemic after its subsidence. Regarding experiential industries, it is unclear whether the United Kingdom in June 2016,COVID-19 pandemic will negatively impact future consumer preferences regarding congregate activities, such as those offered by theatres, casinos, restaurants, attractions and other industries in which the majority of voters voted in favor of an exit from the European Union, the formal notice by the United Kingdom in March 2017 of its exit from the European Unionwe invest. Political decisions and the pending negotiations of such exit, as well as political changesuncertainty in the U.S. and abroad, such as the direction and levels of stimulus spending in response to the impact of the COVID-19 pandemic, have contributed to volatility in the global financial markets. AlthoughMany economists believe that the aftermath of the COVID-19 pandemic will present a significant risk of a recession to the U.S. economy has continued to improve, there can be no assurances that the U.S. economy will continue to improve or that a future recession will not occur.economy. We rely in part on debt financing to finance our investments and development. To the extent that turmoil in the financial markets returnscontinues or intensifies, it has the potential to adversely affect our ability to refinance our existing obligations as they mature or obtain new financing for acquisition or development of properties and adversely affect the value of our investments. If we are unable to refinance existing indebtedness on attractive terms at its maturity, we may be forced to dispose of some of our assets. Uncertain economic conditions and disruptions in the financial markets could also result in a substantial decrease in the value of our investments, which could also make it more difficult to refinance existing obligations or obtain new financing. In addition, these factors may make it more difficult for us to sell properties or may adversely affect the price we receive for properties that we do sell, as prospective buyers may experience increased costs of capital or difficulties in obtaining capital. These events in the credit markets may have an adverse effect on other financial markets in the U.S., which may make it more difficult or costly for us to raise capital through the issuance of our common shares or preferred shares. In addition, disruptions in global financial markets may have other adverse effects on us, our tenants, our borrowers or the economy in general.


Most of our customers, consisting primarily of tenants and borrowers, operate properties in market segments that depend upon discretionary spending by consumers. Any continued reduction in discretionary spending by consumers within the market segments in which our customers or potential customers operate could adversely affect such customers' operations and, in turn, reduce the demand for our properties or financing solutions.
Most of our portfolio is leased to or financed with customers operating service or retail businesses on our property locations. Movie theatres, entertainment retail centers, recreationMany of these customers operate services or businesses that are dependent upon consumer experiences. Theatre, eat & play, attraction, ski, experiential lodging, gaming, private school and entertainment venues, early childhood education centers, private K-12 schools, skicenter properties, and attractions represent some of the largest market investments in our portfolio; and AMC, Topgolf, Regal Cinemas, Inc. and Cinemark USA, Inc. represented our largest customers for the yearfiscal year ended December 31, 2018.2020. The success of most of these businesses depends on the willingness or ability of consumers to use their discretionary income to purchase our customers' products or services. In addition, the lodging industry isand gaming industries are also highly sensitive to consumer discretionary spending. A downturn in the economy, or a trend to not want to go "out of home" for entertainment, recreation or education, could cause consumers in each of our property types to reduce their discretionary spending within the market segments in which our customers or potential customers operate, which could adversely affect such customers' operations and, in turn, reduce the demand for our properties or financing solutions. The current

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COVID-19 pandemic has significantly reduced consumer discretionary spending, which is severely impacting experiential real estate properties, including those of our customers, and it is unclear whether the COVID-19 pandemic will negatively impact future consumer preferences regarding congregate activities.

Covenants in our debt instruments could adversely affect our financial condition and our acquisitions and development activities.
Our unsecured revolving credit facility, term loan facility, senior notes and other loans that we may obtain in the future contain certain cross-default provisions as well as customary restrictions, requirements and other limitations on our ability to incur indebtedness, including covenants involving our maximum total debt to total asset value; maximum permitted investments; minimum tangible net worth; maximum secured debt to total asset value; maximum unsecured debt to eligible unencumbered properties; minimum unsecured interest coverage; and minimum fixed charge coverage. Our ability to borrow under our unsecured revolving credit facility and our term loan facility is also subject to compliance with certain other covenants. We also have senior notes issued in a private placement transaction that are subject to certain covenants. In addition, some of our properties are subject to mortgages that contain customary covenants such as those that limit our ability, without the prior consent of the lender, to further mortgage the applicable property or to discontinue insurance coverage.

As discussed below under "Management's Discussion and Analysis of Financial Condition and Results of Operations", we entered into amendments to our bank credit facilities and agreements regarding certain private placement notes that provide a temporary suspension or modification of our financial covenants during the Covenant Relief Period. During the Covenant Relief Period, we are subject to certain restrictions, including limitations on certain investments, incurrences of indebtedness, capital expenditures, payment of dividends or other distributions and stock repurchases, and maintenance of a minimum liquidity amount, in each case subject to certain exceptions. There can be no assurance as to the timing of the termination of the Covenant Relief Period. In addition, upon termination of the Covenant Relief Period, failure to comply with our covenants or obtain modifications of such covenants could cause a default under the applicable debt instrument, and we may then be required to repay such debt with capital from other sources. The ongoing financial impact of the COVID-19 pandemic could negatively impact our future compliance with financial covenants of our credit facility and other debt agreements and result in a default and potentially an acceleration of indebtedness. Under those circumstances, other sources of capital may not be available to us, or be available only on unattractive terms. Additionally, our ability to satisfy current or prospective lenders' insurance requirements may be adversely affected if lenders generally insist upon greater insurance coverage against acts of terrorism than is available to us in the marketplace or on commercially reasonable terms.

We rely on debt financing, including borrowings under our unsecured revolving credit facility, term loan facility, issuances of debt securities and debt secured by individual properties, to finance our acquisition and development activities and for working capital. If we are unable to obtain financing from these or other sources, or to refinance existing indebtedness upon maturity, our financial condition and results of operations would likely be adversely affected. The ultimate extent to which the COVID-19 pandemic impacts our ability to comply with existing or modified financial covenants and obtain financing will depend on future developments, which, as discussed above, are highly uncertain and cannot be predicted with confidence.

Adverse changes in our credit ratings could impair our ability to obtain additional debt and equity financing on favorable terms, if at all, and negatively impact the market price of our securities, including our common shares.
The credit ratings of our senior unsecured debt and preferred equity securities are based on our operating performance,

liquidity and leverage ratios, overall financial position and other factors employed by the credit rating agencies in their rating analysesanalysis of us. Our credit ratings can affect the amount and type of capital we can access, as well as the terms of any financings we may obtain.obtain, and downward changes in our credit ratings and outlook were recently made by certain credit rating agencies. There can be no assurance that we will be able to maintain our current credit ratings, particularly in light of the effects of the ongoing COVID-19 pandemic, and in the event that our current credit ratings further deteriorate, we would likely incur a higher cost of capital and it may be more difficult or expensive to obtain additional financing or refinance existing obligations and commitments. Also, a downgradefurther downgrades in our credit ratings would trigger additional costs or other potentially negative consequences under our current and future credit facilities and future debt instruments.

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An increase in interest rates could increase interest cost on new debt and could materially adversely impact our ability to refinance existing debt, sell assets and limit our acquisition and development activities.
TheAlthough the U.S. Federal Reserve increaseddecreased its benchmark interest rate multiple times in 20182019 and has continued signaling2020, there can be no assurances that rates could continue to rise.the rate will not increase in the future. If interest rates continue to increase, so could our interest costs for any new debt. This increased cost could make the financing of any acquisition and development activity more costly. Rising interest rates could limit our ability to refinance existing debt when it matures or cause us to pay higher interest rates upon refinancing and increase interest expense on refinanced indebtedness. In addition, an increase in interest rates could decrease the amount third parties are willing to pay for our assets, thereby limiting our ability to reposition our portfolio promptly in response to changes in economic or other conditions.


We depend on leasing space to tenants on economically favorable terms and collecting rent from our tenants, who may not be able to pay.
At any time, a tenant may experience a downturn in its business that may weaken its financial condition. Similarly, a general decline in the economy may result in a decline in demand for space at our commercial properties. Our financial results depend significantly on leasing space at our properties to tenants on economically favorable terms. In addition, because a majority of our income comes from leasing real property, our income, funds available to pay indebtedness and funds available for distribution to our shareholders or share repurchases will decrease if a significant number of our tenants cannot pay their rent or if we are not able to maintain our levels of occupancy on favorable terms. If our tenants cannot pay their rent or we are not able to maintain our levels of occupancy on favorable terms, there is also a risk that the fair value of the underlying property will be considered less than its carrying value and we may have to take a charge against earnings. In addition, if a tenant does not pay its rent, we might not be able to enforce our rights as landlord without significant delays and substantial legal costs.


If a tenant becomes bankrupt or insolvent, that could diminish or eliminate the income we expect from that tenant's leases. If a tenant becomes insolvent or bankrupt, we cannot be sure that we could recover the premises from the tenant promptly or from a trustee or debtor-in-possession in a bankruptcy proceeding relating to the tenant. On the other hand, a bankruptcy court might authorize the tenant to terminate its leases with us. If that happens, our claim against the bankrupt tenant for unpaid future rent would be subject to statutory limitations that might be substantially less than the remaining rent owed under the leases. In addition, any claim we have for unpaid past rent would likely not be paid in full and we would also have to take a charge against earnings for any accrued straight-line rent receivable related to the leases.


The reduced economic activity resulting from the COVID-19 pandemic is severely impacting our tenants' businesses, financial condition and liquidity and has caused most of our tenants to be unable to meet their obligations to us in full, or at all, or to otherwise seek modifications of such obligations. We also anticipate that one or more of our tenants may become bankrupt or insolvent as a result of this reduced economic activity. The ultimate extent to which the COVID-19 pandemic impacts the operations of our tenants will depend on future developments, which, as discussed above, are highly uncertain and cannot be predicted with confidence.

We are exposed to the credit risk of our customers and counterparties and their failure to meet their financial obligations could adversely affect our business.
Our business is subject to credit risk. There is a risk that a customer or counterparty will fail to meet its obligations when due. Customers and counterparties that owe us money may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons. Although we have procedures for reviewing credit exposures to specific customers and counterparties to address present credit concerns, default risk may arise from events or circumstances that are difficult to detect or foresee. Some of our risk management methods depend upon the evaluation of information regarding markets, clients or other matters that are publicly available or otherwise accessible by us. That information may not, in all cases, be accurate, complete, up-to-date or properly evaluated. In addition, concerns about, or a default by, one customer or counterparty could lead to significant liquidity problems, losses or defaults by other customers or counterparties, which in turn could adversely affect us. We have experienced customer defaults resulting from the COVID-19 pandemic, and we expect to experience future defaults, the breadth of which will depend upon the scope, severity and duration of the COVID-19 pandemic. We may be materially and adversely affected in the event of a significant default by our customers and counterparties.

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We could be adversely affected by a borrower's bankruptcy or default.
If a borrower becomes bankrupt or insolvent or defaults under its loan, that could force us to declare a default and foreclose on any available collateral. As a result, future interest income recognition related to the applicable note receivable could be significantly reduced or eliminated. There is also a risk that the fair value of the collateral, if any, will be less than the carrying value of the note and accrued interest receivable at the time of a foreclosure and we may have to take a charge against earnings. If a property serves as collateral for a note, we may experience costs and delays in recovering the property in foreclosure or finding a substitute operator for the property. If a mortgage we hold is subordinated to senior financing secured by the property, our recovery would be limited to any amount remaining after satisfaction of all amounts due to the holder of the senior financing. In addition, to protect our subordinated investment, we may desire to refinance any senior financing. However, there is no assurance that such refinancing would be available or, if it were to be available, that the terms would be attractive. We experienced borrower defaults resulting from the COVID-19 pandemic, and we may experience future defaults, the breadth of which will depend upon the scope, severity and duration of the COVID-19 pandemic. One or more of our borrowers may become bankrupt or insolvent as a result of this reduced economic activity. The ultimate extent to which the COVID-19 pandemic impacts the operations of our borrowers will depend on future developments, which, as discussed above, are highly uncertain and cannot be predicted with confidence.


From time to time, the base terms of some of our leases will expire and there is no assurance that such leases will be renewed at existing lease terms, at otherwise economically favorable terms or at all.
From time to time, the base terms of some of our leases with our tenants will expire. These tenants have and may continue to seek rent or other concessions from us, including requiring us to modify the properties in order to renew their leases. There is no guarantee that we will be able to renew these leases at existing lease terms, at otherwise economically favorable terms or at all. In addition, if we fail to renew these leases, there can be no assurances that we will be able to locate substitute tenants for such properties or enter into leases with these substitute tenants on economically favorable terms.


Operating risks in the entertainmentexperiential real estate industry may affect the ability of our tenants to perform under their leases.
The ability of our tenants to operate successfully in the entertainmentexperiential real estate industry and remain current on their lease obligations depends on a number of factors, including, with respect to theatres, the availability and popularity of motion pictures, the performance of those pictures in tenants' markets, the allocation of popular pictures to tenants, the release window (represents the time that elapses from the date of a picture's theatrical release to the date it is available on other mediums) and the terms on which the pictures are licensed. Neither we nor our tenants control the operations of motion picture distributors. During the COVID-19 pandemic, motion picture distributors have increasingly relied upon streaming as a method of delivering product, including Warner Bros. announced simultaneous release of “Wonder Woman 1984” to theatres and streaming on HBO Max. There can be no assurances that motion picture distributors will continue to rely on theatres as the primary means of distributing first-run films, and motion picture distributors have and may in the future consider alternative film delivery methods.

In addition, some of our theatre tenants have disclosed that they are subject to pending anti-trust investigations byin August 2020, a U.S. District Court granted the U.S. Department of Justice and several states regarding such tenants' alleged anticompetitive practices, including seeking agreements with motion picture distributors for exclusive rightsJustice's request to releases in certain markets. The U.S. Department of Justice has also announced that it is reviewing anti-trust rules thatterminate the Paramount Consent Decrees, which prohibit movie studios from owning theatres or utilizing "block booking," a practice whereby movie studios sell multiple films as a package to theatres.theatres, in addition to other restrictions. The termination was effective immediately for certain restrictions, while other restrictions are subject to a two-year sunset period. There can be no assurances as to the outcomeeffects of such investigations or reviewsthis regulatory action or whether such investigations or reviewsthis regulatory action will materially adversely affect suchour theatre tenants' operations and, in turn, their ability to perform under their leases.


Our other experiential customers are exposed to the risk of adverse economic conditions that can affect experiential activities. Eat & play, ski, attraction, experiential lodging, gaming, fitness & wellness and cultural properties are discretionary activities that can entail a relatively high cost of participation and may be adversely affected by an economic slowdown or recession. Economic conditions, including high unemployment and erosion of consumer confidence, may potentially have negative effects on our customers and on their results of operations. The reduced economic activity resulting from the COVID-19 pandemic is severely impacting our tenants' businesses, financial condition and liquidity. The ultimate extent to which the COVID-19 pandemic impacts the operations of our tenants will depend on future developments, which, as discussed above, are highly uncertain and cannot be predicted with
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confidence. We cannot predict what impact these uncertainties may have on overall guest visitation, guest spending or other related trends and the ultimate impact it will have on our tenants' and mortgagors' operations and, in turn, their ability to perform under their respective leases or mortgages.

Real estate is a competitive business.
Our business operates in highly competitive environments. We compete with a large number of real estate property ownersinvestors and developers someincluding traded and non-traded public REITS, private equity investors and institutional investment funds. Some of whichthese investors may be willing to accept lower returns on their investments. investments, or have greater financial resources than we do, a greater ability to borrow funds to acquire properties and the ability to accept more risk than we prudently manage. This competition may increase the demand for the types of properties in which we typically invest and, therefore, reduce the number of suitable acquisition opportunities available to us and increase the prices paid for such acquisition properties. This competition will increase if investments in real estate become more attractive relative to other types of investment. Accordingly, competition for the acquisition of real property could materially and adversely affect us.

Principal factors of competition are rent or interest charged, attractiveness of location, the quality of the property and breadth and quality of services provided. If our competitors offer space at rental rates below the rental rates we are currently charging our tenants, we may lose potential tenants, and we may be pressured to reduce our rental rates below those we currently charge in order to retain tenants when our tenants' leases expire. Our success depends upon, among other factors, trends of the national and local economies, financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation and population trends.


A single tenant representsFour tenants represent a substantialsignificant portion of our lease revenues.
AMC, theatres, one of the nation's largest movie exhibition companies, is the lessee ofTopgolf, Regal Cinemas Inc. and Cinemark USA, Inc., represent a substantial numbersignificant portion of our megaplex theatre properties.total revenue. For the year ended December 31, 2018,2020, total revenues of approximately $115.8$30.0 million or 16.5% of7.2% were from AMC, approximately $80.7 million or 19.5% were from TopGolf, approximately $13.1 million or 3.1% were from Regal and approximately $42.1 million or 10.1% were from Cinemark. The COVID-19 pandemic is severely impacting these tenants', as well as our total revenues were derived from rental payments by AMC. AMC Entertainment, Inc. (“AMCE”) has guaranteed AMC's performance under substantially all of its leases. other tenants' businesses, financial condition and liquidity.

We have diversified and expect to continue to diversify our real estate

portfolio by entering into lease transactions or financing arrangements with a number of other leading operatorstenants or by acquiring or seeking to acquire other properties. Nevertheless, our revenues and our continuing ability to service our debt and pay shareholder dividends are currently substantially dependent on AMC's performance under its leases and AMCE's performance under its guarantee.

We believe AMC occupies a strong position in the industry and we intend to continue acquiring and leasing back or developing new AMC theatres. However, AMC and AMCE are susceptible to the same risks as our other tenants described herein.borrowers. If for any reason AMC, TopGolf, Regal and/or Cinemark failed to perform under itstheir lease obligations and AMCE did not performfor a significant period of time, or under its guarantee,any modified lease obligations, we could be required to reduce or suspend our shareholder dividends or share repurchases and may not have sufficient funds to support operations or service our debt until substitute tenants are obtained. If that happened, we cannot predict when or whether we could obtain substitute quality tenants on acceptable terms.


Public charter schools are operated pursuant to charters granted by various state or other regulatory authorities and are dependent upon compliance with the terms of such charters in order to obtain funding from local, state and federal governments. We could be adversely affected by a public charter school's failure to comply with its charter, non-renewal of a charter upon expiration or by its reduction or loss of funding.
Our public charter school properties operate pursuant to charters granted by various state or other regulatory authorities, which are generally shorter than our lease terms, and most of the schools have undergone or expect to undergo compliance audits or reviews by such regulatory authorities. Such audits and reviews examine the financial as well as the academic performance of the school. Adverse audit or review findings could result in non-renewal or revocation of a public charter school's charter, or in some cases, a reduction in the amount of state funding, repayment of previously received state funding or other economic sanctions. Our public charter school tenants are also dependent upon funding from local, state and federal governments, which are currently experiencing budgetary constraints, and any reduction or loss of such funding could adversely affect a public charter school's ability to comply with its charter and/or pay its obligations.

Our lease agreements with Imagine Schools, Inc. and its affiliates ("Imagine"), provide certain contractual protections designed to mitigate risk, such as risk arising from the revocation of a charter of one or more of the Imagine school subtenants. Subject to our approval and certain other terms and conditions, the lease agreements allow Imagine to re-tenant any public charter school properties that are causing technical defaults within one hundred and eighty (180) days of notice of such default. However, there is no guarantee that new sub-tenants will be available for such schools. In addition, while governing authorities may approve replacement operators for failed public charter schools to ensure continuity for students,Properties we cannot predict when or whether applicable governing authorities would approve such operators, nor can we predict whether we could reach sublease agreements with such replacement operators on acceptable terms. In addition, Imagine has, in certain previous sales of properties to third parties, agreed to pay us the difference between our carrying value and the sales price. Each of the lease agreements are guaranteed by Imagine. Imagine also has a mortgage note obligation to us as a result of sales of certain properties to Imagine. If Imagine is unable to provide adequate replacement subtenants and/or is unable to pay its obligations, we may be required to record an impairment loss or sell one or more of the public charter school properties for less than their net book value.

Our build-to-suit tenantsdevelop may not achieve sufficient operating results within expected timeframes and therefore the tenant or borrowers may not be able to pay their agreed upon rent or interest, and managed properties may not be able to operate profitably, which could adversely affect our financial results.
A significant portion of our investments include investments in build-to-suit projects. When construction is completed, for these projects tenants may require some period of time to achieve targeted operating results, andresults. For properties leased or financed, we may provide themour tenants or borrowers with lease or financing terms that are more favorable to the tenantthem during this timeframe. Tenants and borrowers that fail to achieve targeted operating results within expected timeframes may be unable to pay their rentobligations pursuant to the agreed upon lease or financing terms or at all. If we are required to restructure lease or financing terms or take other action with respect to the applicable property, our financial results may be impacted by lower lease revenues, recording an impairment or provision for loan loss, writing off rental or interest amounts or otherwise.

The ability of our early childhood education tenant, Children's Learning Adventure, to successfully transition our properties to one or more third party operators.
As previously disclosed, in December 2017, certain subsidiaries of Children’s Learning Adventure USA, LLC (“CLA”) that are our tenants under leases for 21 operating properties filed Chapter 11 petitions in bankruptcy seeking the

protections of the Bankruptcy Code. In July 2018, Additionally, if we have entered into a new leasemanagement agreement with CLA related to these properties, which have continued on a month-to-month basis. In February 2019, we entered into agreements with CLA (collectively, the "PSA") providing for the purchase and sale of certain assets associated with the businesses located at the 21 operating CLA properties whereby we can nominate a third party operator to take an assignment and transfer of such assets from CLA and to receive certain beneficial rights under various ancillary agreements. The transfers of such assets are expected to close between May 1, 2019 and March 31, 2020 as closing conditions for each such transfer are satisfied. CLA has agreed to surrender possession of any of those properties that have not been transferred to a replacement operator prior to March 31, 2020 and has agreed to lease and operate each of the 21 properties until the transfer of each property to our replacement tenant or surrender of the property.

The primary closing condition for each transfer will be the requirement that the replacement tenant has obtained all required licenses and permits. There can be no assurance that our replacement tenant of a property will timely satisfy this or other conditions which could delay or preventwe have developed, the closing of one or more transfers. As a result, there can be no assurance that one or more properties willproject may not be surrendered until after March 31, 2020, in which case we would receive such properties without the ability to provide active operations to a replacement tenant which could adversely affect the terms of our leases of such properties to replacement tenants.

CLA is required to file a motion by March 1, 2019 with the bankruptcy court ("Court") seeking authorization of the sale of certain assets pursuant to the PSA. A condition to the parties’ obligations under the PSA is the Court’s approval of the motion. There can be no assurance that this motion will be approved by the Court or that the Court will not require modifications to the PSA as a condition to its approval.

Additionally, in February 2019, we entered into leases of all 21 operating CLA properties with Crème de la Crème ("Crème"), a premium, national early childhood education operator. These leases are contingent upon us delivering possession of the properties and include different financial terms based on whether or not CLA delivers Crème the assets associated with the in-place operations of the school. The leases have 20 year terms that commence upon Crème beginning operations of the schools. Additionally, Crème and the Company each have early termination rights based on school level economic performance.

There can be no assurance as to the outcome of the contemplated transaction or whether some or all of the properties will be transferred to Crème with in-place operations. If some or all of the schools are not transferred to Crème with in-place operations, there will be a delay in re-opening such schools and a corresponding reduction in near term rents from Crème.

Potential criminal proceedings against one of the Company's waterpark mortgagors and certain related parties could negatively impact the likelihood of repayment of the related mortgage loans secured by the waterpark and other collateral and have a material adverse effect on the Company's business, operating results, cash flows, financial condition and liquidity.
The Company has provided mortgage loans to SVV I, LLC ("SVV") and certain SVV affiliates, which were originally utilized by SVV to construct the Schlitterbahn Kansas City Waterpark and develop excess property adjacent to the waterpark in Kansas City, Kansas (the "Project"). The aggregate outstanding principal balance and related accrued interest receivable for the mortgage loans was $179.8 million at December 31, 2018, and SVV accounted for approximately 2% of total revenue for the fiscal year ended December 31, 2018. The loans are secured by the Project and certain additional waterpark properties operated by affiliates of SVV located in New Braunfels, Texas and South Padre Island, Texas. In March 2018, SVV, one of the owners of SVV and certain related parties were criminally indicted on multiple counts in connection with the investigation of a 2016 fatality that occurred at the waterpark. The indictments were subsequently dismissed in February 2019. Although the original indictments were dismissed, the state attorney general could continue to pursue the matter in criminal court.
An anticipated source of repayment on the mortgage loans is the issuance of sales tax revenue bonds ("STAR Bonds") which have been committed for the Project. The STAR Bonds are issuable in tranches as the development Project is completed and require additional approval from the State of Kansas and the local government prior to each issuance. There can be no assurance that the possibility of criminal proceedings would not delay or cause the State of Kansas or the local government to refuse to provide the necessary approval for future issuances. If additional STAR Bonds cannot

be issued, the likelihood that SVV will be able to fully repay the mortgage loans will be negatively impacted. In addition, negative publicity may have a negative impact on attendance at the Schlitterbahn waterparks,achieve targeted operating results which may reduce the funds available to SVV to repay the mortgage loans.impact our financial results by lowering income or recording an impairment loss.
Schlitterbahn has experienced a cash flow shortage during its off-season and we have agreed to advance additional amounts under the mortgage loan to fund this shortfall including certain costs associated with the legal matters discussed above. We engaged an independent appraiser to perform a valuation of our underlying collateral and the valuation indicates that the collateral value is in excess of our mortgage loan. In the event that SVV defaults on the mortgage loans, the Company may need to restructure the mortgage loans, foreclose on the collateral underlying the loans or take other action with respect to the property, which could reduce the Company's revenue associated with the mortgage loans, require the Company to record a provision for loan loss or incur additional expenses. The occurrence of any of the foregoing events may have a material adverse effect on the Company's business, operating results, cash flows, financial condition and liquidity.
We are subject to risks relating to provisions included in some of our leases or financing arrangements with operators of our education properties pursuant to which such operators have the option to purchase leased properties or prepay notes relating to financed education properties.
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Some of our leases or financing arrangements with education operators include provisions pursuant to which tenant operators may purchase leased properties and mortgagor operators may prepay notes relating to financed education properties, in each case, subject to option exercise payments or prepayment penalties. Some of these tenant or mortgagor operators may be able to obtain alternative financing on more economically favorable terms, in which case, such operators may choose to exercise their purchase option or prepayment right. If such operators exercise their purchase options or prepayment rights, we cannot provide any assurances that we would be able to redeploy the capital associated with these properties in other investments or that such investments would provide comparable returns, which could reduce our earnings going forward. Additionally, it can be difficult to forecast when tenants will exercise their purchase option or borrowers will prepay, which can create volatility in our earnings.


We have entered into management agreements to operate certain of our recreation anchored lodging properties and we could be adversely affected if such managers do not manage our recreation anchored lodgingthese properties successfully.
To maintain our status as a REIT, we are generally not permitted to directly operate our recreation anchored lodging properties. As a result, from time to time, we have enteredenter into management agreements with third-party managers to operate certain ofproperties. In the past, this practice has been most frequent with our recreation anchoredexperiential lodging properties. However, as a result of the impact of the COVID-19 pandemic, we have also begun managing a small number of theatres formerly operated by our tenants and may manage a greater number in the future if defaults result in our taking back additional theatre locations. For this reason,managed properties, our ability to direct and control how our recreation anchored lodging properties are operated is less than if we were able to manage these properties directly. Under the terms of our management agreements, our ability to participateparticipation in operating decisions relating to our recreation anchored lodgingthese properties is generally limited to certain matters, and we do not have the authority to require any such property to be operated in any particular manner.matters. We do not supervise any of these managers or their personnel on a day-to-day basis. We cannot provide any assurances that the managers will manage our recreation anchored lodging properties in a manner that is consistent with their respective obligations under the applicable management agreement or our obligations under any franchise agreements. We could be materially and adversely affected if any of our managers fail to effectively manage revenues and expenses, provide quality services and amenities, or otherwise fail to manage our recreation anchored lodging properties in our best interests, and we may be financially responsible for the actions and inactions of the managers. In certain situations, we may terminate the management agreement. However, we can provide no assurances that we could identify a replacement manager, that the franchisor will consent to the replacement manager, or that the replacement manager will manage our recreation anchored lodging property successfully. A failure by our third-party managers to successfully manage our recreation anchored lodging properties could lead to an increase in our operating expenses or decrease in our revenue, or both.


Our indebtedness may affect our ability to operate our business and may have a material adverse effect on our financial condition and results of operations.
We have a significant amount of indebtedness.indebtedness. As of December 31, 2018,2020, we had total debt outstanding of approximately $3.0 billion.$3.7 billion, including $590.0 million outstanding under our revolving credit facility, drawn as a precautionary measure to increase our cash position and preserve financial flexibility that was subsequently paid down to $90.0 million in January 2021. Our indebtedness could have important consequences, such as:


•limiting our ability to obtain additional financing to fund our working capital needs, acquisitions, capital

expenditures or other debt service requirements or for other purposes;
•limiting our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to service debt;
•limiting our ability to compete with other companies who are not as highly leveraged, as we may be less capable of responding to adverse economic and industry conditions;
•restricting us from making strategic acquisitions, developing properties or exploitingpursuing business opportunities;
•restricting the way in which we conduct our business because of financial and operating covenants in the agreements governing our existing and future indebtedness;
•exposing us to potential events of default (if not cured or waived) under financial and operating covenants contained in our debt instruments that could have a material adverse effect on our business, financial condition and operating results;
•increasing our vulnerability to a downturn in general economic conditions or in pricing of our investments;
•negatively impacting our credit ratings; and
•limiting our ability to react to changing market conditions in our industry and in our customers’ industries.


In addition to our debt service obligations, our operations require substantial investments on a continuing basis. Our ability to make scheduled debt payments, to refinance our obligations with respect to our indebtedness and to fund capital and non-capital expenditures necessary to meet our remaining commitments on existing projects and maintain the condition of our assets, as well as to provide capacity for the growth of our business, depends on our financial and operating performance, which, in turn, is subject to prevailing economic conditions and financial, business, competitive, legal and other factors.


Subject to the restrictions in our unsecured revolving credit facility, our unsecured term loan facility and the debt instruments governing our existing senior notes, we may incur significant additional indebtedness, including additional secured indebtedness. Although the terms of our unsecured revolving credit facility, our unsecured term loan facility and the debt instruments governing our existing senior notes contain restrictions on the incurrence of
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additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and additional indebtedness incurred in compliance with these restrictions could be significant. If new debt is added to our current debt levels, the risks described above could increase.


The financial impact of the COVID-19 pandemic has negatively impacted our compliance with financial covenants of our credit facility and other debt agreements. As discussed below under "Management's Discussion and Analysis of Financial Condition and Results of Operations", during 2020, we entered into amendments to our unsecured revolving credit facility, our unsecured term loan facility and the debt instruments governing our certain private placement notes to provide for a Covenant Relief Period. Upon expiration of the Covenant Relief Period, those financial covenants will apply and our failure to comply with the financial covenants of our credit facility and other debt agreements could result in a default and potentially an acceleration of indebtedness. Such non-compliance could negatively impact our ability to make additional borrowings under our revolving credit facility, pay dividends and repurchase common shares under our share repurchase program. There can be no assurances that we will be able to comply with financial covenants in future periods. The ultimate extent to which the COVID-19 pandemic impacts our operations will depend on future developments, which, as discussed above, are highly uncertain and cannot be predicted with confidence.

There are risks inherent in having indebtedness and using such indebtedness to fund acquisitions.
We currently use debt to fund portions of our operations and acquisitions. In a rising interest rate environment, the cost of our existing variable rate debt and any new debt will increase. We have used leverage to acquire properties and expect to continue to do so in the future. Although the use of leverage is common in the real estate industry, our use of debt exposes us to some risks. If a significant number of our tenants fail to make their lease payments for a significant period of time, the risk of which has been heightened as a result of the COVID-19 pandemic, and we do not have sufficient cash to pay principal and interest on the debt, we could default on our debt obligations. A small amount of our debt financing is secured by mortgages on our properties and we may enter into additional secured mortgage financing in the future. If we fail to meet our mortgage payments, the lenders could declare a default and foreclose on those properties.


Most of our debt instruments contain balloon payments which may adversely impact our financial performance and our ability to pay dividends.
Most of our financing arrangements require us to make a lump-sum or "balloon" payment at maturity. There can be no assurance that we will be able to refinance such debt on favorable terms or at all. To the extent we cannot refinance such debt on favorable terms or at all, we may be forced to dispose of properties on disadvantageous terms or pay higher interest rates, either of which would have an adverse impact on our financial performance and ability to pay dividends to our shareholders.



We must obtain new financing in order to grow.
As a REIT, we are required to distribute at least 90% of our taxable net income to shareholders in the form of dividends. Other than deciding to make these dividends in our common shares, we are limited in our ability to use internal capital to acquire properties and must continually raise new capital in order to continue to grow and diversify our investment portfolio. Our ability to raise new capital depends in part on factors beyond our control, including conditions in equity and credit markets, conditions in the industries in which our tenants are engaged and the performance of real estate investment trusts generally.generally, all of which have been negatively impacted by the COVID-19 pandemic. We continually consider and evaluate a variety of potential transactions to raise additional capital, but we cannot assure that attractive alternatives will always be available to us, nor that our share price will increase or remain at a level that will permit us to continue to raise equity capital publicly or privately.

Covenantsprivately, particularly in our debt instruments could adversely affect our financial condition and our acquisitions and development activities.
Some of our properties are subject to mortgages that contain customary covenants such as those that limit our ability, without the prior consentlight of the lender, to further mortgageeffects of the applicable property or to discontinue insurance coverage. Our unsecured revolving credit facility, term loan facility, senior notes and other loans that we may obtain in the future contain certain cross-default provisions as well as customary restrictions, requirements and other limitations on our ability to incur indebtedness, including covenants involving our maximum total debt to total asset value; maximum permitted investments; minimum tangible net worth; maximum secured debt to total asset value; maximum unsecured debt to eligible unencumbered properties; minimum unsecured interest coverage; and minimum fixed charge coverage. Our ability to borrow under our unsecured revolving credit facility and our term loan facility is also subject to compliance with certain other covenants. We also have senior notes issued in a private placement transaction that are subject to certain covenants. In addition, failure to comply with our covenants could cause a default under the applicable debt instrument, and we may then be required to repay such debt with capital from other sources. Under those circumstances, other sources of capital may not be available to us, or be available only on unattractive terms. Additionally, our ability to satisfy current or prospective lenders' insurance requirements may be adversely affected if lenders generally insist upon greater insurance coverage against acts of terrorism than is available to us in the marketplace or on commercially reasonable terms.ongoing COVID-19 pandemic.


We rely on debt financing, including borrowings under our unsecured revolving credit facility, term loan facility, issuances of debt securities and debt secured by individual properties, to finance our acquisition and development activities and for working capital. If we are unable to obtain financing from these or other sources, or to refinance existing indebtedness upon maturity, our financial condition and results of operations would likely be adversely affected.
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Our real estate investments are concentrated in entertainment, recreation and educationexperiential real estate properties and a significant portion of those investments are in megaplex theatre properties, making us more vulnerable economically than if our investments were more diversified.
We acquire, develop or finance entertainment, recreation and educationexperiential real estate properties. A significant portion of our investments are in megaplex theatre properties. Although we are subject to the general risks inherent in concentrating investments in real estate, the risks resulting from a lack of diversification become even greater as a result of investing primarily in entertainment, recreation and educationexperiential real estate properties. These risks are further heightened by the fact that a significant portion of our investments are in megaplex theatre properties. Although a downturn in the real estate industry could significantly adversely affect the value of our properties, a downturn in the entertainment, recreation and education industriesexperiential real estate industry could compound this adverse effect. These adverse effects could be more pronounced than if we diversified our investments to a greater degree outside of entertainment, recreation and educationexperiential real estate properties or, more particularly, outside of megaplex theatre properties. In addition, the COVID-19 pandemic is severely impacting experiential real estate properties, particularly theatre operations, given that such properties rely on social interaction and discretionary consumer spending and have been subject to state and local governmental restrictions.


If we fail to qualify as a REIT, we would be taxed as a corporation, which would substantially reduce funds available for payment of dividends to our shareholders.
If we fail to qualify as a REIT for U.S. federal income tax purposes, we will be taxed as a corporation. We are organized to and believe we qualify as a REIT, and intend to operate in a manner that will allow us to continue to qualify as a REIT. However, we cannot provide any assurance that we have always qualified and will remain qualified in the future. This is because qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), on which there are only limited judicial and administrative interpretations, and depends on facts and circumstances not entirely within our control.control, including requirements relating to the sources of our gross income. Rents received or accrued by us from our tenants may not be treated as qualifying income for purposes of these requirements if the leases are not respected as true leases or qualified financing arrangements for U.S. federal income tax purposes and instead are treated as service contracts, joint ventures or some other type of arrangement. If some or all of our leases are not respected as true leases or qualified financing arrangements for U.S. federal income tax purposes and are not otherwise treated as generating qualifying REIT income, we may fail to qualify to be taxed as a REIT. Furthermore, our qualification as a REIT will depend on our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. Our ability to satisfy the asset tests depends upon our analysis of the characterization and fair market values of our assets, some of which are not susceptible to a precise determination, and for which we may not obtain independent appraisals. In addition,

future legislation, new regulations, administrative interpretations or court decisions may significantly change the tax laws, the application of the tax laws to our qualification as a REIT or the U.S. federal income tax consequences of that qualification.


If we were to fail to qualify as a REIT in any taxable year (including any prior taxable year for which the statute of limitations remains open), we would face tax consequences that could substantially reduce the funds available for the service of our debt and payment of dividends:


•we would not be allowed a deduction for dividends paid to shareholders in computing our taxable income and would be subject to federal income tax at regular corporate rates;
•we could be subject to increased state and local taxes;
•unless we are entitled to relief under statutory provisions, we could not elect to be treated as a REIT for four taxable years following the year in which we were disqualified; and
•we could be subject to tax penalties and interest.


In addition, if we fail to qualify as a REIT, we will no longer be required to pay dividends. As a result of these factors, our failure to qualify as a REIT could adversely affect the market price for our shares.


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Even if we remain qualified for taxation as a REIT under the Internal Revenue Code, we may face other tax liabilities that reduce our funds available for payment of dividends to our shareholders.shareholders or the repurchase of shares.
Even if we remain qualified for taxation as a REIT under the Internal Revenue Code, we may be subject to federal, state and local taxes on our income and assets, including taxes on any undistributed income, excise taxes, state or local income, property and transfer taxes, and other taxes. Also, some jurisdictions may in the future limit or eliminate favorable income tax deductions, including the dividends paid deduction, which could increase our income tax expense. In addition, in order to meet the requirements for qualification and taxation as a REIT under the Internal Revenue Code, prevent the recognition of particular types of non-cash income, or avert the imposition of a 100% tax that applies to specified gains derived by a REIT from dealer property or inventory, we may hold or dispose of some of our assets and conduct some of our operations through our TRSs or other subsidiary corporations that will be subject to corporate level income tax at regular rates. In addition, while we intend that our transactions with our TRSs will be conducted on arm's length bases, we may be subject to a 100% excise tax on a transaction that the Internal Revenue Service ("IRS") or a court determines was not conducted at arm's length. Any of these taxes would decrease cash available for distribution to our shareholders.shareholders or the repurchase of shares under our share repurchase program.


Distribution requirements imposed by law limit our flexibility.
To maintain our status as a REIT for federal income tax purposes, we are generally required to distribute to our shareholders at least 90% of our taxable income for that calendar year. Our taxable income is determined without regard to any deduction for dividends paid and by excluding net capital gains. To the extent that we satisfy the distribution requirement but distribute less than 100% of our taxable income, we will be subject to federal corporate income tax on our undistributed income. In addition, we will incur a 4% nondeductible excise tax on the amount, if any, by which our distributions in any year are less than the sum of (i) 85% of our ordinary income for that year, (ii) 95% of our capital gain net income for that year and (iii) 100% of our undistributed taxable income from prior years. We intend to continue to make distributions to our shareholders to comply with the distribution requirements of the Internal Revenue Code and to reduce exposure to federal income and nondeductible excise taxes. Differences in timing between the receipt of income and the payment of expenses in determining our taxable income and the effect of required debt amortization payments could require us to borrow funds on a short-term basis in order to meet the distribution requirements that are necessary to achieve the tax benefits associated with qualifying as a REIT.

If arrangements involving our TRSs fail to comply as intended with the REIT qualification and taxation rules, we may fail to qualify for taxation as a REIT under the Internal Revenue Code or be subject to significant penalty taxes.
We lease some of our recreation anchoredexperiential lodging properties to our TRSs pursuant to arrangements that, under the Internal Revenue Code, are intended to qualify the rents we receive from our TRSs as income that satisfies the REIT gross income tests. We also intend that our transactions with our TRSs be conducted on arm's length bases so that we and our TRSs will not be subject to penalty taxes under the Internal Revenue Code applicable to mispriced transactions. While relief provisions can sometimes excuse REIT gross income test failures, significant penalty taxes may still be imposed.


For our TRS arrangements to comply as intended with the REIT qualification and taxation rules under the Internal Revenue Code, a number of requirements must be satisfied, including:


•our TRSs may not directly or indirectly operate or manage a lodging facility, as defined by the Internal Revenue Code;
•the leases to our TRSs must be respected as true leases for federal income tax purposes and not as service contracts, partnerships, joint ventures, financings or other types of arrangements;
•the leased properties must constitute qualified lodging facilities (including customary amenities and facilities) under the Internal Revenue Code;
•our leased properties must be managed and operated on behalf of the TRSs by independent contractors who are less than 35% affiliated with us and who are actively engaged (or have affiliates so engaged) in the trade

or business of managing and operating qualified lodging facilities for persons unrelated to us; and
•the rental and other terms of the leases must be arm's length.

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We cannot be sure that the IRS or a court will agree with our assessment that our TRS arrangements comply as intended with REIT qualification and taxation rules. If arrangements involving our TRSs fail to comply as we intended, we may fail to qualify for taxation as a REIT under the Internal Revenue Code or be subject to significant penalty taxes.


We willmay depend on distributions from our direct and indirect subsidiaries to service our debt, and pay dividends to our shareholders.shareholders and repurchase shares. The creditors of these subsidiaries, and our direct creditors, are entitled to amounts payable to them before we pay any dividends to our shareholders.shareholders or repurchase shares.
Substantially all of our assets are held through our subsidiaries. We depend on these subsidiaries for substantially all of our cash flow.flow from operations. The creditors of each of our direct and indirect subsidiaries are entitled to payment of that subsidiary's obligations to them, when due and payable, before distributions may be made by that subsidiary to us. In addition, our creditors, whether secured or unsecured, are entitled to amounts payable to them before we may pay any dividends to our shareholders.shareholders or repurchase shares under our share repurchase program. Thus, our ability to service our debt obligations, and pay dividends to holders of our common and preferred shares and repurchase shares depends on our subsidiaries' ability first to satisfy their obligations to their creditors and then to pay distributions to us and our ability to satisfy our obligations to our direct creditors. Our subsidiaries are separate and distinct legal entities and have no obligations, other than limited guaranties of certain of our debt, to make funds available to us.


Our development financing arrangements expose us to funding and completion risks.
Our ability to meet our construction financing obligations which we have undertaken or may enter into in the future depends on our ability to obtain equity or debt financing in the required amounts. There is no assurance we can obtain this financing or that the financing rates available will ensure a spread between our cost of capital and the rent or interest payable to us under the related leases or mortgage notes receivable. As a result, we could fail to meet our construction financing obligations or decide to cease such funding which, in turn, could result in failed projects and penalties, each of which could have a material adverse impact on our results of operations and business.


We have a limited number of employees and loss of personnel could harm our operations and adversely affect the value of our shares.
We had 6453 full-time employees as of December 31, 20182020 and, therefore, the impact we may feel from the loss of an employee may be greater than the impact such a loss would have on a larger organization. We are dependent on the efforts of the following individuals: Gregory K. Silvers, our President and Chief Executive Officer; Mark A. Peterson, our Executive Vice President and Chief Financial Officer; Craig L. Evans, our SeniorExecutive Vice President, General Counsel and Secretary; Michael L. Hirons,Greg Zimmerman, our SeniorExecutive Vice President - Strategy & Asset Management;and Chief Investment Officer; and Tonya L. Mater, our Senior Vice President and Chief Accounting Officer. While we believe that we could find replacements for our personnel, the loss of their services could harm our operations and adversely affect the value of our shares.


We are subject to risks associated with the employment of personnel by managers of certain of our recreation anchored lodging properties.
Managers of certain of our recreation anchored lodging properties are responsible for hiring and maintaining the labor force asat each of these properties. Although we do not directly employ or manage employees at our recreation anchored lodgingthese properties, we are subject to many of the costs and risks associated with such labor force.force, including but not limited to risks associated with that certain union contract binding the manager of our Kartrite Resort and Indoor Waterpark. From time to time, the operations of our recreation anchored lodging properties that are managed by third parties may be disrupted as a result of strikes, lockouts, public demonstrations or other negative actions and publicity. We may also incur increased legal costs and indirect labor costs as a result of contract disputes and other events. The resolution of labor disputes or renegotiated labor contracts could lead to increased labor costs, either by increases in wages or benefits or by changes in work rules.


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We may in the future have greater dependence upon the gaming industry and may be susceptible to the risks associated with it, which could materially and adversely affect our business, financial condition, liquidity, results of operations and prospects.
As a landlord of gaming facilities or secured creditor to gaming operators, we may be impacted by the risks associated with the gaming industry. Therefore, so long as we make investments in gaming-related assets, our success is dependent on the gaming industry, which could be adversely affected by economic conditions in general, changes in consumer trends and preferences and other factors over which we and our tenants have no control, such as the COVID-19 pandemic. A component of the rent under our gaming facility lease agreements will be based, over time, on the performance of the gaming facilities operated by our tenants on our properties and any decline in the operating results of our gaming tenants could be material and adverse to our business, financial condition, liquidity, results of operations and prospects.

The gaming industry is characterized by a high degree of competition among a large number of participants, including riverboat casinos, dockside casinos, land-based casinos, video lottery, sweepstakes and poker machines not located in casinos, Native American gaming, internet lotteries and other internet wagering gaming services and, in a broader sense, gaming operators face competition from all manner of leisure and entertainment activities. Gaming competition is intense in most of the markets where our facilities are located. Recently, there has been additional significant competition in the gaming industry as a result of the upgrading or expansion of facilities by existing market participants, the entrance of new gaming participants into a market, internet gaming and legislative changes. As competing properties and new markets are opened, we may be negatively impacted. Additionally, decreases in discretionary consumer spending brought about by weakened general economic conditions such as, but not limited to, lackluster recoveries from recessions, high unemployment levels, higher income taxes, low levels of consumer confidence, weakness in the housing market, cultural and demographic changes and increased stock market volatility may negatively impact our revenues and operating cash flows.

We will face extensive regulation from gaming and other regulatory authorities with respect to our gaming properties.
The ownership, operation, and management of gaming facilities are subject to pervasive regulation. These gaming regulations impact our gaming tenants and persons associated with our gaming facilities, which in many jurisdictions include us as the landlord and owner of the real estate. Certain gaming authorities in the jurisdictions in which we hold properties may require us and/or our affiliates to maintain a license as a key business entity or supplier because of our status as landlord. Gaming authorities also retain great discretion to require us to be found suitable as a landlord, and certain of our shareholders, officers and trustees may be required to be found suitable as well.

In many jurisdictions, gaming laws can require certain of our shareholders to file an application, be investigated, and qualify or have his, her or its suitability determined by gaming authorities. Gaming authorities have very broad discretion in determining whether an applicant should be deemed suitable. Subject to certain administrative proceeding requirements, the gaming regulators have the authority to deny any application or limit, condition, restrict, revoke or suspend any license, registration, finding of suitability or approval, or fine any person licensed, registered or found suitable or approved, for any cause deemed reasonable by the gaming authorities.

Gaming authorities may conduct investigations into the conduct or associations of our trustees, officers, key employees or investors to ensure compliance with applicable standards. If we are required to be found suitable and are found suitable as a landlord, we will be registered as a public company with the gaming authorities and will be subject to disciplinary action if, after we receive notice that a person is unsuitable to be a shareholder or to have any other relationship with us, we:

•pay that person any distribution or interest upon any of our voting securities;
•allow that person to exercise, directly or indirectly, any voting right conferred through securities held by that person;
•pay remuneration in any form to that person for services rendered or otherwise; or
•fail to pursue all lawful efforts to require such unsuitable person to relinquish his or her voting securities, including, if necessary, the immediate purchase of the voting securities for cash at fair market value.
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Many jurisdictions also require any person who acquires beneficial ownership of more than a certain percentage of voting securities of a gaming company and, in some jurisdictions, non-voting securities, typically 5% of a publicly-traded company, to report the acquisition to gaming authorities, and gaming authorities may require such holders to apply for qualification, licensure or a finding of suitability, subject to limited exceptions for "institutional investors" that hold a company's voting securities for passive investment purposes only.

Required regulatory approvals can delay or prohibit transfers of our gaming properties, which could result in periods in which we are unable to receive rent for such properties.
Our tenant is (and any future tenants of our gaming properties will be) required to be licensed under applicable law in order to operate any of our properties that are gaming facilities. If our gaming facility lease agreements, or any future lease agreement we enter into, are terminated (which could be required by a regulatory agency) or expire, any new tenant must be licensed and receive other regulatory approvals to operate our properties as gaming facilities. Any delay in, or inability of, the new tenant to receive required licenses and other regulatory approvals from the applicable state and county government agencies may prolong the period during which we are unable to collect the applicable rent. Further, in the event that our gaming facility lease agreements or future lease agreements are terminated or expire and a new tenant is not licensed or fails to receive other regulatory approvals, the properties may not be operated as gaming facilities and we will not be able to collect the applicable rent. Moreover, we may be unable to transfer or sell the affected properties as gaming facilities, which could materially and adversely affect our business, financial condition, liquidity, results of operations and prospects.

Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer. Our service providers, tenants and managers of our recreation anchored lodging properties and their business partners are exposed to similar risks.
In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and that of our tenants, managers of our recreation anchored lodging properties and other customers and personally identifiable information of our employees, in our facility and on our network. Despite our security measures, our

information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our network and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, disrupt our operations, damage our reputation, and cause a loss of confidence, which could adversely affect our business. Our service providers, tenants, managers of our recreation anchored lodging properties and other customers and their business partners are exposed to similar risks and the occurrence of a security breach or other disruption with respect to their information technology and infrastructure could, in turn, have a material adverse impact on our results of operations and business.


Changes in accounting standards issued by the Financial Accounting Standards Board ("FASB") or other standard-setting bodies may adversely affect our business.
Our financial statements are subject to the application of U.S. GAAP, which is periodically revised and/or expanded. From time to time, we are required to adopt new or revised accounting standards issued by recognized authoritative bodies, including the FASB and the SEC. It is possible that accounting standards we are required to adopt may require changes to the current accounting treatment that we apply to our consolidated financial statements and may require us to make significant changes to our systems. In particular, the amended guidance for lease accounting will require lessees to capitalize substantially all leases on their balance sheet by recognizing a lessee's rights and obligations. Under the new lease accounting rules, many lessees that account for certain leases on an "off balance sheet" basis will be required to account for such leases "on balance sheet." This change will remove many of the differences in the way companies account for owned property and leased property and could have a material effect on various aspects of our tenants' businesses, including the appearance of their credit quality and other factors they consider in deciding whether to own or lease properties. The new lease accounting rules could cause lessees to prefer shorter lease terms in an effort to reduce the leasing liability required to be recorded on their balance sheet or some companies may decide to prefer property ownership to leasing. In addition, we are the lessee on certain land lease arrangements as well as our corporate office lease. We are required to record the rights and obligations associated with these leases and we cannot predict how this increase in our liabilities will impact our ability to obtain additional financing. Changes in accounting standards including the new lease accounting rules, could result in a material adverse impact on our business, financial condition and results of operations.


Risks That Apply to Our Real Estate Business


Real estate income and the value of real estate investments fluctuate due to various factors.
The value of real estate fluctuates depending on conditions in the general economy and the real estate business. These conditions may also limit our revenues and available cash. The rents, interest and other payments we receive and the occupancy levels at our properties may decline as a result of adverse changes in any of the factors that affect the value of our real estate. If our revenues decline, we generally would expect to have less cash available to pay our indebtedness, and distribute to our shareholders.shareholders and effect share repurchases. In addition, some of our unreimbursed costs of owning real estate may not decline when the related rents decline.

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The factors that affect the value of our real estate include, among other things:


•international, national, regional and local economic conditions;
•consequences of any armed conflict involving, or terrorist attack against, the United States or Canada;
•the threat of domestic terrorism or pandemic outbreaks (such as COVID-19), which could cause customers of our tenantsconsumers to avoid public places where large crowds are in attendance, such as megaplex theatres or recreational properties operated by our tenants or recreation anchored lodging properties operated by our managers;congregate settings;
•our ability or the ability of our tenants or managers to secure adequate insurance;
•natural disasters, such as earthquakes, hurricanes and floods, which could exceed the aggregate limits of insurance coverage;
•local conditions such as an oversupply of space or lodging properties or a reduction in demand for real estate in the area;
•competition from other available space or, in the case of our recreation anchoredexperiential lodging properties, competition from other lodging properties or alternative lodging options in our markets;
•whether tenants and users such as customers of our tenants consider a property attractive;

•the financial condition of our tenants, mortgagors and managers, including the extent of bankruptcies or defaults;
•whether we are able to pass some or all of any increased operating costs through to tenants or other customers;
•how well we manage our properties or how well the managers of our recreation anchored lodging properties manage those properties;
•in the case of our recreation anchoredexperiential lodging properties, dependence on demand from business and leisure travelers, which may fluctuate and be seasonal;
•fluctuations in interest rates;
•changes in real estate taxes and other expenses;
•changes in market rental rates;
•the timing and costs associated with property improvements and rentals;
•changes in taxation or zoning laws;
•government regulation;
•availability of financing on acceptable terms or at all;
•potential liability under environmental or other laws or regulations; and
•general competitive factors.


The rents, interest and other payments we receive and the occupancy levels at our properties may decline as a result of adverse changes in any of these factors. If our revenues decline, we generally would expect to have less cash available to pay our indebtedness and distribute to our shareholders. In addition, some of our unreimbursed costs of owning real estate may not decline when the related rents decline.


There are risks associated with owning and leasing real estate.
Although our lease terms in most cases, obligate the tenants to bear substantially all of the costs of operating the properties and our managers to manage such costs, investing in real estate involves a number of risks, including:


•the risk that tenants will not perform under their leases or that managers will not perform under their management agreements, reducing our income from such leases or properties under such management;
•we may not always be able to lease properties at favorable rates or certain tenants may require significant capital expenditures by us to conform existing properties to their requirements;
•we may not always be able to sell a property when we desire to do so at a favorable price; and
•changes in tax, zoning or other laws could make properties less attractive or less profitable.


If a tenant fails to perform on its lease covenants or a manager fails to perform on its management covenants, that would not excuse us from meeting any debt obligation secured by the property and could require us to fund reserves in favor of our lenders, thereby reducing funds available for payment of dividends. We cannot be assured that tenants or managers will elect to renew their leases or management agreements when the terms expire. If a tenant or manager does not renew its lease or agreement or if a tenant or a manager defaults on its lease or management obligations, there is no assurance we could obtain a substitute tenant or manager on acceptable terms. If we cannot
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obtain another quality tenant or manager, we may be required to modify the property for a different use, which may involve a significant capital expenditure and a delay in re-leasing the property or obtaining a new manager. In addition, tenants or managers may seek concessions or other modifications to existing leases and management agreements as a result of the COVID-19 pandemic.


Some potential losses are not covered by insurance.
Our leases with tenants and agreements with managers of our recreation anchored lodging properties require the tenants and managers to carry comprehensive liability, casualty, workers' compensation, extended coverage and rental loss insurance on our properties, as applicable. We believe the required coverage is of the type, and amount, customarily obtained by an owner of similar properties. We believe all of our properties are adequately insured. However, we are exposed to risks that the insurance coverage levels required under our leases with tenants and agreements with managers of our recreation anchored lodging properties may be inadequate, and these risks may be increased as we expand our portfolio into experiential properties that may present more risk of loss as compared to properties in our existing portfolio. In addition, there are some types of losses, such as pandemics, catastrophic acts of nature, acts of war or riots, for which we, our tenants or managers of our recreation anchored lodging properties cannot obtain insurance at an acceptable cost.cost or at all. If there is an uninsured loss or a loss in excess of insurance limits, we could lose both the revenues generated by the affected property and the capital we have invested in the property. We would, however, remain obligated to repay

any mortgage indebtedness or other obligations related to the property. In addition, the cost of insurance protection against terrorist acts has risen dramatically over the years. There can be no assurance our tenants or managers of our recreation anchored lodging properties will be able to obtain terrorism insurance coverage, as applicable, or that any coverage they do obtain will adequately protect our properties against loss from terrorist attack.


Joint ventures may limit flexibility with jointly owned investments.
We may continue to acquire or develop properties in joint ventures with third parties when those transactions appear desirable. We would not own the entire interest in any property acquired by a joint venture. Major decisions regarding a joint venture property may require the consent of our partner. If we have a dispute with a joint venture partner, we may feel it necessary or become obligated to acquire the partner's interest in the venture. However, we cannot ensure that the price we would have to pay or the timing of the acquisition would be favorable to us. If we own less than a 50% interest in any joint venture, or if the venture is jointly controlled, the assets and financial results of the joint venture may not be reportable by us on a consolidated basis. To the extent we have commitments to, or on behalf of, or are dependent on, any such “off-balance sheet”"off-balance sheet" arrangements, or if those arrangements or their properties or leases are subject to material contingencies, our liquidity, financial condition and operating results could be adversely affected by those commitments or off-balance sheet arrangements.


Our multi-tenant properties expose us to additional risks.
Our entertainment retail centersdistricts in Colorado, New York, California, and Ontario, Canada, and similar properties we may seek to acquire or develop in the future, involve risks not typically encountered in the purchase and lease-back of real estate properties which are operated by a single tenant. The ownership or development of multi-tenant retail centers could expose us to the risk that a sufficient number of suitable tenants may not be found to enable the centers to operate profitably and provide a return to us. This risk may be compounded by the failure of existing tenants to satisfy their obligations due to various factors, including economic downturns. In addition, the COVID-19 pandemic is severely impacting our retail tenants' businesses, financial condition and liquidity, which has resulted in most of these tenants failing to satisfy their obligations to us or otherwise seeking modifications to their lease arrangements.These risks, in turn, could cause a material adverse impact to our results of operations and business.


Retail centers are also subject to tenant turnover and fluctuations in occupancy rates, which could affect our operating results. Multi-tenant retail centers also expose us to the risk of potential “CAM"CAM slippage,”" which may occur when the actual cost of taxes, insurance and maintenance at the property exceeds the CAM fees paid by tenants.


Failure to comply with the Americans with Disabilities Act and other laws could result in substantial costs.
Most of our properties must comply with the Americans with Disabilities Act (“ADA”).ADA. The ADA requires that public accommodations reasonably accommodate individuals with disabilities and that new construction or alterations be made to commercial facilities to conform to accessibility guidelines. Failure to comply with the ADA can result in injunctions, fines, damage
26

awards to private parties and additional capital expenditures to remedy noncompliance. Our leases with tenants and agreements with managers of our recreation anchored lodging properties require them to comply with the ADA.


Our properties are also subject to various other federal, state and local regulatory requirements. We do not know whether existing requirements will change or whether compliance with future requirements will involve significant unanticipated expenditures. Although these expenditures would be the responsibility of our tenants in most cases and for our managers to oversee at our recreation anchored lodging properties, if these tenants or managers fail to perform these obligations, we may be required to do so.


Potential liability for environmental contamination could result in substantial costs.
Under federal, state and local environmental laws, we may be required to investigate and clean up any release of hazardous or toxic substances or petroleum products at our properties, regardless of our knowledge or actual responsibility, simply because of our current or past ownership of the real estate. If unidentified environmental problems arise, we may have to make substantial payments, which could adversely affect our cash flow and our ability to service our debt and pay dividends to our shareholders. This is because:


•as owner, we may have to pay for property damage and for investigation and clean-up costs incurred in connection with the contamination;
•the law may impose clean-up responsibility and liability regardless of whether the owner or operator knew

of or caused the contamination;
•even if more than one person is responsible for the contamination, each person who shares legal liability under environmental laws may be held responsible for all of the clean-up costs; and
•governmental entities and third parties may sue the owner or operator of a contaminated site for damages and costs.


These costs could be substantial and in extreme cases could exceed the value of the contaminated property. The presence of hazardous substances or petroleum products or the failure to properly remediate contamination may adversely affect our ability to borrow against, sell or lease an affected property. In addition, some environmental laws create liens on contaminated sites in favor of the government for damages and costs it incurs in connection with a contamination. Most of our loan agreements require the Company or a subsidiary to indemnify the lender against environmental liabilities. Our leases with tenants and agreements with managers of our recreation anchored lodging properties require them to operate the properties in compliance with environmental laws and to indemnify us against environmental liability arising from the operation of the properties. We believe all of our properties are in material compliance with environmental laws. However, we could be subject to strict liability under environmental laws because we own the properties. There is also a risk that tenants may not satisfy their environmental compliance and indemnification obligations under the leases or other agreements. Any of these events could substantially increase our cost of operations, require us to fund environmental indemnities in favor of our lenders, limit the amount we could borrow under our unsecured revolving credit facility and term loan facility and reduce our ability to service our debt and pay dividends to shareholders.


Real estate investments are relatively illiquid.
We have previously disclosed our intent to undertake certain asset dispositions. In addition, we may desire to sell other properties in the future because of changes in market conditions, poor tenant performance or default of any mortgage we hold, or to avail ourselves of other opportunities. We may also be required to sell a property in the future to meet debt obligations or avoid a default. Specialty real estate projects such as we have cannot always be sold quickly, and we cannot assure you that we could always obtain a favorable price. In addition, the Internal Revenue Code limits our ability to sell our properties. We may be required to invest in the restoration or modification of a property before we can sell it. The inability to respond promptly to changes in the performance of our property portfolio could adversely affect our financial condition and ability to service our debt, and pay dividends to our shareholders.shareholders and effect share repurchases.


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There are risks in owning assets outside the United States.
Our properties in Canada are subject to the risks normally associated with international operations. The rentals under our Canadian leases are payable in Canadian dollars ("CAD"), which could expose us to losses resulting from fluctuations in exchange rates to the extent we have not hedged our position. Canadian real estate and tax laws are complex and subject to change, and we cannot assure you we will always be in compliance with those laws or that compliance will not expose us to additional expense. We may also be subject to fluctuations in Canadian real estate values or markets or the Canadian economy as a whole, which may adversely affect our Canadian investments.


Additionally, we have made investments in projects located in China and may enter other international markets, which may have similar risks as described above as well as unique risks associated with a specific country.


There are risks in owning or financing properties for which the tenant's, mortgagor's, or our operations may be impacted by weather conditions, climate change and climate change.natural disasters.
We have acquired and financed ski properties and expect to do so in the future. The operators of these properties, our tenants or mortgagors, are dependent upon the operations of the properties to pay their rents and service their loans. The ski property operator's ability to attract visitors is influenced by weather conditions and climate change in general, each of which may impact the amount of snowfall during the ski season. Adverse weather conditions may discourage visitors from participating in outdoor activities. In addition, unseasonably warm weather may result in inadequate natural snowfall, which increases the cost of snowmaking, and could render snowmaking wholly or partially ineffective in maintaining quality skiing conditions and attracting visitors. Excessive natural snowfall may materially increase the costs incurred for grooming trails and may also make it difficult for visitors to obtain access to ski properties. We also own and finance attractions (including waterparks) which would also be subject to risks relating to weather conditions such as in the case of waterparks and amusement parks, excessive rainfall or unseasonable temperatures. Prolonged

periods of adverse weather conditions, or the occurrence of such conditions during peak visitation periods, could have a material adverse effect on the operator's financial results and could impair the ability of the operator to make rental or other payments or service our loans.


A severe natural disaster, such as a forest fire, may interrupt the operations of an operator, damage our properties, reduce the number of guests who visit the resorts in affected areas and negatively impact an operator's revenue and profitability. Damage to our properties could take a long time to repair and there is no guarantee that we would have adequate insurance to cover the costs of repair and recoup lost profits. Furthermore, such a disaster may interrupt or impede access to our affected properties or require evacuations and may cause visits to our affected properties to decrease for an indefinite period. The ability of our operators to attract visitors to our experiential lodging properties is also influenced by the aesthetics and natural beauty of the outdoor environment where these resorts are located. A severe forest fire or other severe impacts from naturally occurring events could negatively impact the natural beauty of our resort properties and have a long-term negative impact on an operator's overall guest visitation as it could take several years for the environment to recover.

We face risks associated with the development, redevelopment and expansion of properties and the acquisition of other real estate related companies.
We may develop, redevelop or expand new or existing properties or acquire other real estate related companies, and these activities are subject to various risks. We may not be successful in pursuing such development or acquisition opportunities. In addition, newly developed or redeveloped/expanded properties or newly acquired companies may not perform as well as expected. We are subject to other risks in connection with any such development or acquisition activities, including the following:


•we may not succeed in completing developments or consummating desired acquisitions on time;
•we may face competition in pursuing development or acquisition opportunities, which could increase our costs;
•we may encounter difficulties and incur substantial expenses in integrating acquired properties into our operations and systems and, in any event, the integration may require a substantial amount of time on the part of both our management and employees and therefore divert their attention from other aspects of our business;
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•we may undertake developments or acquisitions in new markets or industries where we do not have the same level of market knowledge, which may expose us to unanticipated risks in those markets and industries to which we are unable to effectively respond, such as an inability to attract qualified personnel with knowledge of such markets and industries;
•we may incur construction costs in connection with developments, which may be higher than projected, potentially making the project unfeasible or unprofitable;
•we may incur unanticipated capital expenditures in order to maintain or improve acquired properties;
•we may be unable to obtain zoning, occupancy or other governmental approvals;
•we may experience delays in receiving rental payments for developments that are not completed on time;
•our developments or acquisitions may not be profitable;
•we may need the consent of third parties such as anchor tenants, mortgage lenders and joint venture partners, and those consents may be withheld;
•we may incur adverse tax consequences if we fail to qualify as a REIT for U.S. federal income tax purposes following an acquisition;
•we may be subject to risks associated with providing mortgage financing to third parties in connection with transactions, including any default under such mortgage financing;
•we may face litigation or other claims in connection with, or as a result of, acquisitions, including claims from terminated employees, tenants, former stockholders or other third parties;
•the market price of our common shares, preferred shares and debt securities may decline, particularly if we do not achieve the perceived benefits of any acquisition as rapidly or to the extent anticipated by securities or industry analysts or if the effect of an acquisition on our financial condition, results of operations and cash flows is not consistent with the expectations of these analysts;
•we may issue shares in connection with acquisitions resulting in dilution to our existing shareholders; and
•we may assume debt or other liabilities in connection with acquisitions.


In addition, there is no assurance that planned third-party financing related to development and acquisition opportunities will be provided on a timely basis or at all, thus increasing the risk that such opportunities are delayed or fail to be completed as originally contemplated. We may also abandon development or acquisition opportunities that we have begun pursuing and consequently fail to recover expenses already incurred and have devoted management time to a matter not consummated. In some cases, we may agree to lease or other financing terms for a development project in advance of completing and funding the project, in which case we are exposed to the risk of an increase in our cost of capital during the interim period leading up to the funding, which can reduce, eliminate or result in a negative spread between our cost of capital and the payments we expect to receive from the project. Furthermore, our acquisitions of new properties or companies will expose us to the liabilities of those properties or companies, some of which we may not be aware at the time of acquisition. In addition, development of our existing properties presents similar risks. If a

development or acquisition is unsuccessful, either because it is not meeting our expectations or was not completed according to our plans, we could lose our investment in the development or acquisition.


Risks That May Affect the Market Price of Our Shares


We cannot assure you we will continue paying cash dividends at current rates.
Our dividend policy is determined by our Board of Trustees. Our ability to continue payingpay dividends on our common shares or to pay dividends on our preferred shares at their stated rates or to increase our common share dividend rate will dependdepends on a number of factors, including our liquidity, our financial condition and results of future operations, the performance of lease and mortgage terms by our tenants and customers, our ability to acquire, finance and lease additional properties at attractive rates, and provisions in our loan covenants.

The financial impact of the COVID-19 pandemic has negatively impacted our compliance with financial covenants of our credit facility and other debt agreements. During 2020, we temporarily suspended our monthly cash dividend to common shareholders after the common share dividend payable May 15, 2020, and we are subject to restrictions on the payment of common share dividends during the Covenant Relief Period (except as may be necessary to maintain REIT status and to not owe income tax) under the amendments to our unsecured revolving credit facility, our unsecured term loan facility and the debt instruments governing certain of our private placement notes, as
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described below under "Management's Discussion and Analysis of Financial Condition and Results of Operations". If we do not reinstate common share dividends in future periods or maintain or increase ourany future common share dividend rate, that could have an adverse effect on the market price of our common shares and possibly our preferred shares.shares could be adversely affected. Furthermore, if the Board of Trustees decides to pay dividends on our common shares partially or substantially all in common shares, that could have an adverse effect on the market price of our common shares and possibly our preferred shares. There can be no assurances as to our ability to reinstitute cash dividend payments to common shareholders or the timing thereof or to continue paying dividends on our preferred shares.


Market interest rates may have an effect on the value of our shares.
One of the factors that investors may consider in deciding whether to buy or sell our common shares or preferred shares is our dividend rate as a percentage of our share price, relative to market interest rates. If market interest rates continue to increase, prospective investors may desire a higher dividend rate on our common shares or seek securities paying higher dividends or interest.


Broad market fluctuations could negatively impact the market price of our shares.
The stock market has experienced extreme price and volume fluctuations as a result of the COVID-19 pandemic that have affected the market price of the common equity of many companies, including companies in industries similar or related to ours. These broad market fluctuations could reduce the market price of our shares. Furthermore, our operating results and prospects may be below the expectations of public market analysts and investors or may be lower than those of companies with comparable market capitalizations. Either of these factors could lead to a material decline in the market price of our shares.

Market prices for our shares may be affected by perceptions about the financial health or share value of our tenants, mortgagors and managers or the performance of REIT stocks generally.
To the extent any of our tenants or customers, or their competition, report losses or slower earnings growth, take charges against earnings or enter bankruptcy proceedings, the market price for our shares could be adversely affected. The reduced economic activity resulting from the COVID-19 pandemic is severely impacting our tenants' businesses, financial condition and liquidity, which could adversely affect the market price for our shares.The market price for our shares could also be affected by any weakness in the performance of REIT stocks generally or weakness in any of the sectors in which our tenants and customers operate.


Limits on changes in control may discourage takeover attempts which may be beneficial to our shareholders.
There are a number of provisions in our Declaration of Trust and Bylaws and under Maryland law and agreements we have with others, any of which could make it more difficult for a party to make a tender offer for our shares or complete a takeover of the Company which is not approved by our Board of Trustees. These include:


•a limit on beneficial ownership of our shares, which acts as a defense against a hostile takeover or acquisition of a significant or controlling interest, in addition to preserving our REIT status;
•the ability of the Board of Trustees to issue preferred or common shares, to reclassify preferred or common shares, and to increase the amount of our authorized preferred or common shares, without shareholder approval;
•limits on the ability of shareholders to remove trustees without cause;
•requirements for advance notice of shareholder proposals at shareholder meetings;
•provisions of Maryland law restricting business combinations and control share acquisitions not approved by the Board of Trustees and unsolicited takeovers;
•provisions of Maryland law protecting corporations (and by extension REITs) against unsolicited takeovers by limiting the duties of the trustees in unsolicited takeover situations;
•provisions in Maryland law providing that the trustees are not subject to any higher duty or greater scrutiny than that applied to any other director under Maryland law in transactions relating to the acquisition or potential acquisition of control;
•provisions of Maryland law creating a statutory presumption that an act of the trustees satisfies the applicable standards of conduct for trustees under Maryland law;
•provisions in loan or joint venture agreements putting the Company in default upon a change in control; and
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•provisions of our compensation arrangements with our employees calling for severance compensation and vesting of equity compensation upon termination of employment upon a change in control or certain events of the employees' termination of service.


Any or all of these provisions could delay or prevent a change in control of the Company, even if the change was in our shareholders' interest or offered a greater return to our shareholders.


We may change our policies without obtaining the approval of our shareholders.
Our operating and financial policies, including our policies with respect to acquiring or financing real estate or other companies, growth, operations, indebtedness, capitalization and dividends, are exclusively determined by our Board of Trustees. Accordingly, our shareholders do not control these policies.


Dilution could affect the value of our shares.
Our future growth will depend in part on our ability to raise additional capital. If we raise additional capital through the issuance of equity securities, the interests of holders of our common shares could be diluted. Likewise, our Board of Trustees is authorized to cause us to issue preferred shares in one or more series, the holders of which would be entitled to dividends and voting and other rights as our Board of Trustees determines, and which could be senior to or convertible into our commoncommon shares. Accordingly, an issuance by us of preferred shares could be dilutive to or otherwise adversely affect the interests of holders of our common shares. As of December 31, 2018,2020, our Series C preferred shares are convertible, at each of the holder's option, into our common shares at a conversion rate of 0.39540.4137 common shares per $25.00 liquidation preference, which is equivalent to a conversion price of approximately $63.23$60.43 per common share (subject to adjustment in certain events). Additionally, as of December 31, 2018,2020, our Series E preferred shares are convertible, at each of the holder's option, into our common shares at a conversion rate of 0.46860.4826 common shares per $25.00 liquidation preference, which is equivalent to a conversion price of approximately $53.35$51.80 per common share (subject to adjustment in certain events). Under certain circumstances in connection with a change in control of the Company, holders of our Series G preferred shares may elect to convert some or all of their Series G preferred shares into a number of our common shares per Series G preferred share equal to the lesser of (a) the $25.00 per share liquidation preference, plus accrued and unpaid dividends divided by the market value of our common shares or (b) 0.7389 shares. Depending upon the number of Series C, Series E and Series G preferred shares being converted at one time, a conversion of Series C, Series E and Series G preferred shares could be dilutive to or otherwise adversely affect the interests of holders of our common shares. In addition, we may issue a significant amount of equity securities in connection with acquisitions or investments, with or without seeking shareholder approval, which could result in significant dilution to our existing shareholders.


Future offerings of debt or equity securities, which may rank senior to our common shares, may adversely affect the market price of our common shares.
If we decide to issue debt securities in the future, which would rank senior to our common shares, it is likely that they will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Additionally, any equity securities or convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common shares and may result in dilution to owners of our common shares. We and, indirectly, our shareholders, will bear the cost of issuing and servicing such securities. Because our decision to issue debt or equity securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, holders of our common shares will bear the risk of our future offerings reducing the market price of our common shares and diluting the value of their shareholdings in us.


Changes in foreign currency exchange rates may have an impact on the value of our shares.
The functional currency for our Canadian operations is the Canadian dollar. As a result, our future operating results could be affected by fluctuations in the exchange rate between U.S. and Canadian dollars, which in turn could affect our share price. We have attempted to mitigate our exposure to Canadian currency exchange risk by entering into foreign currency exchange contracts to hedge in part our exposure to exchange rate fluctuations. Foreign currency derivatives are subject to future risk of loss. We do not engage in purchasing foreign exchange contracts for speculative purposes.

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Additionally, we have made investments in China and may enter other international markets which pose similar currency fluctuation risks as described above.


We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our shares.

At any time, the U.S. federal income tax laws or regulations governing REITs or the administrative interpretations of those laws or regulations may be changed, possibly with retroactive effect. In addition, there have been a number of proposals in Congress with respect to tax laws, including proposals to adopt a flat tax or replace the income tax system with a national sales tax or value-added tax.

On December 22, 2017, the Tax Cuts and Jobs Act was signed into law. The Tax Cuts and Jobs Act made many significant changes to the U.S. federal income tax laws applicable to businesses and their owners, including REITs and their shareholders. Pursuant to this legislation, as of January 1, 2018, (1) the federal income tax rate applicable to corporations was reduced to 21%, (2) the highest marginal individual income tax rate was reduced to 37%, and (3) the corporate alternative minimum tax was repealed. In addition, individuals, estates and trusts may deduct up to 20% of certain pass-through income, including ordinary REIT dividends that are not “capital gain dividends” or “qualified dividend income,” subject to complex limitations. For taxpayers qualifying for the full deduction, the effective maximum tax rate on ordinary REIT dividends would be 29.6% (through taxable years ending in 2025). The maximum rate of withholding with respect to our distributions to non-U.S. shareholders that are treated as attributable to gains from the sale or exchange of U.S. real property interests was also reduced from 35% to 21%. The deduction of net interest expense is limited for all businesses, other than certain electing businesses, including real estate businesses, which limitation could adversely affect our taxable REIT subsidiaries.

While the changes in the Tax Cuts and Jobs Act generally appear to be favorable with respect to REITs, the extensive changes to non-REIT provisions in the Internal Revenue Code may have unanticipated effects on us or our shareholders. Moreover, Congressional leaders have recognized that the process of adopting extensive tax legislation in a short amount of time without hearings and substantial time for review is likely to have led to drafting errors, issues needing clarification and unintended consequences that will have to be reviewed in subsequent tax legislation. To date, the IRS has issued only limited guidance on the changes made in the Tax Cuts and Jobs Act. It is not clear at this time whether Congress will address these issues or when the IRS will issue additional administrative guidance.

We cannot predict if or when any new U.S. federal income tax law, regulation or administrative interpretation, or any amendment to any existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective or whether any such law, regulation or interpretation may take effect retroactively. We and our shareholders could be adversely affected by any such change in, or any new, U.S. federal income tax law, regulation or administrative interpretation. Furthermore, any proposals seeking broader reform of U.S. federal income tax laws, if enacted, could change the federal income tax laws applicable to REITs, subject us to federal tax or reduce or eliminate the current deduction for dividends paid to our shareholders, any of which could negatively affect the market for our shares.


Item 1B. Unresolved Staff Comments


There are no unresolved comments from the staff of the SEC required to be disclosed herein as of the date of this Annual Report on Form 10-K.



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Item 2. Properties


As of December 31, 2018,2020, our real estate portfolio consisted of investments in each of our four operatingExperiential and Education reportable segments. Except as otherwise noted, all of the real estate investments listed below are owned or ground leased directly by us.


The following table sets forth our owned properties (excludes properties under development, land held for development and properties securing our mortgage notes) listed by segment and property type, gross square footage (except for certain ski and attraction properties where such number is not meaningful), percentage leased and total rental revenue for the year ended December 31, 20182020 (dollars in thousands). At certain properties included below, we are the tenant under third-party ground leases and have assumed responsibility for performing the obligations thereunder. However, pursuant to the facility leases, the tenants are generally responsible for performing substantially all of our obligations under the ground leases.

Number of PropertiesBuilding Gross Square FootagePercentage LeasedRental Revenue for the Year
Ended December 31, 2020		% of Company's Rental Revenue
Experiential
Theatres178 12,203,123 94.1 %$103,984 28.0 %
Eat & Play (1)51 4,922,523 90.1 %120,186 32.3 %
Attractions17 21,205 100.0 %26,605 7.1 %
Ski5 608,255 100.0 %28,466 7.6 %
Experiential Lodging5 871,417 100.0 %16,303 4.4 %
Gaming (2)1 — — %10,631 2.9 %
Cultural3 512,768 100.0 %2,639 0.7 %
Fitness & Wellness3 186,900 100.0 %2,316 0.6 %
Total Experiential263 19,326,191 93.8 %$311,130 83.6 %
Education
Early Childhood Education Centers63 1,115,821 100.0 %$24,649 6.6 %
Private Schools9 292,362 100.0 %36,397 9.8 %
Total Education72 1,408,183 100.0 %$61,046 16.4 %
Total335 20,734,374 94.2 %$372,176 100.0 %

(1) Includes seven theatres located in entertainment districts.
(2) Represents land under ground lease to a casino operator.


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 Number of Properties Building Gross Square Footage Percentage Leased Rental Revenue for the Year
Ended December 31, 2018		 % of Company's Rental Revenue
Entertainment         
Megaplex Theatres152
 10,679,882
   $229,413
 41.2%
ERCs/Retail7
 2,071,566
   61,395
 11.0%
Other Entertainment11
 690,369
   10,974
 2.0%
Total Entertainment170
 13,441,817
 98.4% 301,782
 54.2%
Recreation         
Ski Properties5
 608,255
   24,981
 4.5%
Attractions18
 952,527
   50,973
 9.2%
Golf Entertainment Complexes31
 1,974,304
   59,533
 10.7%
Other Recreation10
 498,995
   7,335
 1.3%
Total Recreation64
 4,034,081
 100% 142,822
 25.7%
Education         
Public Charter Schools51
 2,823,965
   47,905
 8.6%
Early Childhood Education68
 1,168,962
   25,064
 4.5%
Private Schools14
 710,667
   29,673
 5.3%
Total Education133
 4,703,594
 97.8% 102,642
 18.4%
Other1
 —
 100% 9,117
 1.7%
          
Total368
 22,179,492
 98.6% $556,363
 100.0%




The following table sets forth lease expirations regarding EPR’s owned megaplex theatre portfolio as of December 31, 20182020 excluding non-theatre tenant leases at entertainment districts and experiential lodging properties operated through a traditional REIT lodging structure (dollars in thousands):
YearNumber of
Properties		Square
Footage		Rental Revenue for the Year
Ended December 31, 2020		% of Company's Rental
Revenue
2021— — $— — %
20222 113,770 1,814 0.5 %
20232 90,134 953 0.3 %
20246 458,240 6,294 1.7 %
20252 39,240 2,673 0.7 %
20267 287,693 3,595 1.0 %
202711 657,881 18,660 5.0 %
202811 824,306 9,912 2.7 %
202912 679,171 10,401 2.8 %
203022 1,663,772 22,405 6.0 %
203113 688,919 6,702 1.8 %
203219 979,167 11,988 3.2 %
20339 423,882 8,343 2.2 %
203441 2,459,231 28,130 7.6 %
203533 2,691,756 58,482 15.7 %
203622 1,619,365 21,634 5.8 %
203732 1,941,997 38,372 10.3 %
203835 1,717,060 26,223 7.0 %
20394 176,156 6,739 1.8 %
20402 101,159 1,923 0.5 %
Thereafter35 472,852 25,630 6.9 %
320 18,085,751 $310,873 83.5 %





















34

Megaplex Theatre Portfolio 
Year 

Number of
Properties
 
Square
Footage
 
Revenue for the Year
Ended December 31, 2018
 
% of Company's Total
Revenue
 
2019 3
 303,831
 $6,511
 1% 
2020 3
 186,512
 3,986
 1% 
2021 9
 643,849
 11,106
 2% 
2022 10
 822,146
 20,573
 3% 
2023 9
 892,232
 21,257
 3% 
2024 14
 1,133,549
 28,183
 4% 
2025 5
 287,555
 10,028
 2% 
2026 8
 500,648
 16,354
 2% 
2027 17
 992,828
 24,184
 4% 
2028 14
 992,578
 27,451
 4% 
2029 10
 714,593
 12,486
 2% 
2030 16
 1,323,531
 21,594
 3% 
2031 14
 1,025,239
 22,847
 3% 
2032 7
 344,370
 6,565
 1% 
2033 9
 462,822
 6,708
 1% 
2034 2
 111,493
 1,977
 —% 
2035 2
 51,037
 2,297
 —% 
2036 2
 103,164
 2,393
 —% 
2037 3
 310,360
 7,726
 1% 
2038 2
 116,464
 2,294
 —% 
  159
 11,318,801
 $256,520
 37% 



























The following table sets forth lease expirations regarding EPR’sOur owned recreation portfolio as of December 31, 2018, excluding two properties recorded as investment in joint ventures (dollars in thousands):
 Recreation Portfolio  
Year 

Number of
Properties
 
Square
Footage
 
Revenue for the Year
Ended December 31, 2018
 
% of Company's Total
Revenue
 
2019 —
 —
 $—
 —% 
2020 —
 —
 —
 —% 
2021 —
 —
 —
 —% 
2022 —
 —
 —
 —% 
2023 —
 —
 —
 —% 
2024 —
 —
 —
 —% 
2025 1
 —
 1,850
 —% 
2026 1
 —
 4,922
 1% 
2027 2
 239,547
 17,715
 2% 
2028 —
 —
 —
 —% 
2029 2
 —
 3,068
 —% 
2030 —
 —
 —
 —% 
2031 —
 —
 —
 —% 
2032 5
 183,723
 6,235
 1% 
2033 2
 64,100
 3,726
 1% 
2034 7
 399,205
 11,706
 2% 
2035 13
 1,481,200
 41,380
 6% 
2036 5
 263,758
 10,124
 1% 
2037 15
 433,008
 35,326
 5% 
2038 7
 748,340
 5,824
 1% 
Thereafter 2
 —
 1,008
 —% 
  62
 3,812,881
 $142,884
 20% 


























The following table sets forth lease expirations regarding EPR’s owned education portfolio as of December 31, 2018, (dollars in thousands):
 Education Portfolio  
Year 

Number of
Properties
 
Square
Footage
 
Revenue for the Year
Ended December 31, 2018
 
% of Company's Total
Revenue
 
2019 22
 642,042
 $9,394
 1% 
2020 —
 —
 —
 —% 
2021 —
 —
 —
 —% 
2022 —
 —
 —
 —% 
2023 1
 26,872
 313
 —% 
2024 1
 59,024
 1,216
 —% 
2025 —
 —
 —
 —% 
2026 —
 —
 —
 —% 
2027 6
 358,498
 4,558
 1% 
2028 1
 4,950
 64
 —% 
2029 —
 —
 —
 —% 
2030 —
 —
 —
 —% 
2031 10
 209,948
 3,965
 1% 
2032 6
 324,148
 7,405
 1% 
2033 5
 256,388
 4,151
 1% 
2034 11
 714,590
 23,936
 3% 
2035 9
 455,771
 9,955
 1% 
2036 10
 555,335
 15,348
 2% 
2037 9
 281,367
 6,384
 1% 
2038 8
 239,945
 4,580
 1% 
Thereafter 32
 472,852
 13,766
 2% 
  131
 4,601,730
 $105,035
 15% 











Our properties are locatedlocated in 42 states41 states and in the Canadian province of Ontario. The following table sets forth certain state-by-state and Ontario, Canada information regarding our owned real estate portfolio as of December 31, 2018, excluding public charter schools recorded as investment in direct financing leases2020 (dollars in thousands):
LocationBuilding (gross sq. ft.)Rental Revenue for the Year Ended
December 31, 2020		% of Rental Revenue
Texas3,287,154 $52,102 14.0 %
Florida1,584,699 22,956 6.2 %
California1,274,020 44,402 11.9 %
Ontario, Canada1,204,639 21,788 5.9 %
Pennsylvania932,661 27,035 7.3 %
Illinois844,991 12,077 3.2 %
Virginia816,508 19,187 5.2 %
Ohio814,269 13,464 3.6 %
Colorado720,447 15,512 4.2 %
Michigan699,275 8,030 2.2 %
North Carolina667,317 7,642 2.0 %
New York646,711 30,650 8.2 %
Missouri627,308 1,945 0.5 %
Louisiana624,032 5,952 1.6 %
Kansas512,002 5,880 1.6 %
Arizona465,755 10,127 2.7 %
Indiana457,998 3,369 0.9 %
Tennessee435,433 5,687 1.5 %
Georgia430,695 8,868 2.4 %
New Jersey392,930 6,335 1.7 %
Kentucky365,971 2,701 0.7 %
South Carolina349,388 4,498 1.2 %
Maryland340,986 4,311 1.2 %
Alabama323,972 2,618 0.7 %
Oregon201,532 3,604 1.0 %
Connecticut185,074 3,830 1.0 %
Minnesota181,764 4,971 1.3 %
Idaho179,036 1,424 0.4 %
Arkansas165,219 3,484 0.9 %
Mississippi116,900 916 0.2 %
Massachusetts111,166 1,020 0.3 %
Nebraska107,402 331 0.1 %
Maine107,000 487 0.1 %
New Hampshire97,400 591 0.2 %
Iowa93,755 1,402 0.4 %
Nevada92,697 2,550 0.7 %
Oklahoma90,737 6,058 1.6 %
New Mexico71,297 163 — %
Washington47,004 2,154 0.6 %
Montana44,650 993 0.3 %
Wisconsin22,580 377 0.1 %
Hawaii— 685 0.2 %
20,734,374 $372,176 100.0 %
Location 
Building (gross
sq. ft)
 
Rental Revenue for the Year Ended
December 31, 2018
 
% of
Rental
Revenue
Texas 3,148,261
 $77,801
 14.0%
Florida 1,572,118
 40,723
 7.3%
Ontario, Canada 1,172,535
 33,834
 6.1%
California 1,172,423
 60,115
 10.8%
Ohio 1,097,201
 15,421
 2.8%
Illinois 1,056,903
 27,330
 4.9%
Virginia 1,052,528
 23,824
 4.3%
Pennsylvania 1,002,204
 24,088
 4.3%
North Carolina 869,989
 23,782
 4.3%
Colorado 812,554
 19,176
 3.4%
Arizona 753,503
 20,301
 3.6%
New York 702,917
 35,245
 6.3%
Michigan 699,275
 12,547
 2.3%
Georgia 679,175
 13,326
 2.4%
Louisiana 661,262
 14,964
 2.7%
Tennessee 577,629
 13,167
 2.4%
Missouri 517,613
 1,970
 0.4%
Kansas 512,002
 11,798
 2.1%
New Jersey 464,105
 9,197
 1.7%
Indiana 457,998
 7,424
 1.3%
Alabama 323,972
 7,745
 1.4%
South Carolina 316,862
 5,787
 1.0%
Kentucky 298,196
 5,474
 1.0%
Minnesota 181,764
 5,227
 0.9%
Idaho 179,036
 2,763
 0.5%
Maryland 176,441
 4,151
 0.7%
Connecticut 171,907
 3,561
 0.6%
Arkansas 165,219
 3,834
 0.7%
Massachusetts 165,028
 1,496
 0.3%
Utah 160,000
 2,485
 0.4%
Mississippi 116,900
 3,439
 0.6%
Nebraska 107,402
 1,836
 0.3%
Maine 107,000
 1,870
 0.3%
New Hampshire 97,400
 2,279
 0.4%
Iowa 93,755
 1,339
 0.2%
Nevada 92,697
 1,804
 0.3%
Oklahoma 90,737
 6,374
 1.2%
Oregon 72,546
 2,434
 0.4%
New Mexico 71,297
 1,257
 0.2%
Washington 47,004
 2,330
 0.5%
Montana 44,650
 992
 0.3%
Wisconsin 22,580
 377
 0.1%
Hawaii —
 1,476
 0.3%
  22,084,588
 $556,363
 100.0%

 







35

Office Location
Our executive office is located in Kansas City, Missouri and is leased from a third-party landlord. The lease has projected 20192021 annual rent of approximately $856approximately $884 thousand and is scheduled to expire on September 30, 2026, with two separate five-year extension options available. In March, our employees transitioned to a fully remote work force to protect the safety and well-being of our personnel. Our prior investments in technology, business continuity planning and cyber-security protocols have enabled us to continue working with limited operational impacts.
Tenants and Leases
Our existing leases on rental propertyreal estate investments (on a consolidated basis - excluding unconsolidated joint venture properties) provide for aggregate annual minimum rentals for 2021 of approximately $520.1$461.5 million (not including the impact of rent deferrals, ground lease payments for leases in which we are a sub-lessor, periodic rent escalations that are not fixed, percentage rent or straight-line rent). Our entertainment portfolio hasleases have an average remaining base lease term life of approximately nine years, our recreation portfolio has an average remaining base lease term life of approximately 16 years, and our education portfolio has an average remaining base lease term life of approximately 1412 years. These leases may be extended for predetermined extension terms at the option of the tenant.tenants. Our leases are typically triple-net leases that require the tenanttenant to pay substantially all expenses associated with the operation of the properties, including taxes, other governmental charges, insurance, utilities, service, maintenance and any ground lease payments.


Property Acquisitions and Developments in 20182020
Our property acquisitions and developments in 20182020 consisted primarily of spending in each of our primary segments of Entertainment, Recreation and Education.on Experiential properties. The percentage of total investment spending related to build-to-suit projects, including investment spending for mortgage notes on such projects, increased to approximately 58%55% in 2018,2020, from approximately 47%20% in 2017. Build-to-suit projects remain a significant component2019. While we expect that acquisitions will continue to be the greater portion of our investment spending and we expect this to continue to be the case in future years.years, we also expect that build-to-suit projects will remain a component of such spending as well. Many of our build-to-suit opportunities come to us from our existing strong relationships with property operators and developers and we expect to continue to pursue these opportunities. During the year ended December 31, 2020, we limited our investment spending to enhance our liquidity position in light of the negative impact of the COVID-19 pandemic. We will continue to limit our investment spending during the Covenant Relief Period under the amendments to the agreements governing our bank credit facilities and private placement notes.


Item 3. Legal Proceedings


We are subject to certain claims and lawsuits in the ordinary course of business, the outcome of which cannot be determined at this time. In the opinion of management, any liability we might incur upon the resolution of these claims and lawsuits will not, in the aggregate, have a material adverse effect on our consolidated financial position or results of operations.


Early Childhood Education Tenant
On December 18, 2017, ten subsidiaries of CLA (the "CLA Debtors") filed separate voluntary petitions for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court for the District of Arizona ("Court") (Jointly Administered under Case No. 2:17-bk-14851-BMW). The CLA Debtors in those cases consist of CLA Properties SPE, LLC, CLA Maple Grove, LLC, CLA Carmel, LLC, CLA West Chester, LLC, CLA One Loudoun, LLC, LLC, CLA Fishers, LLC, CLA Chanhassen, LLC, CLA Ellisville, LLC, CLA Farm, LLC, and CLA Westerville, LLC. Children's Learning Adventure USA, LLC ("CLA Parent") has not filed a petition for bankruptcy. The CLA Debtors include each of the Company's direct or indirect tenants on 24 out of the Company's 25 CLA properties, including 21 operating properties, two partially completed properties and one unimproved land parcel. The only CLA tenant unaffected by the bankruptcy is CLA King of Prussia, LLC, which is the CLA tenant entity for an unimproved land parcel located in Tredyffrin, Pennsylvania. This property was one of the two properties sold in February 2019 as further discussed below. It is the Company's understanding that the CLA Debtors filed bankruptcy petitions to stay the termination of the remaining CLA leases and delay the eviction process.

On January 8, 2018, the Company filed with the Court (i) motions seeking rent for the post-petition period beginning on December 18, 2017, and (ii) motions seeking relief from the automatic stay seeking the right to terminate the remaining leases and evict the CLA Debtors from the properties. On March 14, 2018, the CLA Parties and the Company entered into a Stipulation providing that (a) the CLA Parties would pay rent for the months of March through July 2018 for an aggregate total of $4.3 million, (b) resolution of restructuring of the leases between the Company and the CLA Parties would be concluded no later than July 31, 2018 (the "Forbearance Period"), (c) relief from stay would be granted with respect to the Company’s properties as needed to implement the Stipulation, (d) the parties would not commence or prosecute litigation against any other party during the Forbearance Period, and (e) the deadline for any motion by the CLA Debtors to assume or reject the leases under the U.S. Bankruptcy Code would be extended to July 31, 2018. On May 7, 2018, the Court entered an order approving the Stipulation. The CLA Parties made all of the rent payments required by the Stipulation.


The CLA Debtors did not assume the leases by July 31, 2018, and the Company entered into a new lease agreement with CLA related to the 21 operating properties which replaced the prior lease arrangements and continued on a month-to-month basis. The lease agreement provided for a monthly rent of $1.0 million plus approximately $170 thousand for pro rata property taxes. CLA relinquished control of four properties that were still under development as the Company no longer intends to develop these properties for CLA. Two of these properties were sold in February 2019.

In February 2019, CLA and the Company entered into agreements (collectively, the "PSA") providing for the purchase and sale of certain assets associated with the businesses located at the 21 operating CLA properties whereby the Company can nominate a third party operator to take an assignment and transfer of such assets from CLA and to receive certain beneficial rights under various related ancillary agreements. Consideration provided by the Company for the asset transfers includes the release of past due rent obligations, previously fully reserved by the Company, and additional consideration of approximately $15.0 million which includes approximately $3.5 million for equipment used in the operations of the Company's schools. The transfers of such assets are expected to close between May 1, 2019 and March 31, 2020 as closing conditions for each transfer are satisfied. CLA has agreed to surrender possession of any of those properties that have not been transferred to a replacement operator prior to March 31, 2020 and has agreed to lease and operate each of the 21 properties for an aggregate of approximately $1.0 million per month of minimum rent until the transfer of each property to the Company’s replacement tenant or surrender of the property.

The primary closing condition for each transfer will be the requirement that the replacement tenant has obtained all required licenses and permits. There can be no assurance that the replacement tenant of a property will timely satisfy this or other conditions which could delay or prevent the closing of one or more transfers. As a result, there can be no assurance that one or more properties will not be surrendered until after March 31, 2020, in which case the Company would receive such properties without the ability to provide active operations to a replacement tenant which could adversely affect the terms of the Company's leases of such properties to replacement tenants.

CLA is required to file a motion by March 1, 2019 with the Court seeking authorization of the sale of certain assets pursuant to the PSA. A condition to the parties’ obligations under the PSA is the Court’s approval of the motion. There can be no assurance that this motion will be approved by the Court or that the Court will not require modifications to the PSA as a condition to its approval.

Additionally, in February 2019, the Company entered into new leases of all 21 operating CLA properties with Crème de la Crème ("Crème"), a premium, national early childhood education operator. These leases are contingent upon the Company delivering possession of the properties and include different financial terms based on whether or not CLA delivers Crème the assets associated with the in-place operations of the school. The leases have 20-year terms that commence upon Crème beginning operations of the schools. Additionally, Crème and the Company each have early termination rights based on school level economic performance.

There can be no assurance as to the outcome of the contemplated transaction or whether some or all of the properties will be transferred to Crème with in-place operations. If some or all of the schools are not transferred to Crème with in-place operations, there will be a delay in re-opening such schools and a corresponding reduction in near term rents from Crème.

Item 4. Mine Safety Disclosures


Not applicable.


PART II


Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities


Our common shares are listed on the New York Stock Exchange (“NYSE”) under the trading symbol “EPR.”


During the year ended December 31, 2018,2020, the Company did not sell any unregistered equity securities.


On February 27, 2019,24, 2021, there were approximately 7,471 holdersapproximately 6,707 holders of record of our outstanding common shares.


36

Issuer Purchases of Equity Securities
PeriodTotal Number of Shares PurchasedAverage Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
October 1 through October 31, 2020 common shares— $— — $44,006,350 
November 1 through November 30, 2020 common shares— — — 44,006,350 
December 1 through December 31, 2020 common shares— — — 44,006,350 
Total— $— — $— (1)
Period Total Number of Shares Purchased  Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
October 1 through October 31, 2018 common stock —
  $—
 —
 $—
November 1 through November 30, 2018 common stock 8,862
(1) 
 70.08
 —
 —
December 1 through December 31, 2018 common stock —
  —
 —
 —
          
Total 8,862
  $70.08
 —
 $—
          

(1) On March 24, 2020, we announced that our Board of Trustees approved a share repurchase program pursuant to which we may repurchase up to $150 million of our common shares. The repurchasesshare repurchase program was set to expire on December 31, 2020; however, we suspended the program upon the effective date of equity securities during Novemberthe covenant modification agreements, June 29, 2020, as discussed below under "Management's Discussion and Analysis of 2018 were completedFinancial Condition and Results of Operations." Under the share repurchase program, we could repurchase our common shares in conjunction with employee stock option exercises. These repurchases were not madethe open market, through block trades, in privately negotiated transactions, pursuant to a publicly announcedtrading plan separately adopted in the future, or by other means, in accordance with federal securities laws and other applicable laws. The actual timing, number and value of common shares repurchased under the share repurchase program was determined by management at its discretion and depended on a number of factors, including, but not limited to, the market price of our common shares, general market and economic conditions, our financial condition, and applicable legal requirements. We were not obligated to repurchase a minimum number of common shares under the share repurchase program. There can be no assurances as to our ability to reinstitute the share repurchase program in future periods or the timing thereof.



Dividends
As discussed below under "Management's Discussion and Analysis of Financial Condition and Results of Operations," on June 29, 2020 and November 3, 2020, we amended our Consolidated Credit Agreement, which governs our unsecured revolving credit facility and our unsecured term loan facility, and on June 29, 2020 and December 24, 2020, we also amended the Note Purchase Agreement which governs our private placement notes. The amendments modified certain provisions and waived our obligation to comply with certain covenants under these debt agreements in light of the continuing financial and operational impacts of the COVID-19 pandemic on us and our tenants and borrowers. The amendments also impose certain restrictions including our ability to pay common dividends during the Covenant Relief Period, subject to certain exceptions. Accordingly, in connection with these amendments, we temporarily suspended our monthly cash dividend to common shareholders after the common share dividend payable May 15, 2020 (except as may be necessary to maintain REIT status and to not owe income tax). There can be no assurances as to our ability to reinstitute cash dividend payments to common shareholders in future periods or the timing thereof.
37

Share Performance Graph


The following graph compares the cumulative return on our common shares during the five-year period ended December 31, 2018,2020, to the cumulative return on the MSCI U.S. REIT Index and the Russell 1000 Index for the same period. The comparisons assume an initial investment of $100 and the reinvestment of all dividends during the comparison period. Performance during the comparison period is not necessarily indicative of future performance.
a18performancegraph.jpg
epr-20201231_g1.jpg
Total Return Analysis           Total Return Analysis      
12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/201512/31/201612/31/201712/31/201812/31/201912/31/2020
EPR Properties$100.00
 $124.85
 $134.88
 $174.87
 $168.90
 $176.91
EPR Properties$100.00 $129.65 $125.22 $131.16 $153.63 $73.48 
MSCI U.S. REIT Index$100.00
 $130.38
 $133.67
 $145.16
 $152.52
 $145.55
MSCI U.S. REIT Index$100.00 $108.60 $114.11 $108.89 $137.03 $126.65 
Russell 1000 Index$100.00
 $113.24
 $114.28
 $128.05
 $155.82
 $148.37
Russell 1000 Index$100.00 $112.05 $136.36 $129.83 $170.63 $206.40 
Source: S&P Global Market Intelligence
The performance graph and related text are being furnished to and not filed with the SEC, and will not be deemed "soliciting material" or subject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of the Exchange Act, and will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent we specifically incorporate such information by reference into such a filing.



38

Item 6. Selected Financial Data


The following tables settable sets forth selected consolidated financial and other information of the Company as of and for each of the years ended December 31, 2020, 2019, 2018, 2017, 2016, 2015, and 2014.2016. The table should be read in conjunction with the Company's consolidated financial statements and notes thereto and Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in this Annual Report on Form 10-K.

The operating data below reflects the reclassification of discontinued operations for public charter school investments disposed of during the year ended December 31, 2019. For additional detail, see Note 17 to the Consolidated Financial Statements included in this Annual Report on Form 10-K.
Operating Statement Data
(Dollars in thousands, except per share data)
 Year Ended December 31,
 20202019201820172016
Total revenue$414,661 $651,969 $639,921 $518,320 $451,038 
Net (loss) income attributable to EPR Properties(131,728)202,243 266,983 262,968 224,982 
Preferred dividend requirements(24,136)(24,136)(24,142)(24,293)(23,806)
Preferred share redemption costs— — — (4,457)— 
Net (loss) income available to common shareholders of EPR Properties(155,864)178,107 242,841 234,218 201,176 
Net (loss) income available to common shareholders per common share:
Continuing operations$(2.05)$1.70 $2.66 $2.76 $2.62 
Discontinued operations— 0.62 0.61 0.53 0.55 
Basic$(2.05)$2.32 $3.27 $3.29 $3.17 
Continuing operations$(2.05)$1.70 $2.66 $2.76 $2.62 
Discontinued operations— 0.62 0.61 0.53 0.55 
Diluted$(2.05)$2.32 $3.27 $3.29 $3.17 
Shares used for computation (in thousands):
Basic75,994 76,746 74,292 71,191 63,381 
Diluted75,994 76,782 74,337 71,254 63,474 
Cash dividends declared per common share$1.515 $4.500 $4.320 $4.080 $3.840 
Balance Sheet Data (at period end)
(Dollars in thousands)
Cash and cash equivalents$1,025,577 $528,763 $5,872 $41,917 $19,335 
Total assets6,704,185 6,577,511 6,131,390 6,191,493 4,865,022 
Debt3,694,443 3,102,830 2,986,054 3,028,827 2,485,625 
Total liabilities4,073,600 3,571,706 3,266,367 3,264,168 2,679,121 
Equity2,630,585 3,005,805 2,865,023 2,927,325 2,185,901 


39
Operating Statement Data         
(Dollars in thousands, except per share data)         
 Year Ended December 31,
 2018 2017 2016 2015 2014
Total revenue$700,731
 $575,991
 $493,242
 $421,017
 $385,051
Net income attributable to EPR Properties266,983
 262,968
 224,982
 194,532
 179,633
Preferred dividend requirements(24,142) (24,293) (23,806) (23,806) (23,807)
Preferred share redemption costs—
 (4,457) —
 —
 —
Net income available to common shareholders of EPR Properties242,841
 234,218
 201,176
 170,726
 155,826
          
Net income available to common shareholders per common share:         
Basic3.27
 3.29
 3.17
 2.94
 2.87
Diluted3.27
 3.29
 3.17
 2.93
 2.86
          
Shares used for computation (in thousands):         
Basic74,292
 71,191
 63,381
 58,138
 54,244
Diluted74,337
 71,254
 63,474
 58,328
 54,444
          
Cash dividends declared per common share4.32
 4.08
 3.84
 3.63
 3.42
          
Balance Sheet Data (at period end)         
(Dollars in thousands)         
Cash and cash equivalents5,872
 41,917
 19,335
 4,283
 3,336
Total assets6,131,390
 6,191,493
 4,865,022
 4,217,270
 3,686,275
Debt2,986,054
 3,028,827
 2,485,625
 1,981,920
 1,629,750
Total liabilities3,266,367
 3,264,168
 2,679,121
 2,143,402
 1,759,786
Equity2,865,023
 2,927,325
 2,185,901
 2,073,868
 1,926,489




Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations


The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in this Annual Report on Form 10-K. The forward-looking statements included in this discussion and elsewhere in this Annual Report on Form 10-K involve risks and uncertainties, including anticipated financial performance, business prospects, industry trends, shareholder returns, performance of leases by tenants, performance on loans to customers and other matters, which reflect management’s best judgment based on factors currently known. See “Cautionary Statement Concerning Forward-Looking Statements.” Actual results and experience could differ materially from the anticipated results and other expectations expressed in our forward-looking statements as a result of a number of factors, including but not limited to those discussed in this Item and in Item 1A - “Risk Factors.”


Overview


Business
Our principal business objective is to enhance shareholder value by achieving predictable and increasing FFOFunds From Operations As Adjusted ("FFOAA") and dividends per share. Our prevailing strategy is to focus on long-term investments in a limited number of categories inthe Experiential sector which we maintain abenefit from our depth of knowledge and relationships, and which we believe offer sustained performance throughout allmost economic cycles. See Item 1 - "Business" for further discussion regarding our strategic rationale for our focus on Experiential properties.

Our investment portfolio includes ownership of and long-term mortgages on entertainment, recreationExperiential and educationEducation properties. Substantially all of our owned single-tenant properties are leased pursuant to long-term, triple-net leases, under which the tenants typically pay all operating expenses of the property. Tenants at our owned multi-tenant properties are typically required to pay common area maintenance charges to reimburse us for their pro-rata portion of these costs. We also own certain recreation anchoredexperiential lodging assets structured using traditional REIT lodging structures as discussed in Item 1 - "Business."


It has been our strategy to structure leases and financings to ensure a positive spread between our cost of capital and the rentals or interest paid by our tenants. We have primarily acquired or developed new properties that are pre-leased to a single tenant or multi-tenant properties that have a high occupancy rate. We have also entered into certain joint ventures and we have provided mortgage note financing. We intend to continue entering into some or all of these types of arrangements in the foreseeable future.


Historically,Prior to the COVID-19 pandemic, our primary challenges havehad been locating suitable properties, negotiating favorable lease or financing terms (on new or existing properties), and managing our portfolio as we have continued to grow. We believe our management’s knowledge and industry relationships have facilitated opportunities for us to acquire, finance and lease properties. The current economic situation created by the pandemic has impeded our growth in the near term while our focus has been addressing challenges brought on by the pandemic, including monitoring customer status and working with customers to help ensure long-term stability as well as assisting them in reopening plans. See more discussion on the impact of the pandemic on our business below. We expect to return to growth as our customers' businesses continue to recover and, in turn, our cashflows stabilize. Our business is subject to a number of risks and uncertainties, including those described in Item 1A - “Risk Factors” of this report.


We group our investments into four reportable operating segments: Entertainment, Recreation, Education and Other. As of December 31, 2018,2020, our total assets were approximately $6.1approximately $6.7 billion (after accumulated depreciation of approximately $0.9$1.1 billion) which included investments in each of our four operating segments with properties located in 4244 states and Ontario, Canada. Our total investments (a non-GAAP financial measure) were approximately $6.5 billion at December 31, 2020. See "Non-GAAP Financial Measures" for the calculation of total investments and reconciliation of total investments to "Total assets" in the consolidated balance sheet at December 31, 2020 and 2019. We group our investments into two reportable segments, Experiential and Education. As of December 31, 2020, our Experiential investments comprised $5.9 billion, or 91%, and our Education investments comprised $0.6 billion, or 9%, of our total investments.

Our Entertainment
40

As of December 31, 2020, our Experiential segment included investments in 152 megaplex theatres, seven entertainment retail centers (which included seven additional megaplex theatres) and 11 family entertainment centers. Our portfolio of owned entertainment properties consisted of 13.4the following property types (owned or financed):
•178 theatre properties;
•55 eat & play properties (including seven theatres located in entertainment districts);
•18 attraction properties;
•13 ski properties;
•six experiential lodging properties;
•one gaming property;
•three cultural properties; and
•seven fitness & wellness properties.

As of December 31, 2020, our owned Experiential real estate portfolio consisted of approximately 19.3 million square feet, was 93.8% leased and was 98% leased, including megaplex theatres that were 100% leased.
Our Recreation segment included investments$57.6 million in 12 ski properties, 21 attractions, 34 golf entertainment complexes and 13 other recreation facilities. Our portfolio of owned recreation properties was 100% leased.
Our Education segment included investments in 59 public charter schools, 69 early education centers and 15 private schools. Our portfolio of owned education properties consisted of 4.7 million square feet and was 98% leased.
Our Other segment consisted primarily of land under ground lease, property under development and $20.2 million in undeveloped land held for development related toinventory.

As of December 31, 2020, our Education segment consisted of the Resorts World Catskills casinofollowing property types (owned or financed):
•65 early childhood education center properties; and resort project
•10 private school properties.

As of December 31, 2020, our owned Education real estate portfolio consisted of approximately 1.4 million square feet, was 100% leased and included $3.0 million in Sullivan County, New York.undeveloped land inventory.



The combined owned portfolio consisted of 22.220.7 million square feet and was 99%94.2% leased.

COVID-19 Update
We are subject to risks and uncertainties as a result of the COVID-19 pandemic. The outbreak of the COVID-19 pandemic severely impacted global economic activity during 2020 and caused significant volatility and negative pressure in financial markets, which is expected to continue into 2021. The extent of the impact of the COVID-19 pandemic on our business is highly uncertain and difficult to predict, as information is rapidly evolving. As a result, the COVID-19 pandemic severely impacted experiential real estate properties, given that such properties involve congregate social activity and discretionary consumer spending. Substantially all of our non-theatre locations and many of our theatre locations have re-opened as of December 31, 2018,2020. However, certain theatre locations remain closed due to local restrictions or operator decision to close as a result of the impact of the COVID-19 pandemic, specifically the decision by many major studios to delay the release of blockbuster movies in hopes that larger audiences will be available as additional markets open. The continuing impact of the COVID-19 pandemic on our business will depend on several factors, including, but not limited to, the scope, severity and duration of the pandemic, the actions taken to contain the outbreak or mitigate its impact, the development and distribution of vaccines and the efficacy of those vaccines, the public’s confidence in the health and safety measures implemented by our tenants and borrowers, and the direct and indirect economic effects of the outbreak and containment measures, all of which are uncertain and cannot be predicted. During 2020, the COVID-19 pandemic negatively affected our business, and could continue to have material, adverse effects on our financial condition, results of operations and cash flows.

Our Consolidated Financial Statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and reported amounts of revenue and expenses during the reporting periods presented. We considered the impact of the COVID-19 pandemic on the assumptions and estimates used in determining our financial condition and results of operations for the year ended December 31, 2020. The following were adverse impacts to our financial statements and business during the year ended December 31, 2020:
•We wrote-off receivables from tenants and straight-line rent receivables totaling $65.1 million directly to rental revenue upon determination that the collectibility of these receivables or future lease payments from
41

these tenants were no longer probable. Additionally, we also had investeddetermined that future rental revenue related to these tenants, including American-Multi Cinema, Inc. ("AMC") and Regal Cinemas ("Regal"), a subsidiary of Cineworld Group, will be recognized on a cash basis. The straight-line rent receivable represented $38.0 million of this write-off and was comprised of $26.5 million of straight-line rent receivable and $11.5 million of sub-lessor ground lease straight-line rent receivable.
•We reduced rental revenue by$13.6 million due to rent abatements.
•We deferred approximately $287.5$76.0 million of amounts due from tenants and $3.4 million due from borrowers that were booked as receivables. Additionally, we have amounts due from tenants that were not booked as receivables as the full amounts were not deemed probable of collection as a result of the COVID-19 pandemic. The amounts not booked as receivables remain obligations of the tenants and will be recognized as revenue when received. The repayment terms for all of these deferments vary by tenant or borrower.
•We recognized $85.7 million in propertyimpairment charges during the year ended December 31, 2020, which was comprised of $70.7 million of impairments of real estate investments, and $15.0 million of impairments of operating lease right-of-use assets. We also recognized impairment charges on joint ventures of $3.2 million related to our equity investments in three theatre projects located in China.
•We increased our expected credit losses by $30.7 million from our implementation estimate of $2.2 million. This increase was primarily due to credit loss expense related to fully reserving the outstanding principal balance of $12.6 million and unfunded commitment to fund $12.9 million, totaling $25.5 million, related to notes receivable from one borrower, as a result of recent changes in the borrower's financial status due to the impact of the COVID-19 pandemic. The remaining increase was due to economic uncertainty and the rapidly changing environment surrounding the pandemic.
•We recognized a full valuation allowance of $18.0 million during third quarter 2020 on our net deferred tax assets related to our taxable REIT subsidiary ("TRS") and Canadian tax paying entity as a result of the uncertainty of realization caused by the impact of the COVID-19 pandemic. At December 31, 2020, we have a valuation allowance totaling $24.9 million on our net deferred tax assets.
•On March 20, 2020, we borrowed $750.0 million under development.our unsecured revolving credit facility as a precautionary measure to increase our cash position and preserve financial flexibility given the global uncertainty caused by the COVID-19 pandemic. On December 30, 2020, we paid down our revolving credit facility by $160.0 million, following the sale of six private schools and four early childhood education centers. Subsequent to year-end, we paid down an additional $500.0 million on our revolving credit facility.

•We amended our Consolidated Credit Agreement, which governs our unsecured revolving credit facility and our unsecured term loan facility, and our Note Purchase Agreement, which governs our private placement notes. The amendments modified certain provisions and waived our obligation to comply with certain covenants under these debt agreements during the Covenant Relief Period in light of the uncertainty related to impacts of the COVID-19 pandemic on us and our tenants and borrowers. We pay higher interest costs during the Covenant Relief Period. The amendments to the Consolidated Credit Agreement and Note Purchase Agreement also impose additional restrictions on us during the Covenant Relief Period, including limitations on making investments, incurring indebtedness, making capital expenditures, paying dividends and making other distributions, repurchasing our shares, voluntarily prepaying certain indebtedness, encumbering certain assets and maintaining a minimum liquidity amount, in each case subject to certain exceptions. See below and Note 8 to the Consolidated Financial Statements in this Annual Report on Form 10-K for additional details.
•In connection with the loan amendments discussed above, certain of our key subsidiaries guaranteed our obligations based on our unsecured debt ratings. If our unsecured debt rating is further downgraded by Moody's, we will be required to pledge the equity interest in certain of these subsidiary guarantors to secure our obligations under our unsecured credit facilities and private placement notes. See Note 8 to the Consolidated Financial Statements in this Annual Report on Form 10-K for additional details.

On March 24, 2020, our Board of Trustees (the "Board") announced approval of a $150 million share repurchase program in response to the extraordinary dislocation in our common share price. The share repurchase program was set to expire on December 31, 2020; however, the program was suspended upon the effective date of the loan amendments on June 29, 2020, discussed above. During the year ended December 31, 2020, we repurchased 4,066,716 common shares under the share repurchase program for approximately $106.0 million. The repurchases
42

were made under a Rule 10b5-1 trading plan. There can be no assurances as to our ability to reinstitute the share repurchase program in future periods or the timing thereof.

The monthly cash dividends to common shareholders were suspended following the common share dividend paid on May 15, 2020 to shareholders of record as of April 30, 2020. The suspension of the monthly cash dividend to common shareholders will continue through the Covenant Relief Period, except as may be necessary to maintain REIT status and to not owe income tax. There can be no assurances as to our ability to reinstitute cash dividend payments to common shareholders or the timing thereof.

Collections of rent and interest were impacted during the year by the COVID-19 pandemic and approximately 92% of our non-theatre and 58% of our theatre locations were open for business as of December 31, 2020. During the year ended December 31, 2020, tenants and borrowers paid approximately 46% of fourth quarter, 43% of third quarter and 29% of second quarter 2020 pre-COVID contractual cash revenue. Pre-COVID contractual cash revenue is an operational measure and represents aggregate cash payments for which we were entitled under existing contracts prior to the COVID-19 pandemic, excluding percentage rent (rents received over base amounts) and cash payments for subsequently disposed properties, net. The Company has reached resolution with customers representing approximately 95% of its pre-COVID contractual revenue. While deferments for this and future periods delay rent or mortgage payments, these deferments generally do not release customers from the obligation to pay the deferred amounts in the future. Deferred rent amounts are reflected in our financial statements as accounts receivable if collection is determined to be probable or will be recognized when received as variable lease payments if collection is determined to not be probable, whiledeferred mortgage payments are reflected as mortgage notes and related accrued interest receivable, less any allowance for credit loss. Certain agreements with tenants where remaining lease terms are extended, or other changes are made that do not qualify for the treatment in the Financial Accounting Standards Board (FASB) Staff Q&A on Topic 842 and Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic, are treated as lease modifications. In these circumstances upon an executed lease modification, if the tenant is not being recognized on a cash basis, the contractual rent reflected in accounts receivable and the straight-line rent receivable will be amortized over the remaining term of the lease against rental revenue. In limited cases, tenants may be entitled to the abatement of rent during governmentally imposed prohibitions on business operations which is recognized in the period to which it relates, or we may provide rent concessions to tenants. In cases where we provide concessions to tenants to which they are not otherwise entitled, those amounts are recognized in the period in which the concession is granted unless the changes are accounted for as lease modifications.

In March 2020, our employees transitioned to a fully remote work force to protect the safety and well-being of our personnel. Our prior investments in technology, business continuity planning and cyber-security protocols have enabled us to continue working with limited operational impacts.

Operating Results
Our total revenue from continuing operations, net (loss) income available to common shareholders and Funds From Operations As Adjusted ("FFOAA") per diluted share and FFOAA per diluted share (a non-GAAP financial measure) are detailed below for the years ended December 31, 20182020 and 20172019 (in millions, except per share information):
Year ended December 31,
20202019Change
Total revenue from continuing operations$414.7 $652.0 (36)%
Net (loss) income available to common shareholders per diluted share(2.05)2.32 (188)%
FFOAA per diluted share1.43 5.44 (74)%
 Year ended December 31,  
 2018 2017 Increase
Total revenue (1)$700.7
 $576.0
 22 %
Net income available to common shareholders per diluted share (2)3.27
 3.29
 (1)%
FFOAA per diluted share (3)6.10
 5.02
 22 %


(1) Total revenueThe major factors impacting our results for the year ended December 31, 2018, versus the year ended December 31, 2017 was favorably impacted by the effect of investment spending. Total revenue for the year ended December 31, 2018 was also favorably impacted by an increase of $73.9 million in prepayment fees from the early payoff of mortgage notes and higher percentage rent of $2.8 million2020, as compared to the year ended December 31, 2017. Total revenue for2019 were as follows:
•The effects of the year ended December 31, 2018 versus the year ended December 31, 2017 was unfavorably impacted byCOVID-19 pandemic as described above;
•The effect of investment spending that occurred in 2020 and 2019;
43

•The effect of property dispositions and mortgage note payoffs that occurred in 20182020 and 2017.2019;

•The decrease in other income and other expenses primarily from the operations of the Kartrite Resort and Indoor Waterpark in Sullivan County, New York and the impacts of the COVID-19 pandemic on this property;
(2) Net income available to common shareholders per diluted share for the year ended December 31, 2018, versus the year ended December 31, 2017 was also impacted by the items affecting total revenue as described above and was favorably impacted by a•The decrease in termination fees included in gain on sale related to the sale of investment in direct financing leases and no preferred share redemption costs. Net income available to common shareholders per diluted share for the year ended December 31, 2018 versus the year ended December 31, 2017 was unfavorably impacted by an increaseEducation properties;
•The decrease in general and administrative expense, severance expense, litigation settlement expense,expense;
•The decrease in costs associated with loan refinancing or payoff (primarily related to our redemption of our 7.75% Senior Notes due 2020), interest expense,payoff;
•The decrease in transaction costs, impairment charges, depreciationcosts; and amortization and lower gains on sale of real estate. Additionally, net income available to common shareholders per diluted share for the year ended December 31, 2018, versus the year ended December 31, 2017 was unfavorably impacted by an increase
•The decrease in common shares outstanding.


(3) FFOAA per diluted share for the year ended December 31, 2018, versus the year ended December 31, 2017 was also impacted by theFor further detail on items affecting total revenue as described above. FFOAA per diluted share for the year ended December 31, 2018, versus the year ended December 31, 2017 was unfavorably impacted by lower termination fees recognized with the exerciseimpacting our operating results, see section below titled "Results of tenant purchase options, as well as increases in general and administrative expense, interest expense and common shares outstanding.

Operations". FFOAA is a non-GAAP financial measure. For the definitions and further details on the calculations of FFOAA and certain other non-GAAP financial measures, see the section below titled "Funds From Operations (FFO), Funds From Operations As Adjusted (FFOAA) and Adjusted Funds from Operations (AFFO)."Non-GAAP Financial Measures."


Investment Spending Overview
For much of 2018, market conditions were such that our cost of capital was higher, thus reducing the spread between what we could charge in rent and interest to our tenants and borrowers for new investments and the cost at which we could raise new capital. As a result, we became more selective in our investment spending decision making in 2018 and implemented a plan to sell existing assets rather than raise new capital to fund such investments. Accordingly, our total investment spending was $572.0 million in 2018 compared to $1.6 billion in the prior year and dispositions and mortgage note pay-offs totaled $471.1 million compared to $197.6 million in the prior year. Investment spending in 2017 also included a transaction in the Recreation segment with CNL Lifestyle Properties, Inc. ("CNL Lifestyle") and Och-Ziff Real Estate ("OZRE") totaling $730.8 million. There was no such large singular transaction in 2018.


While there can be no assurance, as market conditions have improved, we expect that our investment spending will increase in 2019 as we continue to see significant opportunities in each of our segments.

Critical Accounting Policies


The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and related notes. In preparing these financial statements, management has made its best estimates and assumptions that affect the reported assets and liabilities.liabilities and the reported amounts of revenues and expenses during the reporting periods. The most significant assumptions and estimates relate to the valuation of real estate, accounting for real estate acquisitions, estimating reserves for uncollectibleassessing the collectibility of receivables and the impairment ofcredit loss related to mortgage and other notes receivable. Application of these assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.


Impairment of Real Estate Values
We are required to make subjective assessments as to whether there are impairments in the value of our rental properties.real estate investments. These estimates of impairment may have a direct impact on our consolidated financial statements. We assess the carrying value of our rental propertiesreal estate investments whenever events or changes in circumstances indicate that the carrying amount of a property may not be recoverable. Certain factors may indicate that impairments exist which include, but are not limited to, underperformanceunder-performance relative to projected future operating results, change in the time period we expect to hold the property, tenant difficulties and significant adverse industry or market economic trends. If an indicator of possible impairment exists, the property is evaluated for impairment by comparing the carrying amount of the property to the estimated future cash flows (undiscounted and without interest charges), including the residual value of the real estate. If an impairment is indicated, a loss will be recorded for the amount by which the carrying value of the asset exceeds its estimated fair value. Estimating future cash flows is highly subjective and such estimates could differ materially from actual results.


Real Estate Acquisitions
Upon acquisition of real estate properties, we evaluate the acquisition to determine if it is a business combination or an asset acquisition. In January 2017, we adopted Accounting Standards Update ("ASU") No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, and as a result, expect that few, if any, of our real estate acquisitions will be accounted for as business combinations.


If the acquisition is determined to be an asset acquisition, we record the purchase price and other related costs incurred to the acquired tangible assets (consisting of land, building, tenant improvements, leasehold interests and furniture, fixtures and equipment) and identified intangible assets and liabilities (consisting of above and below market leases, in-place leases, tradenames, tenant relationships and assumed financing that is determined to be above or below market terms) on a relative fair value basis. Typically, relative fair values are based on recent independent appraisals or methods similar to those used by independent appraisers, as well as management judgment. In addition, acquisition-related costs incurred for asset acquisitions are capitalized.


If the acquisition is determined to be a business combination, we record the fair value of acquired tangible assets and identified intangible assets and liabilities as well as any noncontrollingnon-controlling interest. Typically, fair values are based on recent independent appraisals or methods similar to those used by independent appraisers, as well as management judgment. In addition, acquisition-related costs incurred for business combinations are expensed as incurred. Costs
44

related to such transactions, as well as costs associated with terminated transactions, are included in the accompanying consolidated statements of (loss) income and comprehensive (loss) income as transaction costs.

Allowance for Doubtful AccountsCollectibility of Lease Receivables
Accounts receivable is reduced by an allowance for amounts where collection is not probable. Our accounts receivable balance is comprised primarily of rents and operating cost recoveries due from tenants as well as accrued rental rate increases to be received over the life of the existing leases. We regularly evaluate the adequacycollectibility of our allowance for doubtful accounts.receivables on a lease by lease basis. The evaluation primarily consists of reviewing past due account balances and considering such factors as the credit quality of our tenants, historical trends of the tenant, and/or other debtor, current economic conditions and changes in customer payment terms. Additionally, with respectWe suspend revenue recognition when the collectibility of amounts due are no longer probable and record a direct write-off of the receivable to tenantsrevenue. Prior to 2019, we reduced our accounts receivable by an allowance for doubtful accounts and recorded bad debt expense included in bankruptcy, weproperty operating expenses when loss was probable.

Collectibility of Mortgage and Notes Receivables
Our mortgage and notes receivables consist of loans originated by us and the related accrued and unpaid interest income. We regularly evaluate the collectibility of our receivables by reviewing past due balances and considering such factors as the credit quality of our borrowers, historical trends of the borrower, our historical loss experience, current portfolio, market and economic conditions and changes in borrower payment terms. We estimate theour current expected

recovery through bankruptcy claims credit losses on a loan-by-loan basis using a forward-looking commercial real estate forecasting tool. We record credit loss expense and increasereduce our mortgage note and note receivables balances by the allowance for amounts deemed uncollectible. These estimatescredit losses on a quarterly basis in accordance with ASC 326. In the event we have a direct impact on our net income.

Impairment of Mortgage Notespast due mortgage note or note receivable and Other Notes Receivable
We evaluate the collectability of both interest and principal for each loan to determine whether it is impaired. A loan is considered to be impaired when, based on current information and events, we determine it is collateral dependent, we measure expected credit losses based on the fair value of the collateral. If foreclosure is deemed probable, and we expect to sell rather than operate the collateral, we adjust the fair value of the collateral for the estimated costs to sell. Prior to 2020, we evaluated the collectibility of our mortgage and notes receivables to determine whether the loan was impaired and if it was probable that we willwould be unable to collect all amounts due according to the existing contractual terms. Certain factors that may occur and indicate that impairments may exist include, but are not limited to: underperformance relative to projected future operating results, borrower difficulties and significant adverse industry or market economic trends. When a loan is considered to be impaired, the amount of loss is calculated by comparing the recorded investment to the value determined by discounting the expected future cash flows at the loan’s effective interest rate or to the fair value of the underlying collateral, less costs to sell, if the loan is collateral dependent. For impaired loans, interest income is recognized on a cash basis, unless we determine based on the loan to estimated fair value ratio the loan should be on the cost recovery method, and any cash payments received would then be reflected as a reduction of principal. Interest income recognition is recommenced if and when the impaired loan becomes contractually current and performance is demonstrated to be resumed.


Recent Developments


Investment Spending
Our investment spending during the year ended December 31, 2018 totaled $572.0 million and included investments in each of our four operating segments.

Entertainment investment spending during the year ended December 31, 2018 totaled $87.2 million, including spending on build-to-suit development and redevelopment of megaplex theatres, entertainment retail centers and family entertainment centers, as well as $22.4 million in two megaplex theatre acquisitions.

Recreation investment spending during the year ended December 31, 2018 totaled $384.0 million, including spending on build-to-suit development of golf entertainment complexes and attractions, redevelopment of ski properties, as well as investments in two other recreation facilities which included one mortgage note investment and one property acquisition. In addition, we acquired three other recreation properties and one attraction property described below.

On June 22, 2018, we acquired a recreation anchored lodging property located in Pagosa Springs, Colorado for approximately $36.4 million. The property is a natural hot springs resort and spa on approximately eight acres and is subject to a long-term, triple-net lease.

On December 21, 2018, we entered into two joint ventures to acquire two recreation anchored lodging properties located in St. Petersburg, Florida, for a total of approximately $68.5 million ($29.5 million after the Company's pro-rata share of debt at closing), representing a 65% interest in the joint ventures. We account for these investments under the equity method of accounting.

On December 28, 2018, we acquired an attraction property located in St. Louis, Missouri for approximately $50.3 million. The property is an interactive museum and is subject to a long-term, triple-net lease.

Education investment spending during the year ended December 31, 2018 totaled $86.9 million, including spending on build-to-suit development and redevelopment of public charter schools, early education centers and private schools, as well as $17.7 million on four early education center acquisitions.

Other investment spending during the year ended December 31, 2018 totaled $13.9 million and was related to the common infrastructure for the Resorts World Catskills casino and resort project in Sullivan County, New York.

The following details our investment spending during the years ended December 31, 20182020 and 20172019 totaled $85.1 million and $794.7 million, respectively, and is detailed below (in thousands):
45

For the Year Ended December 31, 2018
Operating Segment Total Investment Spending New Development Re-development Asset Acquisition Mortgage Notes or Notes Receivable Investment in Joint Ventures
Entertainment $87,194
 $31,276
 $33,500
 $22,418
 $—
 $—
Recreation 383,990
 208,831
 650
 94,671
 11,365
 68,473
Education 86,907
 49,749
 —
 17,691
 19,467
 —
Other 13,891
 13,891
 —
 —
 —
 —
Total Investment Spending $571,982
 $303,747
 $34,150
 $134,780
 $30,832
 $68,473
             
For the Year Ended December 31, 2017
Operating Segment Total Investment Spending New Development Re-development Asset Acquisition Mortgage Notes or Notes Receivable Investment in Joint Ventures
Entertainment $319,665
 $62,521
 $95,520
 $154,144
 $7,480
 $—
Recreation 1,006,741
 189,907
 1,223
 542,453
 273,158
 —
Education 255,127
 119,047
 —
 38,497
 97,583
 —
Other 1,079
 1,079
 —
 —
 —
 —
Total Investment Spending $1,582,612
 $372,554
 $96,743
 $735,094
 $378,221
 $—
For the Year Ended December 31, 2020
Investment TypeTotal Investment SpendingNew DevelopmentRe-developmentAsset AcquisitionMortgage Notes or Notes ReceivableInvestment in Joint Ventures
Experiential:
Theatres$33,162 $5,760 $5,183 $22,219 $— $— 
Eat & Play19,679 18,852 827 — — — 
Attractions669 — 669 — — — 
Ski2,088 — — — 2,088 — 
Experiential Lodging17,114 13,775 1,649 — — 1,690 
Cultural6,293 — 159 — 6,134 — 
Fitness & Wellness6,049 — — — 6,049 — 
Total Experiential85,054 38,387 8,487 22,219 14,271 1,690 
Education:
Early Childhood Education Centers3 — — — 3 — 
Total Education3 — — — 3 — 
Total Investment Spending$85,057 $38,387 $8,487 $22,219 $14,274 $1,690 
For the Year Ended December 31, 2019
Investment TypeTotal Investment SpendingNew DevelopmentRe-developmentAsset AcquisitionMortgage Notes or Notes ReceivableInvestment in Joint Ventures
Experiential:
Theatres$459,393 $4,500 $28,429 $426,464 $— $— 
Eat & Play76,739 51,209 6,901 1,429 17,200 — 
Attractions102 — — — 102 — 
Ski37,288 — 288 — 37,000 — 
Experiential Lodging125,170 53,130 935 — 70,000 1,105 
Gaming608 608 — — — — 
Cultural30,661 198 — 23,963 6,500 — 
Fitness & Wellness5,950 — — — 5,950 — 
Total Experiential735,911 109,645 36,553 451,856 136,752 1,105 
Education:
Private Schools18,798 2,300 1,474 5,871 9,153 — 
Early Childhood Education Centers4,914 4,914 — — — — 
Public Charter Schools35,068 29,953 — — 5,115 — 
Total Education58,780 37,167 1,474 5,871 14,268 — 
Total Investment Spending$794,691 $146,812 $38,027 $457,727 $151,020 $1,105 
The above amounts include $135$9 thousand and $118$35 thousand in capitalized payroll, $9.9$1.2 million and $5.3 million in capitalized interest for both periods and $0.9$0.3 million and $3.3$0.4 million in capitalized other general and administrative direct project costs for the years ended December 31, 20182020 and 2017,2019, respectively. Excluded from the table above is $3.6$11.3 million and $4.7$15.2 million of maintenance capital expenditures and other spending for the years ended December 31, 20182020 and 2017,2019, respectively.


Property Dispositions
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DuringWe limited our investment spending during the year ended December 31, 2018, we completed2020 to enhance our liquidity position in light of the salenegative impact of four entertainment parcels located in West Virginia, Illinoisthe COVID-19 pandemic. We will continue to limit our investment spending during the Covenant Relief Period under the amendments to the agreements governing our bank credit facilities and Kansas for net proceeds totaling $7.3 million. In connection with these sales, we recognized a gain on sale of $1.2 million.private placement notes as discussed above.


PursuantDispositions
On December 29, 2020, pursuant to a tenant purchase option, we completed the sale of one public charter school located in Californiasix private schools and four early childhood education centers for net proceeds totaling $12.0of approximately $201.2 million and recognized a gain on sale of $1.9 million during the year ended December 31, 2018. Additionally, we also completed the sale of two early education centers for net proceeds of $2.5 million during the year ended December 31, 2018. No gain or loss was recognized on these sales.

During the year ended December 31, 2018, we completed the sale of four public charter schools, classified as investment in direct financing leases, and leased to Imagine Schools, Inc. for net proceeds of $43.4 million. Accordingly, we reduced our investment in direct financing leases, net, by $37.9 million, which included $31.6 million in original acquisition costs. A gain of $5.5 million was recognized during the year ended December 31, 2018.

Recreation Tenant Update

During the year ended December 31, 2018, Six Flags Entertainment Corporation ("Six Flags") completed their acquisition of the leasehold interest in five of our attraction properties which were previously operated by Premier

Parks, LLC. As a result, Six Flags now operates six of our attraction properties representing approximately $173.7 million of net book value of assets at December 31, 2018.

Mortgage Notes Receivable

On February 16, 2018, a borrower exercised its put option to convert its mortgage note agreement, totaling $142.9 million and secured by 28 education facilities including both early education and private school properties, to a lease agreement. As a result, we recorded the rental property at the carrying value, which approximated fair value of the mortgage note on the conversion date, and allocated this cost on a relative fair value basis. The properties are leased pursuant to a triple-net master lease with a 23-year remaining term.

During the year ended December 31, 2018, we received payment in full on the mortgage note receivable of $250.3 million from OZRE that was secured by 14 ski properties. In connection with the prepayment of this note, we recognized prepayment fees totaling $65.9 million.

During the year ended December 31, 2018, we received payment in full on one mortgage note receivable of $32.0 million that was secured by the observation deck of the John Hancock Tower in Chicago, Illinois. In connection with the prepayment of this note, we recognized prepayment fees of $5.4 million.

During the year ended December 31, 2018, we received payment in full on five mortgage notes receivable totaling $38.1 from LBE Investments, Ltd. that were secured by four charter school properties and land located in Arizona. In connection with the prepayment of these notes, we recognized prepayment fees totaling $3.4$39.7 million. Additionally, during the year ended December 31, 2018,2020, we completed the sale of three early education properties, four experiential properties and two land parcels for net proceeds totaling $26.6 million and recognized a combined gain on sale of $10.4 million.

AMC Restructuring
On July 31, 2020, we entered into a Forbearance Agreement (the “Forbearance Agreement”), a Master Lease Agreement (the “Master Lease”) and seven amended lease agreements (the “Transitional Leases” and collectively with the Master Lease, the “Leases”) with American Multi-Cinema, Inc. and certain affiliates (“AMC”) relating to 53 properties leased by us to AMC (the “Leased Properties”) on the date the agreement was executed. We entered into the Master Lease with AMC relating to 46 theatres (“Master Lease Properties”) and amended the Transitional Leases relating to seven theatres (“Transitional Properties”), each of which was effective July 1, 2020. Subsequent to the effective date, we terminated the Transitional Leases during the second and third quarter of 2020.

We agreed to reduce total annual fixed rent on the 46 Master Lease Properties by approximately 18%, or $19.4 million to approximately $87.8 million (including approximately $6.8 million of ground rent and the repayment of deferral amounts for the months of April, May and June 2020 which we had agreed to defer and amortize as part of fixed rent over the first 14 years of the Master Lease term). Additionally, the Master Lease has fixed escalators of 7.5% every five years on fixed rent excluding the portion attributable to deferred rent.

Each lease for the seven Transitional Properties was amended by the parties. We agreed to reduce the aggregate annual fixed rent on the Transitional Properties by approximately $6.2 million to approximately $8.1 million (including approximately $1.2 million of ground rent and the repayment of deferral amounts for the months of April, May and June 2020 which we had agreed to defer and amortize as part of fixed rent over the remaining terms of the new leases). The total amount deferred under each Transitional Lease prior to us terminating these agreements is still due by AMC and is scheduled to be paid over what would have been the remaining terms of the related property leases.

Pursuant to the Leases and the Forbearance Agreement, during the period of July 1, 2020 through December 31, 2020, AMC agreed to pay percentage rent (15% of gross receipts) in lieu of fixed rent for the Leased Properties prior to any lease terminations. The difference between the percentage rent paid and fixed rent due under the Master Lease represents an additional deferred amount that, beginning in February 2021, will be added to fixed cash rent and amortized over the first 14 years of the Master Lease and beginning January 2021 will be rent due related to the Transitional Leases amortized over the prior lease terms. During the year ended December 31, 2020, we recognized $1.7 million in percentage rent from AMC which related to the period they were open beginning in late August. The payment expected for December will be recognized in the first quarter of 2021 when the payment is received paymentdue to recognizing AMC's revenue on a cash basis.

The Master Lease Properties have been divided into four tranches, with the initial term of each tranche expiring annually from June 30, 2034 to June 30, 2037. The Transitional Leases have expiration dates occurring between November 2026 and March 2029. Prior to December 31, 2020, we terminated all Transitional Leases with AMC.

We believe that the AMC restructuring significantly improves our long-term position with respect to AMC, while providing AMC with deferrals it needs during the pandemic and better performing theatres in fullthe future. Specifically:

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•The Master Lease was designed with the intention that the parties will respect the master lease characterization at all times, which we believe will enhance our position in the event of a reorganization proceeding regarding AMC;
•The lease terms on two mortgage notes receivable totaling $10.5 million thatproperties included in the Master Lease were securedincreased by land locatedan average of nine years; and
•We have reduced our exposure to AMC through the termination of each of the seven Transitional Lease and plan to re-brand or sell these properties with one property sold in California and real estate in Washington. There were no prepayment fees received in connection with these note payoffs.December of 2020.


Impairment Charges

During the year ended December 31, 2018, we recognized a $10.7 million impairment charge related to our guarantees of the payment of certain economic development revenue bonds secured by leasehold interest and improvements at two theatres in Louisiana. We determined a portion of our guarantee fees receivable was no longer recoverable and in addition, determined that our future payment on a portion of the bond obligations was probable. See Note 4 to the consolidated financial statements included in this Annual Report on Form 10-K for further detail.

As further discussed below, during the year ended December 31, 2018, we also recognized an impairment charge of $16.5 million related to an early childhood education tenant.

Severance Expense
On April 5, 2018, we entered into an Amended and Restated Employment Agreement with Mr. Earnest, our then Senior Vice President and Chief Investment Officer, effective March 31, 2018, to reflect the changes in connection with Mr. Earnest's transition to Executive Advisor of the Company. As we determined that such services were no longer needed, on December 27, 2018, we gave notice that the agreement was going to be terminated pursuant to the provisions of the Amended and Restated Employment Agreement. As a result during the year ended December 31, 2018, we recorded severance expense related to Mr. Earnest, as well as another employee terminated under a similar such agreement, totaling $5.9 million. Severance expense includes cash payments totaling $2.6 million, accelerated vesting of nonvested shares totaling $3.2 million and $0.1 million of related taxes and other expenses.

Cappelli Legal Settlement
On June 29, 2018, we entered into a settlement agreement with affiliates of Louis Cappelli (the "Cappelli Group") whereby each of the parties fully settled all disputes between and among them relating to previously disclosed litigation in whichCOVID-19 pandemic, we were the defendant. The terms of the settlement agreement include, among other terms, a payment of $2.0 million to the plaintiffs, the mutual release of all parties, and the dismissal of the final pending New York state court

case with prejudice. Additionally, during the year ended December 31, 2018, we paid approximately $90 thousand in professional fees associated with the settlement. See Note 19 to the consolidated financial statements included in this Annual Report on Form 10-K for further discussion related to the Cappelli Group legal settlement.

Early Childhood Education Tenant Update
As previously disclosed, certain subsidiaries of Children's Learning Adventure USA ("CLA") that are tenantsexperienced vacancies at some of our leases (the "CLA Debtors") filed petitions in bankruptcy under Chapter 11 seekingproperties and at others we negotiated lease modifications that included rent reductions. As part of this process, we reassessed the protectionsexpected holding periods and expected future cash flows of the U.S. Bankruptcy Code. On March 14, 2018, we, CLA, CLA Debtors and certain other CLA subsidiaries' operatingsuch properties owned by us (collectively, the "CLA Parties") entered into and filed a Stipulation to Resolve Pending Motions (the "Stipulation") providing that (a) the CLA Parties would pay rent for the months of March through July for an aggregate total of $4.3 million, (b) resolution of restructuring of the leases between us and the CLA Parties would be concluded no later than July 31, 2018 (the "Forbearance Period"), (c) relief from stay would be granted with respect to our properties as needed to implement the Stipulation, (d) the parties would not commence or prosecute litigation against any other party during the Forbearance Period, and (e) the deadline for any motion by the CLA Debtors to assume or reject the leases under the U.S. Bankruptcy Code would be extended to July 31, 2018. On May 7, 2018, the Court entered an order approving the Stipulation.

In July 2018, we entered into a new lease agreement with CLA related to 21 open schools which replaced the prior lease arrangements and continued on a month-to-month basis. The lease agreement provided for a monthly rent of $1.0 million plus approximately $170 thousand for pro rata property taxes. We had $246.2 million classified in rental properties, net, in the accompanying consolidated balance sheets at December 31, 2018 for these 21 schools and determined that the estimated undiscounted future cash flow exceed the carrying values of these properties.

As part of the July agreement, CLA also relinquished control of four of our properties that were still under development as we no longer intend to develop these properties for CLA. As a result, we revised our estimated undiscounted cash flows for these four properties, considering shorter expected holding periods, and determined that those estimated cash flows were not sufficient to recover the carrying values of nine properties. Accordingly, we recognized impairment charges of $85.7 million, which were comprised of $70.7 million of impairments of real estate investments at nine properties and $15.0 million of impairments of operating lease right-of-use assets at two of these properties. See Note 4 to the Consolidated Financial Statements in this Annual Report on Form 10-K for additional information related to these impairment charges.

During the year ended December 31, 2018,2020, we obtained independent appraisalsrecognized other-than-temporary impairment charges of these four properties and reduced$3.2 million on our equity investments in three theatre projects located in China. See Note 7 to the carrying value of these assets to $9.8 million, recording an impairment charge of $16.5 million. The charge is primarilyConsolidated Financial Statements in this Annual Report on Form 10-K for additional information related to these impairment charges.

Severance Expense
On December 31, 2020, our Senior Vice President - Asset Management, Michael L. Hirons, retired. His retirement was a "Qualifying Termination" under our Employee Severance and Retirement Vesting Plan. For the costyear ended December 31, 2020, severance expense totaled $2.9 million and included cash payments totaling $1.6 million, and accelerated vesting of improvements specific tononvested shares and performance shares totaling $1.3 million.

Attraction Tenant Update
During the development of CLA’s prototype. Two of these properties were sold in February 2019.

In February 2019,year ended December 31, 2020, we entered into agreementsan amended and restated loan and security agreement with CLA (collectively,one of our notes receivable borrowers in response to the "PSA") providingimpacts of the COVID-19 pandemic on the borrower. The restated note receivable consisted of the previous note balance of $6.5 million and provides the borrower with a term loan for up to $13.0 million and a $6.0 million revolving line of credit. The restated note receivable has a maturity date of June 30, 2032 and the line of credit matures on December 31, 2022. Interest is deferred through June 30, 2022, at which time monthly principal and interest payments will be due over 10 years and will be recognized as income on a cash basis. Although the borrower is not in default, nor has the borrower declared bankruptcy, we determined these modifications resulted in a troubled debt restructuring at December 31, 2020 due to the impacts of the COVID-19 pandemic on the borrower's financial condition. We recognized credit loss expense for the purchaseoutstanding principal balance of $12.6 million and salethe $12.9 million unfunded commitment on the term loan and line of certain assets associated withcredit as of December 31, 2020.

Amended Consolidated Credit Agreement and Note Purchase Agreement
During the businesses located at the 21 operating CLA properties whereby we can nominate a third party operator to take an assignment and transfer of such assets from CLA and to receive certain beneficial rights under various related ancillary agreements. Consideration provided by us for the asset transfers includes the release of past due rent obligations, previously fully reserved by us, and additional consideration of approximately $15.0 million which includes approximately $3.5 million for equipment used in the operations of our schools. The transfers of such assets are expected to close between May 1, 2019 and Marchyear ended December 31, 2020, as closing conditions for each transfer are satisfied. CLA has agreedwe amended our Consolidated Credit Agreement, which governs our unsecured revolving credit facility and our unsecured term loan facility, and our Note Purchase Agreement, which governs our private placement notes. The amendments modified certain provisions and waived our obligation to surrender possession of any of those properties that have not been transferred to a replacement operator prior to Marchcomply with certain covenants under these debt agreements through December 31, 2020, or when the Company provides notice that it elects to terminate the Covenant Relief Period, both subject to certain conditions. See discussion below in Liquidity and has agreed to leaseCapital Resources and operate each of the 21 properties for an aggregate of approximately $1.0 million per month of minimum rent until the transfer of each property to our replacement tenant or surrender of the property.

CLA is required to file a motion by March 1, 2019 with the bankruptcy court ("Court") seeking authorization of the sale of certain assets pursuantNote 8 to the PSA. A conditionConsolidated Financial Statements in this Annual Report on Form 10-K for additional information related to the parties’ obligations under the PSA is the Court’s approval of the motion. There can be no assurance that this motion will be approved by the Court or that the Court will not require modifications to the PSA as a condition to its approval.these amendments.

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Also, in February 2019, we entered into new leases of all 21 operating CLA properties with Crème de la Crème ("Crème"), a premium, national early childhood education operator. These leases are contingent upon us delivering possession of the properties and include different financial terms based on whether or not CLA delivers Crème the assets associated with the in-place operations of the school. The leases have 20-year terms that commence upon Crème beginning operations of the schools. Additionally, both us and Crème have early termination rights based on school level economic performance.


There can be no assurance as to the outcome of the contemplated transaction or whether some or all of the properties will be transferred to Crème with in-place operations. If some or all of the schools are not transferred to Crème with in-place operations, there will be a delay in re-opening such schools and a corresponding reduction in near term rents from Crème.

Results of Operations


Year ended December 31, 20182020 compared to year ended December 31, 20172019


RentalAnalysis of Revenue

The following table summarizes our total revenue (dollars in thousands):
Year Ended December 31,Change
20202019
Minimum rent (1)$372,546 $544,279 $(171,733)
Percentage rent (2)8,554 14,962 (6,408)
Straight-line rent (3)(24,550)10,557 (35,107)
Tenant reimbursements (4)15,111 22,864 (7,753)
Other rental revenue515 360 155 
Total Rental Revenue$372,176 $593,022 $(220,846)
Other income (5)9,139 25,920 (16,781)
Mortgage and other financing income33,346 33,027 319 
Total revenue$414,661 $651,969 $(237,308)

(1) For the year ended December 31, 2020 compared to the year ended December 31, 2019, the decrease in minimum rent resulted primarily from the impact of the COVID-19 pandemic, with approximately $176.0 million related to tenants with rent recognized on a cash basis or as restructured, as well as for properties with deferred rent not recognized because collection was $556.4determined not probable or there were rent abatements. In addition, there was a decrease in rental revenue of $7.0 million from property dispositions not classified in discontinued operations. This was partially offset by an increase in minimum rent of $5.5 million related to property acquisitions and developments completed in 2020 and 2019 and $5.8 million in increases on existing properties. Minimum rent for the year ended December 31, 20182020 includes $5.2 million in variable rent from tenants that paid a portion of minimum rent based on a percentage of gross revenue.

During the year ended December 31, 2020, we renewed 15 lease agreements on approximately 0.9 million square feet. These extension agreements (which exclude restructured agreements with AMC as discussed in "Recent Developments") were negotiated with our tenants in conjunction with rent deferrals as a result of the impact of the COVID-19 pandemic. The extension periods for these agreements will begin in future periods, between 2021 and 2031. Upon the commencement of the extension periods, we expect a weighted average increase of approximately 8% in rental rates. We paid no leasing commissions with respect to these lease renewals.

(2) The decrease in percentage rent (amounts above base rent) related primarily to lower percentage rent recognized during the year ended December 31, 2020 from five theatre properties, one ski property, five attraction properties, one eat and play tenant and one early education tenant. These decreases were partially offset by increases in percentage rent from one private school tenant.

(3) For the year ended December 31, 2020 compared to $484.2the year ended December 31, 2019, the decrease in straight-line rent resulted primarily from write-offs totaling $38.0 million during the year ended December 31, 2020, which was comprised of $26.5 million of straight-line accounts receivable and $11.5 million of sub-lessor ground lease straight-line accounts receivable, due to the COVID-19 pandemic. This was partially offset by an increase in straight-line rent related to property acquisitions and developments completed in 2020 and 2019.

(4) The decrease in tenant reimbursements during the year ended December 31, 2020 was primarily due to COVID-19 contractual abatements (which in certain cases included tenant reimbursements), tenant deferrals that were not recognized because collection was not probable and vacancies. Additionally, during the year ended December 31, 2020, we had $4.7 million less in the gross-up of tenant reimbursed expenses for property taxes at various properties as certain tenants at these properties are now paying these costs directly.

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(5) The decrease in other income for the year ended December 31, 2017. This2020 related primarily to a decrease in operating income as a result of COVID-19 closures at the Kartrite Resort and a theatre property.

Analysis of Expenses and Other Line Items

The following table summarizes our expenses and other line items (dollars in thousands):
Year Ended December 31,Change
20202019
Property operating expense (1)$58,587 $60,739 $(2,152)
Other expense (2)16,474 29,667 (13,193)
General and administrative expense (3)42,596 46,371 (3,775)
Severance expense2,868 2,364 504 
Costs associated with loan refinancing or payoff (4)1,632 38,269 (36,637)
Interest expense, net (5)157,675 142,002 15,673 
Transaction costs (6)5,436 23,789 (18,353)
Credit loss expense (7)30,695 — 30,695 
Impairment charges (8)85,657 2,206 83,451 
Depreciation and amortization (9)170,333 158,834 11,499 
Equity in loss from joint ventures (10)(4,552)(381)(4,171)
Impairment charges on joint ventures (11)(3,247)— (3,247)
Gain on sale of real estate (12)50,119 4,174 45,945 
Income tax (expense) benefit (13)(16,756)3,035 (19,791)
Income from discontinued operations before other items (14)— 37,241 (37,241)
Impairment on public charter school portfolio sale (15)— (21,433)21,433 
Gain on sale of real estate from discontinued operations (16)— 31,879 (31,879)
Preferred dividend requirements(24,136)(24,136)— 

(1) Our property operating expenses arise from the operations of our entertainment districts and other specialty properties as well as operating ground lease expense and the gross-up of tenant reimbursed expenses. The decrease in property operating expenses resulted from bad debt expense booked in 2019, as well as a decrease in the gross-up of tenant reimbursed expenses for property taxes at various properties as certain tenants at these properties are now paying these costs directly. These decreases were partially offset by an increase in costs due to higher vacancies.

(2) The decrease in other expense for the year ended December 31, 2020 related to a decrease in operating expenses as a result of COVID-19 closures at the Kartrite Resort and a theatre property.

(3) The decrease in general and administrative expense for the year ended December 31, 2020 was primarily due to a decrease in payroll and benefits costs, as well as travel expenses, partially offset by increases in professional fees.

(4) Costs associated with loan refinancing or payoff for the year ended December 31, 2020 related to fees paid to third parties in connection with amendments to our Consolidated Credit Agreement and Note Purchase Agreement. Costs associated with loan refinancing or payoff for the year ended December 31, 2019 related to the tender and redemption of the 5.75% Senior Notes due 2022.

(5) The increase in our net interest expense for the year ended December 31, 2020 compared to the year ended December 31, 2019 resulted primarily from $63.1an increase in average borrowings as well as a decrease in interest cost capitalized on development projects. This was partially offset by a decrease in our weighted average interest rate on outstanding debt and an increase in interest income from short-term investments related to cash on hand.

(6) The decrease in transaction costs for the year ended December 31, 2020 compared to the year ended December 31, 2019 was primarily due to pre-opening costs related to the Kartrite Resort, which opened in May 2019, as well as less costs related to the transfer of our CLA properties to Crème.

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(7) Credit loss expense for the year ended December 31, 2020 was recognized in conjunction with our implementation of the new current expected credit losses standard (Topic 326). In addition, credit loss expense for the year ended December 31, 2020 included $25.5 million of credit loss expense that was recognized to reserve the outstanding principal balance of notes receivable from one borrower and an unfunded commitment to fund an additional $12.9 million, as a result of to recent changes in the borrower's financial status due to the COVID-19 pandemic.

(8) Impairment charges recognized during the year ended December 31, 2020, related to nine properties with revised estimated undiscounted cash flows and shorter hold periods as a result of the COVID-19 pandemic. Impairment charges recognized during the year ended December 31, 2020 were comprised of $70.7 million of impairments of real estate investments and $15.0 million of impairments of operating lease right-of-use assets. Impairment charges recognized during the year ended December 31, 2019, related to one theatre property.

(9) The increase in depreciation and amortization expense resulted primarily from acquisitions and developments completed in 2019 and 2020 as well as the acceleration of amortization on an in-place lease intangible related to a vacant property. This increase was partially offset by decreases related to property dispositions that occurred during 2019 and 2020.

(10) The increase in equity in loss from joint ventures resulted primarily from losses recognized at our joint ventures projects located in St. Petersburg Beach, Florida, and our joint ventures in three theatre projects in China. These properties were negatively impacted due to COVID-19 closures.

(11) Impairment charges on joint ventures for the year ended December 31, 2020 related to other-than-temporary impairment charges on three theatre projects located in China. See Note 7 to the Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information.

(12) The gain on sale of real estate for the year ended December 31, 2020 related to the exercise of a tenant purchase option on six private schools and four early childhood education centers as well as the sale of three early education center properties, four experiential properties and two land parcels. The gain on sale of real estate for the year ended December 31, 2019 related to the sale of one early childhood education center property, one attraction property and four land parcels.

(13) The increase in income tax expense for the year ended December 31, 2020 compared to income tax benefit for the year ended December 31, 2019 is primarily related to the recognition of a full valuation allowance on deferred tax assets for our Canadian operations and certain TRSs as a result of the economic uncertainty caused by the COVID-19 pandemic.

(14) Income from discontinued operations before other items for the year ended December 31, 2019 related to the operating results of all public charter school investments disposed in 2019. See Note 17 to the Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information on discontinued operations.

(15) Impairment on public charter school portfolio sale for the year ended December 31, 2019 related to the sale of substantially all of our public charter school portfolio, consisting of 47 public charter school related assets. See Note 4 to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information on these impairment charges.

(16) Gain on sale of real estate from discontinued operations for the year ended December 31, 2019 was due to the disposition of ten public charter schools pursuant to tenant purchase options and seven other public charter school properties sold during 2019.

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Year ended December 31, 2019 compared to year ended December 31, 2018

Analysis of Revenue

The following table summarizes our total revenue (dollars in thousands):
Year Ended December 31,Change
20192018
Minimum rent (1)$544,279 $478,087 $66,192 
Percentage rent (2)14,962 10,663 4,299 
Straight-line rent (3)10,557 4,703 5,854 
Tenant reimbursements (4)22,864 15,305 7,559 
Other rental revenue360 328 32 
Total Rental Revenue$593,022 $509,086 $83,936 
Other income (5)25,920 2,076 23,844 
Mortgage and other financing income (6)33,027 128,759 (95,732)
Total revenue$651,969 $639,921 $12,048 

(1) For the year ended December 31, 2019 compared to the year ended December 31, 2018, the increase in minimum rent resulted from $41.2 million of rental revenue related to property acquisitions and developments completed in 20182019 and 2017 and conversion of certain mortgage notes to rental properties,2018, an increase of $4.7$3.5 million in rental revenue related to our 21 early childhood education center properties that were transferred from CLA to Crème and an increase of $0.2 million in rental revenue on existing properties and an increaseproperties. In addition, during the year ended December 31, 2019, we recognized $22.6 million in rentallease revenue on our existing operating ground leases in which we are sub-lessor, in connection with our adoption of $10.9 million related to CLA.Topic 842. These increases were partially offset by a decrease of $6.5$1.3 million in rental revenue from property dispositions. Percentage rents of $10.7 million and $7.8 million were recognized during the years ended December 31, 2018 and 2017, respectively. Straight-line rents, net of $10.2 million and $4.3 million were recognized during the years ended December 31, 2018 and 2017, respectively. Tenant reimbursements of $15.4 million and $15.6 million were recognized during the years ended December 31, 2018 and 2017, respectively.dispositions not included in discontinued operations.


During the year ended December 31, 2018,2019, we renewed four10 lease agreements on approximately 240,809783 thousand square feet and funded or agreed to fund an average of $29.07$17.25 per square foot in tenant improvements. We experienced a decrease of approximately 1.7%6.3% in rental rates and paid no leasing commissions with respect to these lease renewals.
Mortgage
(2) The increase in percentage rent related primarily to higher percentage rent recognized during the year ended December 31, 2019 from one of our ski properties, our gaming property and several attraction and Education properties.

(3) The increase in straight-line rent related primarily to property acquisitions and developments completed in 2019 and 2018 as well as $0.9 million in straight-line revenue on our existing operating ground leases in which we are a sub-lessor, in connection with our adoption of Topic 842.

(4) The increase in tenant reimbursements related primarily to the gross-up of tenant reimbursed expenses of $6.9 million recognized during the year ended December 31, 2019 in accordance with Topic 842.

(5) The increase in other financing income for the year ended December 31, 2018 was $142.3 million compared2019 related primarily to $88.7 million for the year ended December 31, 2017.operating income from the Kartrite Resort, as well as the operating income from a theatre.

(6) The $53.6 million increasedecrease in mortgage and other financing income was primarily due to an increase in prepayment fees received of $73.9 million in connection with prepayments on two non-Education mortgage notes for the year ended December 31, 2018 versus the year ended December 31, 2017. See Note 6 to the consolidated financial statements included in this Annual Report on Form 10-K for further detail. These increases were partially offset by the conversion of a mortgage note secured by 28 early education properties to leased properties during the year ended December 31, 2018 six public charter school properties reclassified from direct financing leases to operating leases in 2017, other note payoffs during 2018 and 2017,totaling $71.3 million as well as the sale of four public charter school properties classified asnote and direct financing leases.lease payoffs in 2018 and 2019.

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Analysis of Expenses and Other Line Items
The following table summarizes our expenses and other line items (dollars in thousands):
Year Ended December 31,Change
20192018
Property operating expense (1)$60,739 $29,654 $31,085 
Other expense (2)29,667 443 29,224 
General and administrative expense46,371 48,889 (2,518)
Severance expense2,364 5,938 (3,574)
Litigation settlement expense— 2,090 (2,090)
Costs associated with loan refinancing or payoff (3)38,269 31,958 6,311 
Interest expense, net (4)142,002 135,870 6,132 
Transaction costs (5)23,789 3,698 20,091 
Impairment charges (6)2,206 27,283 (25,077)
Depreciation and amortization (7)158,834 138,395 20,439 
Equity in loss from joint ventures(381)(22)(359)
Gain on sale of real estate4,174 3,037 1,137 
Gain on sale of investment in direct financing leases (8)— 5,514 (5,514)
Income tax benefit (expense) (9)3,035 (2,285)5,320 
Income from discontinued operations before other items (10)37,241 45,036 (7,795)
Impairment on public charter school portfolio sale (11)(21,433)— (21,433)
Gain on sale of real estate from discontinued operations (12)31,879 — 31,879 
Preferred dividend requirements(24,136)(24,142)6 

(1) Our property operating expense totaled $30.8 million for the year ended December 31, 2018 compared to $31.7 million for the year ended December 31, 2017. These property operating expenses arise from the operations of our retail centersentertainment districts and other specialty properties.properties as well as operating ground lease expense and the gross-up of tenant reimbursed expenses. The $0.9 million decreaseincrease in property operating expenses resulted primarily from a decrease in bad debtground lease expense offset by higher propertyof $24.6 million from our existing operating ground leases as well as the gross-up of tenant reimbursed expenses at our multi-tenant properties.

Our general and administrative expense totaled $48.9of $6.9 million forrecognized during the year ended December 31, 2018 compared to $43.4 million for the year ended December 31, 2017.2019, in accordance with Topic 842, adopted January 1, 2019.
(2) The increase of $5.5 million was primarily due to an increase in payroll and benefits costs, including share-based compensation, as well as increases in professional fees, shareholder and marketing expenses, franchise taxes and insurance costs.

Severance expense was $5.9 million for the year ended December 31, 2018 and related to the termination of the Amended and Restated Employment Agreement for our former Senior Vice President and Chief Investment Officer as well as another employee. See Note 15 to the consolidated financial statements included in this Annual Report on Form 10-K for further detail. There was no severanceother expense for the year ended December 31, 2017.2019 related to operating expenses for the Kartrite Resort, as well as operating expense for a theatre.
Litigation settlement expense was $2.1 million
(3) Costs associated with loan refinancing or payoff for the year ended December 31, 2018 and2019 related to the settlementtender and redemption of our litigation with the Cappelli Group. See Note 19 to the consolidated financial statements included in this Annual Report on Form 10-K for further detail. There was no litigation settlement expense for the year ended December 31, 2017.

5.75% Senior Notes due 2022. Costs associated with loan refinancing or payoff for the year ended December 31, 2018 was $32.0 million and primarily related to the redemption of the 7.75% Senior Notes due 2020. Costs associated with loan refinancing or payoff totaled $1.5 million

(4) The increase in our net interest expense for the year ended December 31, 2017 and primarily related2019 compared to the amendment to our unsecured revolving credit facility and term loan, and the prepayment of secured fixed rate mortgage notes payable.

Gain on early extinguishment of debt for the year ended December 31, 2017 was $1.0 million and related to a note payoff in advance of maturity that was initially recorded at fair value upon acquisition. There was no gain on early extinguishment of debt for the year ended December 31, 2018.

Our net interest expense increased by $2.4 million to $135.5 million for the year ended December 31, 2018 from $133.1 million for the year ended December 31, 2017. This increase resulted primarily from an increase in average borrowings partially offset by a decrease in the weighted average interest rate used to finance our real estate acquisitions and fund our mortgage notes receivable.receivable as well as a decrease in interest cost capitalized on development projects. This was partially offset by an increase in interest income recognized during the year ended December 31, 2019.


Transaction(5) The increase in transaction costs totaled $3.7 million for the year ended December 31, 20182019 compared to $0.5 million for the year ended December 31, 2017. The increase of $3.2 million was due to an increase in potential and terminated transactions, as well as $1.3 million in pre-opening costs related to the indoor waterpark hotel and adventure park at the casino and resort project in Sullivan County, New York, which is being operated under a traditional REIT lodging structure.

Impairment charges for the year ended December 31, 2018 totaled $27.3 million andwas primarily due to pre-opening costs related to the Kartrite Resort, which opened in May 2019, as well as costs related to the transfer of our CLA properties to Crème.

(6) Impairment charges recognized during the year ended December 31, 2019 related to one theatre property. Impairment charges recognized during the year ended December 31, 2018 related to two partially completed early childhood education centers and two land parcels with site improvements, as well as an impairment charge related to two guarantees of the payment of certain economic development revenue bonds secured by leasehold interest and improvements at two theatres in Louisiana. See Note 4 to the consolidated financial statementsConsolidated Financial Statements included in this Annual Report on Form 10-K for further information on these impairment charges. Impairment charges for the year ended December 31, 2017 totaled $10.2 million and related to six charter school properties previously included

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(7) The increase in our investment in direct financing leases. See Note 7 to the consolidated financial statements included in this Annual Report on Form 10-K for further information.

Depreciationdepreciation and amortization expense totaled $153.4 million for the year ended December 31, 2018 compared to $132.9 million for the year ended December 31, 2017. The $20.5 million increase resulted primarily from acquisitions and developments completed in 2018 and 2017, including our transaction with CNL Lifestyle which closed on April 6, 2017. This increase2019 and was partially offset by property dispositions that occurred during 2018 and 2017.2019.


(8) Gain on sale of real estate was $3.0 million for the year ended December 31, 2018 and related to the sale of four entertainment parcels and the exercise of a tenant purchase option on a public charter school property. Gain on sale of real estate was $41.9 million for the year ended December 31, 2017 and related to the sale of four entertainment properties, the exercise of eight tenant purchase options on public charter school properties and the sale of three other education properties.

Gain on sale of investment in direct financing leases was $5.5 million for the year ended December 31, 2018 and related to the sale of four public charter school properties leased to Imagine. For further detail, see Note 7 to the consolidated financial statements included in this Annual Report on Form 10-K. There was no gain on sale of investment in direct financing leases for the year ended December 31, 2017.2018 related to the sale of four public charter school properties leased to Imagine Schools, Inc. ("Imagine").


Preferred share redemption costs of $4.5 million(9) The change in income tax benefit for the year ended December 31, 2017 were due2019 compared to the redemption of all of our 6.625% Series F cumulative redeemable preferred shares on December 21, 2017. These costs consist of the original issuance costs and other redemption related expenses. There were no preferred share redemption costsincome tax expense for the year ended December 31, 2018.2018 is primarily related to lower deferred taxes due to the treatment of pre-opening costs and other expected tax losses for the Kartrite Resort, as well as certain expenses related to our Canadian trust.


Year ended December 31, 2017 compared to year ended December 31, 2016

Rental revenue was $484.2 million(10) Income from discontinued operations before other items for the year ended December 31, 2017 compared2019 and 2018 related to $415.2 millionthe operating results of all public charter school investments disposed in 2019. See Note 17 to the Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information on discontinued operations.

(11) Impairment on public charter school portfolio sale for the year ended December 31, 2016. This increase resulted primarily from $82.6 million of rental revenue2019 related to property acquisitions and developments completed in 2017 and 2016, including our transaction with CNL Lifestyle which closed

on April 6, 2017. This increase was partially offset by a decrease of $13.6 million in rental revenue on existing properties, primarily due to lower straight-line rental revenue and the reversal of prior period straight-line receivables of $4.0 million and $7.4 million, respectively, as well as a reduction in rental revenue of $2.7 million all relating to one of our early education tenants, CLA. In addition, property dispositions contributed to this decrease. Percentage rents of $7.8 million and $4.7 million were recognized during the years ended December 31, 2017 and 2016, respectively. Straight-line rents, net of $4.3 million and $17.0 million were recognized during the years ended December 31, 2017 and 2016, respectively. The decrease of $12.7 million in straight-line rent is due primarily to lower straight-line rent and the reversal of prior period straight-line rent receivables related to CLA. Tenant reimbursements of $15.6 million were recognized during both the years ended December 31, 2017 and 2016.

During the year ended December 31, 2017, we renewed 27 lease agreements on approximately 2.2 million square feet and funded or agreed to fund an average of $28.44 per square foot in tenant improvements. We experienced an increase of approximately 15% in rental rates and paid no leasing commissions with respect to these lease renewals.

Other income was $3.1 million for the year ended December 31, 2017 compared to $9.0 million for the year ended December 31, 2016. The $5.9 million decrease was primarily due to higher gains from insurance recovery and fee income recognized during the year ended December 31, 2016.

Mortgage and other financing income for the year ended December 31, 2017 was $88.7 million compared to $69.0 million for the year ended year ended December 31, 2016. The $19.7 million increase was primarily due to additional real estate lending activities during 2017 and 2016, including our investment in a mortgage note receivable with OZRE secured by 14 ski properties which closed on April 6, 2017. This increase was offset by a decrease of $2.8 million in prepayment fees received in connection with prepayments of mortgage notes receivable during the year ended December 31, 2017, as well as the sale of ninesubstantially all of our public charter school properties that were accounted for as direct financing leases during 2016.

Our property operating expense totaled $31.7 million for the year ended December 31, 2017 compared to $22.6 million for the year ended December 31, 2016. These property operating expenses arise from the operationsportfolio, consisting of our retail centers and other specialty properties. The $9.1 million increase resulted primarily from an increase in bad debt expense47 public charter school related to CLA, as well as higher property operating expenses at our multi-tenant properties.

Our general and administrative expense totaled $43.4 million for the year ended December 31, 2017 compared to $37.5 million for the year ended December 31, 2016. The increase of $5.9 million was primarily due to an increase in payroll and benefits costs, including share-based compensation, as well as increases in professional fees and franchise taxes.

Costs associated with loan refinancing or payoff for the year ended December 31, 2017 was $1.5 million and primarily relatedassets, which occurred on November 22, 2019. See Note 4 to the amendment to our unsecured revolving credit facility and term loan, and the prepayment of secured fixed rate mortgage notes payable. Costs associated with loan refinancing or payoff totaled $0.9 million for the year ended December 31, 2016 and related to fees associated with the repayment of a secured fixed rate mortgage note payable and the write off of prepaid mortgage fees in conjunction with our borrowers' prepayments of two mortgage notes receivable.

Gain on early extinguishment of debt for the year ended December 31, 2017 was $1.0 million and related to a note payoff in advance of maturity that was initially recorded at fair value upon acquisition. There was no gain on early extinguishment of debt for the year ended December 31, 2016.

Our net interest expense increased by $36.0 million to $133.1 million for the year ended December 31, 2017 from $97.1 million for the year ended December 31, 2016. This increase resulted primarily from an increase in average borrowings used to finance our real estate acquisitions and fund our mortgage notes receivable.

Transaction costs totaled $0.5 million for the year ended December 31, 2017 compared to $7.9 million for the year ended December 31, 2016. The decrease of $7.4 million was due to a decrease in potential and terminated transactions as well as our early adoption of ASU 2017-01.


Impairment charges for the year ended December 31, 2017 totaled $10.2 million and related to six charter school properties previously included in our investment in direct financing leases. There were no impairment charges for the year ended December 31, 2016. See Note 7 to the consolidated financial statementsConsolidated Financial Statements included in this Annual Report on Form 10-K for further information.information on these impairment charges.


Depreciation and amortization expense totaled $132.9 million(12) Gain on sale of real estate from discontinued operations for the year ended December 31, 2017 compared to $107.6 million for the year ended December 31, 2016. The $25.3 million increase resulted primarily from asset acquisitions and developments completed in 2017 and 2016, including our transaction with CNL Lifestyle which closed on April 6, 2017. This increase2019 was partially offset by property dispositions.

Gain on sale of real estate was $41.9 million for the year ended December 31, 2017 and relateddue to the saledisposition of four entertainment properties, the exercise of eightten public charter schools pursuant to tenant purchase options onand seven other public charter school properties and the sale of three other education properties. Gain on sale of real estate was $5.3 million for the year ended December 31, 2016 and related to the sale of three retail parcels and the exercise of two tenant purchase options on public charter schools properties.sold during 2019.


Income tax expense was $2.4 million for the year ended December 31, 2017 compared to $0.6 million for the year ended December 31, 2016 and related primarily to Canadian income taxes on our Canadian trust and Federal income
taxes on our TRSs, as well as state income taxes and withholding tax for distributions related to our unconsolidated joint venture projects located in China. The $1.8 million increase in expense related primarily to the reversal of a valuation allowance associated with our TRSs, deferred tax assets recorded in the year ended December 31, 2016, as well as higher deferred tax expense in 2017 related to our Canadian trust. See Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K for further information.

Preferred dividend requirements for the year ended December 31, 2017 were $24.3 million compared to $23.8 million for the year ended December 31, 2016. The $0.5 million increase is due to an increase of $0.7 million due to the issuance of 6.0 million 5.75% Series G cumulative redeemable preferred shares on November 30, 2017, offset by a decrease of $0.2 million as a result of the redemption of 5.0 million 6.625% Series F cumulative redeemable preferred shares on December 21, 2017.

Preferred share redemption costs of $4.5 million for the year ended December 31, 2017 were due to the redemption of all of our 6.625% Series F cumulative redeemable preferred shares on December 21, 2017. These costs consist of the original issuance costs and other redemption related expenses. There were no preferred share redemption costs for the year ended December 31, 2016.

Liquidity and Capital Resources


Cash and cash equivalents were $5.9 million at were $1.0 billion at December 31, 2018.2020. In addition, we had restricted cash of $12.6of $2.4 million at December 31, 2018.2020. Of the restricted cash at December 31, 2018, $8.02020, $1.3 million relatedrelated to cash held for our borrowers’ debt service reserves for mortgage notes receivable or tenants' off-season rent reserves and $4.6and $1.1 million related to escrow deposits required for property management agreements or held related tofor potential acquisitions and developments.redevelopments.


Mortgage Debt, Senior Notes, Unsecured Revolving Credit Facility and Unsecured Term Loan Facility and Equity Issuances


As of December 31, 2018,2020, we had total debt outstanding of $3.0$3.7 billion of which 99% waswas unsecured.


At December 31, 2018,2020, we had outstanding $2.2outstanding $2.4 billion in aggregateaggregate principal amount of unsecured senior notes (excluding the private placement notes discussed below) ranging in interest rates from 4.50%3.75% to 5.75%5.25%. The notes contain various covenants, including: (i) a limitation on incurrence of any debt that would cause the ratio of our debt to adjusted total assets to exceed 60%; (ii) a limitation on incurrence of any secured debt whichthat would cause the ratio of secured debt to adjusted total assets to exceed 40%; (iii) a limitation on incurrence of any debt whichthat would cause our debt service coverage ratio to be less than 1.5 times; and (iv) the maintenance at all times of our total unencumbered assets such that they are not less than 150% of our outstanding unsecured debt.


In light of the continuing financial and operational impacts of the COVID-19 pandemic on us, our tenants and borrowers, on June 29, 2020 and November 3, 2020, we amended our Consolidated Credit Agreement, which governs our unsecured revolving credit facility and our unsecured term loan facility. The amendments modified certain provisions and waived our obligation to comply with certain covenants under this debt agreement through December 31, 2021. We can elect to terminate the Covenant Relief Period early, subject to certain conditions.

On June 29, 2020 and December 24, 2020, we further amended our Note Purchase Agreement, which governs our private placement notes. The amendments modified certain provisions and waived our obligation to comply with certain covenants under these debt agreements through October 1, 2021. We can elect to extend such period through January 1, 2022 and may elect to terminate the Covenant Relief Period early, subject to certain conditions. See Note 8 to the Consolidated Financial Statements in this Annual Report on Form 10-K for additional details.
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At December 31, 2018,2020, we had $30.0$590.0 million outstanding balance under our $1.0 billion unsecured revolving credit facility with interest at a floating rate of LIBOR plus 100 basis points,1.625% (with a LIBOR floor of 0.50%), which was 3.50% at2.125%, with a facility fee of 0.375%. During the three months ended December 31, 2018.2020, our unsecured debt rating was downgraded to BB+ by both Fitch and Standard & Poor's. If our unsecured debt rating is further downgraded by Moody's, the interest rate on the revolving credit facility would increase by 0.35% during the Covenant Relief Period. After the Covenant Relief Period and based on our current unsecured debt ratings, the interest rate will be LIBOR plus 1.20% (with a LIBOR floor of zero) and the facility fee will be 0.25%, however these rates are subject to change based on our unsecured debt ratings. Subsequent to December 31, 2020, due to stronger collections, disposition proceeds and significant liquidity, we used a portion of our cash on hand to reduce borrowing under our unsecured revolving credit facility by $500.0 million, resulting in a remaining balance of $90.0 million on our $1.0 billion facility.


At December 31, 2018,2020, our unsecured term loan facility had a balance of $400.0 million with interest at a floating rate of LIBOR plus 110 basis points,2.00% (with a LIBOR floor of 0.50%), which was 3.48% at December 31, 2018.2.50%. Similar to the unsecured revolving credit facility discussed above, if our unsecured debt rating is further downgraded by Moody's, the interest rate on the term loan facility would increase by 0.35% during the Covenant Relief Period. After the Covenant Relief Period and based on our current unsecured debt ratings, the interest rate will be LIBOR plus 1.35% (with a LIBOR floor of zero), however these rates are subject to change based on our unsecured debt ratings. As of December 31, 2018, $300.0 million2020, all of this LIBOR-based debt was fixed with interest rate swap agreements at 2.64% from July 6, 2017 to April 5, 2019. In addition, as of December 31, 2018, we have interest rate swap agreements to fix the interest rate at 3.15% on an additional $50.0 million of this LIBOR-based debt from November 6, 2017 to April 5, 2019 and on $350.0 million of this LIBOR-based debtswaps from April 6,5, 2019 to February 7, 2022. During the Covenant Relief Period and based on our current unsecured debt ratings, the interest rate swaps are fixed at 4.40% for $350.0 million of borrowings and 4.60% for the remaining $50.0 million of borrowings, and after the Covenant Relief Period will be 3.40% for $350.0 million of borrowings and 3.60% for the remaining $50.0 million of borrowings, however these rates are subject to change based on the Company’s unsecured debt ratings.


At December 31, 2018,2020, we had outstanding $340.0 million of senior unsecured notes that were issued in a private placement transaction. The private placement notes were issued in two tranches with $148.0 million bearing interest at 4.35% and due August 22, 2024, and $192.0 million bearing interest at 4.56% and due August 22, 2026. As noted above, we amended the Note Purchase Agreement, which governs our private placement notes, on June 29, 2020 and December 24, 2020 to modify certain provisions and obtain covenant waivers. At December 31, 2020, the interest rates for the private placement notes were 5.60% and 5.81% for the Series A notes due 2024 and the Series B notes due 2026, respectively. After the Covenant Relief Period, the interest rates for the private placement notes are scheduled to return to 4.35% and 4.56% for the Series A notes due 2024 and the Series B notes due 2026, respectively. Subsequent to December 31, 2020, we used a portion of our cash proceeds from property sales to reduce the principal of our private placement notes by $23.8 million in accordance with the above amendments to the Note Purchase Agreement.
Our unsecured credit facilities and the private placement notes contain financial covenants or restrictions that limit our levels of consolidated debt, secured debt, investment levels outside certain categories, stock repurchases and dividend distributions and require us to maintain a minimum consolidated tangible net worth and meet certain coverage levels for fixed charges and debt service. The amendments to these debt agreements imposed a new minimum liquidity financial covenant during the Covenant Relief Period, provided relief from compliance with certain other financial covenants during the Covenant Relief Period and permanently modified certain other financial covenants. The amendments also imposed additional restrictions on us during the Covenant Relief Period, including limitations on making investments, incurring indebtedness, making capital expenditures and paying dividends and making other distributions, repurchasing our shares, voluntarily prepaying certain indebtedness, encumbering certain assets and maintaining a minimum liquidity amount, in each case subject to certain exceptions. In addition, the amendments required us to cause certain of our key subsidiaries to guarantee our obligations based on our unsecured debt ratings, and we are required to pledge the equity interests of such subsidiary guarantors if certain subsequent events occur; however, both of these requirements end when the Covenant Relief Period is over. See Note 8 to the Consolidated Financial Statements in this Annual Report on Form 10-K for additional details regarding these amendments.
Additionally, these debt instruments contain cross-default provisions if we default under other indebtedness exceeding certain amounts. Those cross-default thresholds vary from $25.0$50.0 million to in $75.0 million, depending upon
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the case of the note purchase agreement governing the private placement notes, $75.0 million.debt instrument. We were in compliance with these financial and other covenants under our debt instruments at December 31, 2018.2020.
Our principal investing activities are acquiring, developing and financing entertainment, recreationExperiential and educationEducation properties. These investing activities have generally been financed with senior unsecured notes, as well as the proceeds from equity offerings. Our unsecured revolving credit facility is also used to finance the acquisition or development of properties, and to provide mortgage financing. We have and expect to continue to issue debt securities in public or private offerings. We have and may in the future assume mortgage debt in connection with property acquisitions or, after the expiration of the Covenant Relief Period, incur new mortgage debt on existing properties. We may also issue equity securities in connection with acquisitions. Continued growth of our rental propertyreal estate investments and mortgage financing portfolios will depend in part on our continued ability to access funds through additional borrowings and securities offerings and, to a lesser extent, our ability to assume debt in connection with property acquisitions. We may also fund investments with the proceeds from asset dispositions.


CertainCapital Markets

During the year ended December 31, 2020, our Board of Trustees approved a share repurchase program to repurchase up to $150.0 million of our other long-term debt agreements contain customary restrictive covenants relatedcommon shares. The share repurchase program was set to financial and operating performance as well as certain cross-default provisions. We were in compliance with all financial covenants atexpire on December 31, 2018.

Subsequent to2020; however, we suspended the program on the effective date of the covenant modification agreements, June 29, 2020, as discussed above. During the year ended December 31, 2018,2020, we repurchased 4,066,716 common shares under the share repurchase program for approximately $106.0 million. The repurchases were made under a Rule 10b5-1 trading plan.

During the year ended December 31, 2020, we issued an aggregate of 490,31036,176 common shares under the direct share purchase component of our Dividend Reinvestment and Direct Share PurchaseDSP Plan ("DSPP") for total net proceeds of $35.6$1.1 million.

Debt Financing Activity
On January 2, 2018, we prepaid in full a mortgage note payable totaling $11.7 million with an annual interest rate of 6.19%, which was secured by a theatre property.

On February 28, 2018, we redeemed all of our outstanding 7.75% Senior Notes due July 15, 2020. The notes were redeemed at a price equal to the principal amount of $250.0 million plus a premium calculated pursuant to the terms of the indenture of $28.6 million, together with accrued and unpaid interest up to, but not including the redemption date of $2.3 million. In connection with the redemption, we recorded a non-cash write off of $3.3 million in deferred financing costs. The premium and non-cash write off were recognized as costs associated with loan refinancing or payoff in the accompanying consolidated statements of income for the year ended December 31, 2018.

On April 16, 2018, we issued $400.0 million in aggregate principal amount of senior notes due April 15, 2028 pursuant to an underwritten public offering. The notes bear interest at an annual rate of 4.95%. Interest is payable on April 15

and October 15 of each year beginning on October 15, 2018 until the stated maturity date of April 15, 2028. The notes were issued at 98.883% of their face value and are unsecured. We used the net proceeds from the note offering of $391.8 million to pay down our unsecured revolving credit facility.


Liquidity Requirements

Short-term liquidity requirements consist primarily of normal recurring corporate operating expenses, debt service requirements, distributions to shareholders and, dividends to shareholders.a lesser extent, share repurchases. We meethave historically met these requirements primarily through cash provided by operating activities. NetThe table below summarizes our cash provided by operating activities was $484.3 million, $398.3 million and $305.4 million for the years ended December 31, 2018, 2017 and 2016, respectively. Net cash used by investing activities was $96.8 million, $702.1 million and $662.1 million for the years ended December 31, 2018, 2017 and 2016, respectively. Net cash used by financing activities was $427.6 million for the year ended December 31, 2018 and net cash provided by financing activities was $333.5 million and $371.1 million for the years ended December 31, 2017 and 2016, respectively. flows (dollars in thousands):
Year Ended December 31,
20202019
Net cash provided by operating activities$65,273 $439,530 
Net cash provided by investing activities133,986 96,505 
Net cash provided (used) by financing activities297,169 (23,223)

We currently anticipate that our cash on hand, cash from operations funds available under our unsecured revolving credit facility and proceeds from asset dispositions will provide adequate liquidity to meet our financial commitments for the next 12 months, including to fund our operations, make interest and principal payments on our debt, allow dividends to be paiddistributions to our preferred shareholders, and allow distributions to our common shareholders to avoid corporate level federal income or excise tax in accordance with REIT Internal Revenue Code requirements. We may also use funds available under our unsecured revolving credit facility, subject to compliance with financial covenants.


As discussed above, we have agreed to rent and mortgage payment deferral arrangements with most of our customers as a result of the COVID-19 pandemic. Under these deferral arrangements, our customers are required to resume rent and mortgage payments at negotiated times, and begin repaying deferred amount under negotiated schedules, which will begin at various times in the future. In addition, the continuing impact of the COVID-19 pandemic may result in further extensions or adjustments for our customers, which we cannot predict at this time. In the near term, we believe we can fund our short-term liquidity requirements primarily with cash on hand, including funds borrowed under our unsecured revolving credit facility.

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Liquidity requirements at December 31, 20182020 consisted primarily of maturities of debt. Contractual obligations as of December 31, 20182020 are as follows (in thousands):
 Year ended December 31,
Contractual Obligations20212022202320242025ThereafterTotal
Long Term Debt Obligations$— $590,000 $675,000 $148,000 $300,000 $2,016,995 $3,729,995 
Interest on Long Term Debt Obligations157,078 131,911 117,895 106,927 92,653 175,670 782,134 
Operating Lease Obligation - Corporate Office884 967 967 967 967 724 5,476 
Operating Ground Lease Obligations (1)22,520 22,058 21,340 20,840 20,936 203,467 311,161 
Total$180,482 $744,936 $815,202 $276,734 $414,556 $2,396,856 $4,828,766 
 Year ended December 31,    
Contractual Obligations2019 2020 2021 2022 2023 Thereafter Total
Long Term Debt Obligations$—
 $—
 $—
 $380,000
 $675,000
 $1,964,995
 $3,019,995
Interest on Long Term Debt Obligations138,524
 138,908
 138,908
 131,522
 100,588
 271,005
 919,455
Operating Lease Obligation - Corporate Office856
 856
 884
 967
 967
 2,658
 7,188
Operating Ground Lease Obligations (1)22,867
 23,236
 23,600
 22,996
 22,303
 257,446
 372,448
Total$162,247
 $163,000
 $163,392
 $535,485
 $798,858
 $2,496,104
 $4,319,086


(1) Our tenants, who are generally sub-tenants under the ground leases, are responsible for paying the rent under these ground leases. As of December 31, 2020, rental revenue from several of our tenants, who are also sub-tenants under the ground leases, are being recognized on a cash basis. In most cases, the ground lease sub-tenants have continued to pay the rent under these ground leases. In addition, two of these properties are vacant. In the event the tenant fails to pay the ground lease rent or the property is vacant, we would be primarily responsible for the payment, assuming we do not sell or re-tenant the property. The above amounts exclude contingent rent due under leases where the ground lease payment, or a portion thereof, is based on the level of the tenant's sales.



Commitments

As of December 31, 2018,2020, we had 17 development projects with commitments to fund an aggregate of approximately $98.7$118.3 million, of commitments to fund development projects including 10 entertainment development projects for which we have commitments to fund approximately $25.4$46.9 million five recreation development projects for which we have commitments to fund approximately $45.9 million and six education development projects for which we have commitments to fund approximately $27.4 million of additional improvements. All of these amounts are expectedis expected to be funded in 2019.2021. Development costs are advanced by us in periodic draws. If we determine that construction is not being completed in accordance with the terms of the development agreements,agreement, we can discontinue funding construction draws. We have agreed to lease the properties to the operators at pre-determined rates upon completion of construction.


Additionally, as of December 31, 2018, we had a commitment to fund approximately $206.9 million, of which $149.3 million has been funded, to complete an indoor waterpark hotel and adventure park at the casino and resort project in Sullivan County, New York. Of this amount, approximately $49.0 million is expected to be funded in 2019. This project is expected to go in service in Spring 2019. We are also responsible for the construction of this project's common infrastructure. In June 2016, the Sullivan County Infrastructure Local Development Corporation issued $110.0 million of Series 2016 Revenue Bonds, which has funded a substantial portion of such construction costs. We received reimbursements of $43.4 million and $23.9 million of construction costs during the year ended December 31, 2016 and 2017, respectively. During the year ended December 31, 2018, we received an additional reimbursement of $6.9 million and anticipate receiving $11.5 million in 2019. Construction of infrastructure improvements was completed in 2018.

We have certain commitments related to our mortgage notenotes and notes receivable investments that we may be required to fund in the future. We are generally obligated to fund these commitments at the request of the borrower or upon the occurrenceoccurrence of events outside of ourits direct control. As of December 31, 2018,2020, we had fourthree mortgage notes and one note receivable with commitments totaling approximately $6.9$31.8 million, of which $4.1approximately $21.7 million is expected to be funded in 2019.2021. If commitmentscommitments are funded in the future, interest will be charged at rates consistent with the existing investments.


We have provided guarantees of the payment of certain economic development revenue bonds that are secured by leasehold interest and improvements at two theatres in Louisiana. During the year ended December 31, 2017, these bonds were re-issued and the maturity date of these bonds was extended to December 22, 2047. At December 31, 2018, our guarantees of the payment of these bonds totaled $24.7 million.

During the year ended December 31, 2018, we recognized a $10.7 million impairment charge related to these guarantees as we determined a portion of our guarantee fees receivable was no longer recoverable and in addition, determined that our future payment on a portion of the bond obligations was probable. At December 31, 2018, there were $5.3 million in other assets and $16.1 million in other liabilities in the accompanying consolidated balance sheet included in this Annual Report on Form 10-K related to these guarantees. See Note 4 to the consolidated financial statements included in this Annual Report on Form 10-K for further detail.

In connection with construction of our development projects and related infrastructure, certain public agencies require posting of surety bonds to guarantee that our obligations are satisfied. These bonds expire upon the completion of the improvements or infrastructure. As of December 31, 2018, the Company2020, we had fivetwo surety bonds outstanding totaling $22.5$31.6 million.


Liquidity Analysis
In analyzing our liquidity,
As noted above, we expect that our cash provided by operating activities will meet our normal recurring operating expenses, recurring debt service requirements and dividends to shareholders.

We have no debt payments due until 2022. Our sources of liquidity as of December 31, 2018 to pay the 2019 commitments described above include the amount availablehad $590.0 million outstanding under our unsecured revolving credit facility at December 31, 2020. We borrowed $750.0 million on March 20, 2020 as a precautionary measure to increase our cash position and preserve financial flexibility in light of $970.0uncertainty in the global markets due to the COVID-19 pandemic. In addition, during 2020, we deferred our anticipated gaming venue investment and all other uncommitted investment spending. On December 30, 2020, we paid down our unsecured revolving credit facility by $160.0 million. In January 2021, due to stronger collections, disposition proceeds and significant liquidity, we used $500.0 million and unrestrictedof our cash on hand to reduce the balance outstanding on our $1.0 billion unsecured revolving credit facility from
57

$590.0 million to $90.0 million. We believe our unrestricted cash position and borrowing capacity on our unsecured revolving credit facility will provide us with sufficient liquidity and aid us in this time of $5.9 million. Accordingly, while there can be no assurance, we expect that our sources of cash will exceed our existing commitments over the remainder of 2019.market disruption.



We alsohave no scheduled debt payments due until 2022. We currently believe that we will be able to repay, extend, refinance or otherwise settle our debt maturities as the debt comes due and that we will be able to fund our remaining commitments, as necessary. However, there can be no assurance that additional financing or capital will be available, or that terms will be acceptable or advantageous to us.us, particularly in light of the current economic uncertainty caused by the COVID-19 pandemic.


Our primary use of cash after paying operating expenses, debt service, dividendsdistributions to shareholders, funding share repurchases and funding existing commitments is in growing our investment portfolio through the acquisition, development and financing of additional properties. We expect to finance these investments with borrowings under our unsecured revolving credit facility, as well as debt and equity financing alternatives or proceeds from asset dispositions. The availability and terms of any such financing or sales will depend upon market and other conditions.conditions, which have been negatively impacted by the COVID-19 pandemic. If we borrow the maximum amount available under our unsecured revolving credit facility, there can be no assurance that we will be able to obtain additional or substitute investment financing (See Item 1A - “Risk Factors”).financing. We may also assume mortgage debt in connection with property acquisitions.

Our investment spending and uses of cash during the Covenant Relief Period will be subject to limitations under the amendments to the agreements governing our Consolidated Credit Agreement and Note Purchase Agreement as discussed above. In addition, in certain circumstances, we will be required to apply 100% of the proceeds, net of certain costs, received during the Covenant Relief Period from certain sales and dispositions, debt issuances or equity issuances, in each case, subject to certain exceptions, to repay amounts outstanding under our Consolidated Credit Agreement and Note Purchase Agreement.

Capital Structure

We believe that our shareholders are best served by a conservative capital structure. Therefore, we seek to maintain a conservative debt level on our balance sheet as measured primarily by our net debt to adjusted EBITDA ratio (see "Non-GAAP Financial Measures" for definitions). We also seek to maintain conservative interest, fixed charge, debt service coverage and net debt to gross asset ratios.


We expect to maintain our net debt to adjusted EBITDA ratio between 4.6x to 5.6x. Our net debt to adjusted EBITDAEBITDAre ratio was 5.5xnot meaningful at December 31, 2020 given the temporary disruption caused by the COVID-19 pandemic and the associated accounting for tenant rent deferrals and other lease modifications. Our net debt to gross assets ratio was 40% as of December 31, 20182020 (see "Non-GAAP Financial Measures" for calculation). Because adjusted EBITDA as defined does not include the annualization of adjustments for projects put in service during the quarter and other items, and net debt includes the debt provided for build-to-suit projects under development that do not have any current EBITDA, we also look at a ratio adjusted for these items. The level of this additional ratio, along with the timing and size of our equity and debt offerings, may cause us to temporarily operate outside our stated range for the net debt to adjusted EBITDA ratio of 4.6x to 5.6x.


Our net debt (see "Non-GAAP Financial Measures" for definition) to gross assets ratio (i.e. net debt to total assets plus accumulated depreciation less cash and cash equivalents) was 43% as of December 31, 2018. Our net debt as a percentage of our total market capitalization at December 31, 2018 was 37%. We calculate our total market capitalization of $8.1 billion by aggregating the following at December 31, 2018:

Common shares outstanding of 74,347,856 multiplied by the last reported sales price of our common shares on the NYSE of $64.03 per share, or $4.8 billion;
Aggregate liquidation value of our Series C convertible preferred shares of $134.9 million;
Aggregate liquidation value of our Series E convertible preferred shares of $86.2 million;
Aggregate liquidation value of our Series G redeemable preferred shares of $150.0 million; and
Net debt of $3.0 billion.

Non-GAAP Financial Measures


Funds From Operations (FFO), Funds From Operations As Adjusted (FFOAA) and Adjusted Funds from Operations (AFFO)


The National Association of Real Estate Investment Trusts (“NAREIT”) developed FFO as a relative non-GAAP financial measure of performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP. Pursuant to the definition of FFO by the Board of Governors of NAREIT, we calculate FFO as net (loss) income available to common shareholders, computed in accordance with GAAP, excluding gains and losses from salesdisposition of depreciable operating propertiesreal estate and impairment losses of depreciableon real estate, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships, joint ventures and other affiliates. Adjustments for unconsolidated partnerships, joint ventures and other affiliates are

calculated to reflect FFO on the same basis. We have calculated FFO for all periods presented in accordance with this definition.


In addition to FFO, we present FFOAA and AFFO. FFOAA is presented by adding to FFO costs (gain) associated with loan refinancing or payoff, net, transaction costs, severance expense, litigation settlement expense, preferred share redemption costs, impairment of
58

operating lease right-of-use assets, termination fees associated with tenants' exercises of public charter school buy-out options impairment of direct financing leases (allowance for leaseand credit loss portion)expense and provision for loan losses and subtracting gain on early extinguishment of debt, gain (loss) on sale of land, gain on insurance recovery and deferred income tax benefit (expense).(benefit) expense. AFFO is presented by adding to FFOAA non-real estate depreciation and amortization, deferred financing fees amortization, share-based compensation expense to management and Trustees and amortization of above-above and below market leases, net;net and tenant allowances; and subtracting maintenance capital expenditures (including second generation tenant improvements and leasing commissions), straight-lined rental revenue (removing impact of straight-line ground sublease expense), and the non-cash portion of mortgage and other financing income.


FFO, FFOAA and AFFO are widely used measures of the operating performance of real estate companies and are provided here as a supplemental measure to GAAP net (loss) income available to common shareholders and earnings per share, and management provides FFO, FFOAA and AFFO herein because it believes this information is useful to investors in this regard. FFO, FFOAA and AFFO are non-GAAP financial measures. FFO, FFOAA and AFFO do not represent cash flows from operations as defined by GAAP and are not indicative that cash flows are adequate to fund all cash needs and are not to be considered alternatives to net income or any other GAAP measure as a measurement of the results of our operations or our cash flows or liquidity as defined by GAAP. It should also be noted that not all REITs calculate FFO, FFOAA and AFFO the same way so comparisons with other REITs may not be meaningful.


The following table summarizes our FFO, FFOAA and AFFO including per share amounts for FFO and FFOAA, for the years ended December 31, 2018, 20172020, 2019 and 20162018 and reconciles such measures to net (loss) income available to common shareholders, the most directly comparable GAAP measure (unaudited, in thousands, except per share information):



 Year ended December 31,
 202020192018
FFO:
Net (loss) income available to common shareholders of EPR Properties$(155,864)$178,107 $242,841 
Gain on sale of real estate(50,119)(36,053)(3,037)
Gain on sale of investment in direct financing leases— — (5,514)
Impairment of real estate investments, net (1)70,648 23,639 27,283 
Real estate depreciation and amortization169,253 170,717 152,508 
Allocated share of joint venture depreciation1,491 2,213 226 
Impairment charges on joint ventures3,247 — — 
FFO available to common shareholders of EPR Properties$38,656 $338,623 $414,307 
FFO available to common shareholders of EPR Properties$38,656 $338,623 $414,307 
Add: Preferred dividends for Series C preferred shares— 7,754 7,759 
Add: Preferred dividends for Series E preferred shares— 7,756 7,756 
Diluted FFO available to common shareholders of EPR Properties$38,656 $354,133 $429,822 
FFOAA:
FFO available to common shareholders of EPR Properties$38,656 $338,623 $414,307 
Costs associated with loan refinancing or payoff1,632 38,450 31,958 
Transaction costs5,436 23,789 3,698 
Severance expense2,868 2,364 5,938 
Litigation settlement expense— — 2,090 
Termination fee included in gain on sale— 24,075 1,864 
Gain on insurance recovery (included in other income)(809)— — 
Impairment of operating lease right-of-use assets (1)15,009 — — 
Credit loss expense30,695 — — 
Deferred income tax expense (benefit)15,246 (4,115)573 
FFOAA available to common shareholders of EPR Properties$108,733 $423,186 $460,428 
59

Year ended December 31,
2018 2017 2016
FFO:     
Net income available to common shareholders of EPR Properties$242,841
 $234,218
 $201,176
Gain on sale of real estate (excluding land sale)(3,037) (41,942) (2,819)
Gain on sale of investment in direct financing leases(5,514) —
 —
Impairment charges27,283
 —
 —
Impairment of direct financing leases - residual value portion (1)—
 2,897
 —
Real estate depreciation and amortization152,508
 132,040
 106,049
Allocated share of joint venture depreciation226
 218
 229
FFO available to common shareholders of EPR Properties$414,307
 $327,431
 $304,635
     
FFO available to common shareholders of EPR Properties$414,307
 $327,431
 $304,635
Add: Preferred dividends for Series C preferred shares7,759
 7,763
 7,764
Add: Preferred dividends for Series E preferred shares7,756
 7,761
 —
Diluted FFO available to common shareholders of EPR Properties$429,822
 $342,955
 $312,399
FFOAA:     
FFO available to common shareholders of EPR Properties$414,307
 $327,431
 $304,635
Costs associated with loan refinancing or payoff31,958
 1,549
 905
Transaction costs3,698
 523
 7,869
Severance expense5,938
 —
 —
Litigation settlement expense2,090
 —
 —
Preferred share redemption costs—
 4,457
 —
Termination fee included in gain on sale1,864
 20,049
 2,819
Impairment of direct financing leases - allowance for lease loss portion (1)—
 7,298
 —
Gain on early extinguishment of debt—
 (977) —
Gain on sale of land—
 —
 (2,496)
Gain on insurance recovery (included in other income)—
 (606) (4,684)
Deferred income tax expense (benefit)573
 812
 (1,065)
FFOAA available to common shareholders of EPR Properties$460,428
 $360,536
 $307,983
     
FFOAA available to common shareholders of EPR Properties$460,428
 $360,536
 $307,983
FFOAA available to common shareholders of EPR Properties$108,733 $423,186 $460,428 
Add: Preferred dividends for Series C preferred shares7,759
 7,763
 7,764
Add: Preferred dividends for Series C preferred shares— 7,754 7,759 
Add: Preferred dividends for Series E preferred shares7,756
 7,761
 —
Add: Preferred dividends for Series E preferred shares— 7,756 7,756 
Diluted FFOAA available to common shareholders of EPR Properties$475,943
 $376,060
 $315,747
Diluted FFOAA available to common shareholders of EPR Properties$108,733 $438,696 $475,943 
AFFO:     AFFO:
FFOAA available to common shareholders of EPR Properties$460,428
 $360,536
 $307,983
FFOAA available to common shareholders of EPR Properties$108,733 $423,186 $460,428 
Non-real estate depreciation and amortization922
 906
 1,524
Non-real estate depreciation and amortization1,080 1,045 922 
Deferred financing fees amortization5,797
 6,167
 4,787
Deferred financing fees amortization6,606 6,192 5,797 
Share-based compensation expense to management and trustees15,111
 14,142
 11,164
Share-based compensation expense to management and trustees13,819 13,180 15,111 
Amortization of above/below-market leases, net and tenant allowances(581) (107) 183
Amortization of above/below-market leases, net and tenant allowances(480)(343)(581)
Maintenance capital expenditures (2)(2,101) (5,523) (6,214)Maintenance capital expenditures (2)(11,377)(5,453)(2,101)
Straight-line rental revenue, net(10,229) (4,332) (17,012)
Straight-lined rental revenueStraight-lined rental revenue24,550 (13,552)(10,229)
Straight-lined ground sublease expenseStraight-lined ground sublease expense749 882 — 
Non-cash portion of mortgage and other financing income(3,043) (3,080) (3,769)Non-cash portion of mortgage and other financing income(250)(2,411)(3,043)
AFFO available to common shareholders of EPR Properties$466,304
 $368,709
 $298,646
AFFO available to common shareholders of EPR Properties$143,430 $422,726 $466,304 
FFO per common share attributable to EPR Properties:     
FFO per common share:FFO per common share:
Basic$5.58
 $4.60
 $4.81
Basic$0.51 $4.41 $5.58 
Diluted5.51
 4.58
 4.77
Diluted0.51 4.39 5.51 
FFOAA per common share attributable to EPR Properties:     
FFOAA per common share:FFOAA per common share:
Basic$6.20
 $5.06
 $4.86
Basic$1.43 $5.51 $6.20 
Diluted6.10
 5.02
 4.82
Diluted1.43 5.44 6.10 
Shares used for computation (in thousands):     Shares used for computation (in thousands):
Basic74,292
 71,191
 63,381
Basic75,994 76,746 74,292 
Diluted74,337
 71,254
 63,474
Diluted75,994 76,782 74,337 
     
Weighted average shares outstanding-diluted EPS74,337
 71,254
 63,474
Weighted average shares outstanding-diluted EPS75,994 76,782 74,337 
Effect of dilutive Series C preferred shares2,114
 2,068
 2,032
Effect of dilutive Series C preferred shares— 2,164 2,114 
Adjusted weighted average shares outstanding - diluted Series C76,451
 73,322
 65,506
Effect of dilutive Series E preferred shares1,607
 1,586
 —
Effect of dilutive Series E preferred shares— 1,631 1,607 
Adjusted weighted average shares outstanding - diluted Series C and Series E78,058
 74,908
 65,506
Adjusted weighted average shares outstanding - diluted Series C and Series E75,994 80,577 78,058 
Other financial information:     Other financial information:
Dividends per common share$4.32
 $4.08
 $3.84
Dividends per common share$1.515 $4.500 $4.320 

Amounts above include the impact of discontinued operations, which are separately classified in the consolidated statements of (loss) income and comprehensive (loss) income included in this Annual Report on Form 10-K. See Note 17 to the Consolidated Financial Statements in this Annual Report on Form 10-K for additional information related to discontinued operations.
(1)Impairment charges recognized during the year ended December 31, 2017 total $10.2 million and related to our investment in direct financing leases, net, consisting of $2.9 million related to the residual value portion and $7.3 million related to the allowance for lease loss portion. See Note 7 to the consolidated financial statements in this Annual Report on Form 10-K for further details.
(2)Includes maintenance capital expenditures and certain second-generation tenant improvements and leasing commissions.


(1) Impairment charges recognized during the year ended December 31, 2020 totaled $85.7 million, which was comprised of $70.7 million of impairments of real estate investments and $15.0 million of impairments of operating lease right-of-use assets.
(2) Includes maintenance capital expenditures and certain second-generation tenant improvements and leasing commissions.

The effect of the conversion of our convertible preferred shares is calculated using the if-converted method and the conversion which results in the most dilution is included in the computation of per share amounts.

The conversion of the 5.75% Series C cumulative convertible preferred shares and the 9.00% Series E cumulative convertible preferred shares would be dilutive to FFO and FFOAA per share for the years ended December 31, 20182019 and December 31, 2017.2018. Therefore, the additional 2.1 million and 1.6 million common shares that would result from the conversion and the corresponding add-back of the preferred dividends declared on those shares are included in the calculation of diluted FFO and diluted FFOAA per share for the years ended December 31, 2018 and December 31, 2017. these periods.


The conversion of 5.75% Series C cumulative convertible preferred shares would also be dilutive to FFO and FFOAA per share for the year ended December 31, 2016. Therefore, the additional 2.0 million common shares that would result from the conversion and the corresponding add-back of the preferred dividends declared on those shares are included in the calculation of diluted FFO and diluted FFOAA per share for the year ended December 31, 2016. The effect of the conversion of our 9.0% Series E cumulative convertible preferred shares and the additional 1.6 million common shares that would result from the conversion do not result in more dilution to per share results and are therefore not included in the calculation of diluted FFO and FFOAA per share data for the year ended December 31, 2016.
60


Net Debt


Net Debt represents debt (reported in accordance with GAAP) adjusted to exclude deferred financing costs, net and reduced for cash and cash equivalents. By excluding deferred financing costs, net and reducing debt for cash and cash equivalents on hand, the result provides an estimate of the contractual amount of borrowed capital to be repaid, net of cash available to repay it. We believe this calculation constitutes a beneficial supplemental non-GAAP financial disclosure to investors in understanding our financial condition. Our method of calculating Net Debt may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.


Gross Assets

Gross Assets represents total assets (reported in accordance with GAAP) adjusted to exclude accumulated depreciation and reduced for cash and cash equivalents. By excluding accumulated depreciation and reducing cash and cash equivalents, the result provides an estimate of the investment made by us. We believe that investors commonly use versions of this calculation in a similar manner. Our method of calculating Gross Assets may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

Net Debt to Gross Assets

Net Debt to Gross Assets is a supplemental measure derived from non-GAAP financial measures that we use to evaluate capital structure and the magnitude of debt to gross assets. We believe that investors commonly use versions of this ratio in a similar manner. Our method of calculating Net Debt to Gross Assets may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.

EBITDAre


NAREIT developed EBITDAre as a relative non-GAAP financial measure of REITs, independent of a company's capital structure, to provide a uniform basis to measure the enterprise value of a company. Pursuant to the definition of EBITDAre by the Board of Governors of NAREIT, we calculate EBITDAre as net (loss) income, computed in accordance with GAAP, excluding interest expense (net), income tax (benefit) expense, (benefit), depreciation and amortization, gains and losses from salesdisposition of depreciable operating properties,real estate, impairment losses of depreciableon real estate, costs (gain) associated with loan refinancing or payoff and adjustments for unconsolidated partnerships, joint ventures and other affiliates.


Management provides EBITDAre herein because it believes this information is useful to investors as a supplemental performance measure as it can help facilitate comparisons of operating performance between periods and with other REITs. Our method of calculating EBITDAre may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. EBITDAre is not a measure of performance under GAAP, does not represent cash flowgenerated from operations as defined by GAAP and is not indicative thatof cash flows are adequateavailable to fund all cash needs, and isincluding distributions. This measure should not to be considered an alternative to net income or any other GAAP measure as a measurement of the results of our operations or cash flows or liquidity as defined by GAAP.


Adjusted EBITDAEBITDAre


Management uses Adjusted EBITDAEBITDAre in its analysis of the performance of the business and operations of the Company. Management believes Adjusted EBITDAEBITDAre is useful to investors because it excludes various items that management believes are not indicative of operating performance, and that it is an informative measure to use in computing various financial ratios to evaluate the Company. We define Adjusted EBITDAEBITDAre as EBITDAre (defined above) for the quarter excluding gain

on insurance recovery, severance expense, litigation settlementcredit loss expense, impairment of direct financing lease (allowance for lease loss portion), the provision for loan losses, transaction costs, impairment losses on operating lease right-of-use assets and prepayment fees, which is then multiplied by fourfees. For the three months ended December 31, 2020, Adjusted EBITDAre was further adjusted to get an annual amount.add back prior period receivable write-offs related to certain theatre tenants placed on cash basis or receiving abatements during the quarter.


Our method of calculating Adjusted EBITDAEBITDAre may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. Adjusted EBITDAEBITDAre is not a measure of performance
61

under GAAP, does not represent cash generated from operations as defined by GAAP and is not indicative of cash available to fund all cash needs, including distributions. This measure should not be considered as an alternative to net income foror any other GAAP measure as a measurement of the purposeresults of evaluating the Company's performanceour operations or to cash flows or liquidity as a measure of liquidity.defined by GAAP.

Net Debt to Adjusted EBITDA Ratio

Net Debt to Adjusted EBITDA Ratio is a supplemental measure derived from non-GAAP financial measures that we use to evaluate our capital structure and the magnitude of our debt against our operating performance. We believe that investors commonly use versions of this ratio in a similar manner. In addition, financial institutions use versions of this ratio in connection with debt agreements to set pricing and covenant limitations. Our method of calculating Net Debt to Adjusted EBITDA may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.


Reconciliations of debt, total assets and net (loss) income available to common shareholders (both(all reported in accordance with GAAP) to Net Debt, Adjusted EBITDA andGross Assets, Net Debt to Gross Assets, EBITDAre and Adjusted EBITDA RatioEBITDAre (each of which is a non-GAAP financial measure) are included in the following tables (unaudited, in thousands):

December 31,
20202019
Net Debt:
Debt$3,694,443 $3,102,830 
Deferred financing costs, net35,552 37,165 
Cash and cash equivalents(1,025,577)(528,763)
Net Debt$2,704,418 $2,611,232 
Gross Assets:
Total Assets$6,704,185 $6,577,511 
Accumulated depreciation1,062,087 989,254 
Cash and cash equivalents(1,025,577)(528,763)
Gross Assets$6,740,695 $7,038,002 
Net Debt to Gross Assets40 %37 %
Three Months Ended December 31,
20202019
EBITDAre and Adjusted EBITDAre:
Net (loss) income$(19,977)$36,297 
Interest expense, net42,838 34,907 
Income tax expense (benefit)402 (530)
Depreciation and amortization42,014 44,530 
Gain on sale of real estate(49,877)(5,648)
Impairment of real estate investments, net22,832 23,639 
Costs associated with loan refinancing or payoff812 43 
Allocated share of joint venture depreciation361 551 
Allocated share of joint venture interest expense872 735 
EBITDAre (for the quarter)$40,277 $134,524 
Gain on insurance recovery (1)(809)— 
Severance expense2,868 423 
Transaction costs814 5,784 
Credit loss expense20,312 — 
Accounts receivable write-offs from prior periods (2)4,301 — 
Straight-line receivable write-offs from prior periods (2)870 — 
Adjusted EBITDAre (for the quarter)$68,633 $140,731 
Amounts above include the impact of discontinued operations, which are separately classified in the consolidated statements of (loss) income and comprehensive (loss) income included in this Annual Report on Form 10-K.
(1) Included in other income in the consolidated statements of (loss) income and comprehensive (loss) income for the quarter. Other income includes the following:
Three Months Ended December 31,
20202019
Income from settlement of foreign currency swap contracts$110 $252 
Gain on insurance recovery809 — 
Operating income from operated properties45 7,996 
Miscellaneous income4 138 
Other income$968 $8,386 
62

 December 31,
 2018 2017
Net Debt:   
Debt$2,986,054
 $3,028,827
Deferred financing costs, net33,941
 32,852
Cash and cash equivalents(5,872) (41,917)
Net Debt$3,014,123
 $3,019,762
    
 Three Months Ended December 31,
 2018 2017
EBITDAre and Adjusted EBITDA:   
Net income$54,031
 $65,563
Interest expense, net33,515
 35,271
Income tax expense108
 383
Depreciation and amortization39,541
 37,027
Gain on sale of real estate(349) (13,480)
Impairment charges10,735
 —
Costs associated with loan refinancing or payoff—
 58
Equity in loss from joint ventures5
 14
EBITDAre (for the quarter)$137,586
 $124,836
    
EBITDAre$137,586
 $124,836
Severance expense5,938
 —
Transaction costs1,583
 135
Straight-line rental revenue write-off related to CLA (1)—
 9,010
Bad debt expense related to CLA (2)—
 6,003
Prepayment fees(7,391) (834)
Adjusted EBITDA (for the quarter)$137,716
 $139,150
    
Adjusted EBITDA (3)$550,864
 $556,600
    
Net Debt/Adjusted EBITDA Ratio5.5
 5.4
    
(1) Included in rental revenue in the accompanying consolidated statements of income. Rental revenue includes the following:
 Three Months Ended December 31,
 2018 2017
Minimum rent$133,258
 $123,208
Tenant reimbursements3,950
 4,131
Percentage rent5,005
 3,108
Straight-line rental revenue3,216
 1,925
Straight-line rental revenue write-off related to CLA—
 (9,010)
Other rental revenue86
 84
Rental revenue$145,515
 $123,446
    
(2) Included in property operating expense in the accompanying consolidated statements of income. Property operating expense includes the following:
 Three Months Ended December 31,
 2018 2017
Expenses related to the operations of our retail centers and other specialty properties$8,397
 $6,649
Bad debt expense493
 239
Bad debt expense related to CLA—
 6,003
Property operating expense$8,890
 $12,891
    
(2) Included in rental revenue from continuing operations in the consolidated statements of (loss) income and comprehensive (loss) income for the quarter. Rental revenue includes the following:
Three Months Ended December 31,
20202019
Minimum rent$79,342 $139,529 
Accounts receivable write-offs from prior periods(4,301)— 
Tenant reimbursements4,831 5,790 
Percentage rent3,040 6,428 
Straight-line rental revenue1,768 2,926 
Straight-line receivable write-offs from prior periods(870)— 
Other rental revenue201 92 
Rental revenue$84,011 $154,765 
(3) Adjusted EBITDA for the quarter is multiplied by four to calculate an annual amount.



Total Investments


Total investments is a non-GAAP financial measure defined as the sum of the carrying values of rental propertiesreal estate investments (before accumulated depreciation), land held for development, property under development, mortgage notes receivable (including related accrued interest receivable), investment in direct financing leases, net, investment in joint ventures, intangible assets, gross (before accumulated amortization and included in other assets) and notes receivable and related accrued interest receivable, net (included in other assets). Total investments is a useful measure for management and investors as it illustrates across which asset categories the Company's funds have been invested. Our method of calculating total investments may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. A reconciliation of total investments to total assets (computed in accordance with GAAP) is included in the following table (unaudited, in thousands):
December 31, 2020December 31, 2019
Total Investments:
Real estate investments, net of accumulated depreciation$4,851,302 $5,197,308 
Add back accumulated depreciation on real estate investments1,062,087 989,254 
Land held for development23,225 28,080 
Property under development57,630 36,756 
Mortgage notes and related accrued interest receivable365,628 357,391 
Investment in joint ventures28,208 34,317 
Intangible assets, gross (1)57,962 57,385 
Notes receivable and related accrued interest receivable, net (1)7,300 14,026 
Total investments$6,453,342 $6,714,517 
Total investments$6,453,342 $6,714,517 
Operating lease right-of-use assets163,766 211,187 
Cash and cash equivalents1,025,577 528,763 
Restricted cash2,433 2,677 
Accounts receivable116,193 86,858 
Less: accumulated depreciation on real estate investments(1,062,087)(989,254)
Less: accumulated amortization on intangible assets (1)(16,330)(12,693)
Prepaid expenses and other current assets (1)21,291 35,456 
Total assets$6,704,185 $6,577,511 
(1) Included in other assets in the accompanying consolidated balance sheet. Other assets include the following:
December 31, 2020December 31, 2019
Intangible assets, gross$57,962 $57,385 
Less: accumulated amortization on intangible assets(16,330)(12,693)
Notes receivable and related accrued interest receivable, net7,300 14,026 
Prepaid expenses and other current assets21,291 35,456 
Total other assets$70,223 $94,174 

63
 December 31, 2018 December 31, 2017
Total Investments:   
Rental properties, net of accumulated depreciation$5,024,057
 $4,604,231
Add back accumulated depreciation on rental properties883,174
 741,334
Land held for development34,177
 33,692
Property under development287,546
 257,629
Mortgage notes and related accrued interest receivable517,467
 970,749
Investment in direct financing leases, net20,558
 57,903
Investment in joint ventures34,486
 5,602
Intangible assets, gross(1)
51,414
 35,209
Notes receivable and related accrued interest receivable, net(1)
5,445
 5,083
Total investments$6,858,324
 $6,711,432
    
Total investments$6,858,324
 $6,711,432
Cash and cash equivalents5,872
 41,917
Restricted cash12,635
 17,069
Account receivable, net98,369
 93,693
Less: accumulated depreciation on rental properties(883,174) (741,334)
Less: accumulated amortization on intangible assets(8,923) (6,340)
Prepaid expenses and other current assets48,287
 75,056
Total assets$6,131,390
 $6,191,493
    
(1) Included in other assets in the accompanying consolidated balance sheet. Other assets includes the following:
    
 December 31, 2018 December 31, 2017
Intangible assets, gross$51,414
 $35,209
Less: accumulated amortization on intangible assets(8,923) (6,340)
Notes receivable and related accrued interest receivable, net5,445
 5,083
Prepaid expenses and other current assets48,287
 75,056
Total other assets$96,223
 $109,008



Impact of Recently Issued Accounting Standards

See Note 2 to the consolidated financial statementsConsolidated Financial Statements included in this Annual Report on Form 10-K for additional information on the impact of recently issued accounting standards on our business.


Inflation
Investments by EPR are financed with a combination of equity and debt. During inflationary periods, which are generally accompanied by rising interest rates, our ability to grow may be adversely affected because the yield on new investments may increase at a slower rate than new borrowing costs.
Substantially allA substantial portion of our megaplex theatre leases as well as other leases provide for base and participating rent features. In addition, certain of our mortgage notes receivable similarly provide for base and participating interest. To the extent inflation causes tenant or borrower revenues at our properties to increase, over baseline amounts, we would participate in those revenue increases through our right to receive variable rent and annual percentage rent and/or participating interest.interest over the base amounts, as applicable.
Our leases and mortgage notes receivable also may provide for escalation in base rents or interest in the event of increases in the Consumer Price Index, with generally a limitlimit of 2% per annum,annum, or fixed periodic increases. During deflationary periods, the escalations in base rents or interest that are dependent on increases in the Consumer Price Index in our leases and mortgage notes receivable may be adversely affected.
Our leases are generally triple-net leases requiring the tenants to pay substantially all expenses associated with the operation of the properties, thereby minimizing our exposure to increases in costs and operating expenses resulting from inflation. A portion of our megaplex theatre, retail and restaurant leases are non-triple-net leases. These non-triple net entertainment leases represent approximately 14%18% of ourour total real estate square footage. To the extent any of those leases contain fixed expense reimbursement provisions or limitations, we may be subject to increases in costs resulting from inflation that are not fully passed through to tenants.

Some of our investments in recreation anchored lodging have been structured using more traditional REIT lodging structures.structures or are managed through a third-party manager. In the traditional REIT lodging structure, we hold qualified lodging facilities under the REIT and we separately hold the operations of the facilities in taxable REIT subsidiaries (TRSs) which are facilitated by management agreements with eligible independent contractors. Under this structure and when we manage properties through a third-party manager, we rely on the performance of our proprietiesproperties and the ability of the properties' managers to increase revenues to keep pace with inflation which may be limited by competitive pressures.

Additionally, our general and administrative costs may be subject to increases resulting from inflation.


Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks, primarily relating to potential losses due to changes in interest rates and foreign currency exchange rates. We seek to mitigate the effects of fluctuations in interest rates by matching the term of new investments with new long-term fixed rate borrowings whenever possible. As of December 31, 2018,2020, we had a $1.0 billion unsecured revolving credit facility with $30.0with $590.0 million outstanding and $25.0outstanding. Subsequent to December 31, 2020, we paid down $500.0 million in bonds, all of which bear interest at a floating rate.on our revolving credit facility. We also had a $400.0 million unsecured term loan facility and a $25.0 million bond that bearsbear interest at a floating rate based on LIBOR. but have been fixed through interest rate swap agreements.
As of December 31, 2018,2020, we had a 65% investment interest in two unconsolidated real estate joint ventures related to two experiential lodging properties located in St. Petersburg Beach, Florida. At December 31, 2020, the joint venture had a secured mortgage loan with an outstanding balance of $85.0 million. The mortgage loan bears interest at an annual rate equal to the greater of 6.00% or LIBOR plus 3.75%. The joint venture has an interest rate swap agreementscap agreement to fixlimit the variable portion of the interest rate at 2.64%(LIBOR) on $300.0 million of this LIBOR-based debtnote to 3.0% from July 6, 2017March 28, 2019 to April 5, 2019. Additionally, as1, 2023. In response to the COVID-19 pandemic, on May 28, 2020, the joint venture was granted a three-month interest deferral, which is required to be paid on the maturity date of December 31, 2018, we had three interest rate swap agreements to fix the interest rate at 3.15% on $50.0 million of this LIBOR-basedloan and is not considered a troubled debt from November 6, 2017 to April 5, 2019 and on $350.0 million of this LIBOR-based debt from April 6, 2019 to February 7, 2022.restructuring.


64

We are subject to risks associated with debt financing, including the risk that existing indebtedness may not be refinanced or that the terms of such refinancing may not be as favorable as the terms of current indebtedness.indebtedness, particularly in light of the current economic uncertainty caused by the COVID-19 pandemic. The majority of our borrowings are subject to contractual agreements or mortgages which limit the amount of indebtedness we may incur. Accordingly, if we are unable to raise additional equity or borrow money due to these limitations, our ability to make additional real estate investments may be limited.

The following table presents the principal amounts, weighted average interest rates, and other terms required by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes as of December 31 (including the impact of the interest rate swap agreements described below):
Expected Maturities (dollars in millions)
20212022202320242025ThereafterTotalEstimated
Fair Value
December 31, 2020:
Fixed rate debt$— $— $675.0 $148.0 $300.0 $2,017.0 $3,140.0 $3,114.8 
Average interest rate— %— %4.76 %5.60 %4.50 %4.55 %4.67 %4.64 %
Variable rate debt$— $590.0 $— $— $— $— $590.0 $590.0 
Average interest rate (as of December 31, 2020)— %2.13 %— %— %— %— %2.13 %2.13 %
20202021202220232024ThereafterTotalEstimated
Fair Value
December 31, 2019:
Fixed rate debt$— $— $— $675.0 $148.0 $2,317.0 $3,140.0 $3,295.5 
Average interest rate— %— %— %4.02 %4.35 %4.44 %4.34 %3.45 %
Variable rate debt$— $— $— $— $— $— $— $— 
Average interest rate (as of December 31, 2019)— %— %— %— %— %— %— %— %
 2019 2020 2021 2022 2023 Thereafter Total 
Estimated
Fair Value
December 31, 2018:               
Fixed rate debt$—
 $—
 $—
 $350.0
 $625.0
 $1,940.0
 $2,915.0
 $2,908.6
Average interest rate—% —% —% 5.75% 3.83% 4.65% 4.60% 4.55%
Variable rate debt$—
 $—
 $—
 $30.0
 $50.0
 $25.0
 $105.0
 $105.0
Average interest rate (as of December 31, 2018)—% —% —% 3.50% 3.48% 2.50% 3.25% 3.25%
                
 2018 2019 2020 2021 2022 Thereafter Total 
Estimated
Fair Value
December 31, 2017:               
Fixed rate debt$11.7
 $—
 $250.0
 $—
 $350.0
 $2,165.0
 $2,776.7
 $2,881.9
Average interest rate6.19% —% 7.75% —% 5.75% 4.35% 4.84% 3.85%
Variable rate debt$—
 $—
 $—
 $—
 $210.0
 $75.0
 $285.0
 $285.0
Average interest rate (as of December 31, 2017)—% —% —% —% 2.49% 2.19% 2.41% 2.41%


The fair value of our debt as of December 31, 20182020 and 20172019 is estimated by discounting the future cash flows of each instrument using current market rates including current market spreads.

We are exposed to foreign currency risk against our functional currency, the U.S. dollar, on our four Canadian properties and the rents received from tenants of the properties are payable in CAD. To mitigate our foreign currency risk in future periods on these Canadian properties, we entered into a cross currency swap with a fixed original notional value of $100.0 million CAD and $79.5 million U.S. The net effect of this swap was to lock in an exchange rate of $1.26 CAD per U.S. dollar on approximately $13.5 million of annual CAD denominated cash flows on the properties through June 2020. There was no initial or final exchange of the notional amounts on this swap. These foreign currency derivatives should hedge a significant portion of our expected CAD denominated FFO of these four Canadian properties through June 2020 as their impact on our reported FFO when settled moved in the opposite direction of the exchange rates used to translate revenues and expenses of these properties.

In order to also hedge our net investment on thein our four Canadian properties, we entered into two fixed-to-fixed cross-currency swaps, designated as net investment hedges effective July 1, 2018 with a total fixed notional value of $200.0 million CAD and $151.6 million USD with a maturity date ofCAD. These investments became effective on July 1, 2023. Included in this2018, mature on July 1, 2023 and are designated as net investment hedges of our Canadian net investments. The net effect of this hedge we lockedis to lock in an exchange rate of $1.32 CAD per U.S. dollar on approximately$200.0 million CAD of our foreign net investments. The cross-currency swaps also have a monthly settlement feature locked in at an exchange rate of $1.32 CAD per USD on $4.5 million of additionalCAD annual CAD denominated cash flows, on the properties through July 1, 2023.net effect of which is an excluded component from the effectiveness testing of this hedge.

On June 29, 2018, we de-designated two CAD to USD currency forward agreements in conjunction with entering into new agreements, described above, effectively terminating the currency forward agreements. These contracts were previously designated as net investment hedges. During the year ended December 31, 2018,2020, we received $30.8 million of cash in connectionentered into three USD-CAD cross-currency swaps that were effective July 1, 2020 with the settlement of the CAD to USD currency forward agreements. The corresponding change ina total fixed original notional value of the forward contracts for the period from inception$100.0 million CAD and $76.6 million USD. The net effect of these swaps is to lock in an exchange rate of $1.31 CAD per USD on approximately $7.2 million annual CAD denominated cash flows through de-designation of $30.8 million is reported in AOCI and will be reclassified into earnings upon a sale or complete or substantially complete liquidation of our investment in our four Canadian properties.

June 2022.
For foreign currency derivatives designated as net investment hedges, the change in the fair value of the derivatives are reported in AOCIaccumulated other comprehensive income (AOCI) as part of the cumulative translation adjustment. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated.


See Note 119 to the consolidated financial statementsConsolidated Financial Statements in this Annual Report on Form 10-K for additional information on our derivative financial instruments and hedging activities.


65


Item 8.Financial Statements and Supplementary Data
EPR Properties



Contents
 
Report of Independent Registered Public Accounting Firm
Audited Financial Statements
Consolidated Balance Sheets
Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income
Consolidated Statements of Comprehensive Income
67
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Financial Statement Schedules
Schedule II – Valuation and Qualifying Accounts
Schedule III - Real Estate and Accumulated Depreciation

66

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders
EPR Properties:


Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of EPR Properties and subsidiaries (the Company) as of December 31, 20182020 and 2017,2019, the related consolidated statements of (loss) income and comprehensive (loss) income, changes in equity, and cash flows for each of the years in the three-yearthree‑year period ended December 31, 2018,2020, and the related notes and financial statement schedules II and III (collectively, the “consolidatedconsolidated financial statements”)statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2018,2020, based on the criteria established in Internal Control -– Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20182020 and 2017,2019, and the results of its operations and its cash flows for each of the years in the three-yearthree‑year period ended December 31, 2018,2020, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018,2020, based on criteria established in Internal Control -– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Adoption of New Accounting Pronouncements
As discussed in Note 2 to the consolidated financial statements, the Company has changed its method for accounting for expected credit losses as of January 1, 2020 due to the adoption of Accounting Standards Update (ASU) No. 2016‑13, Measurement of Credit Losses on Financial Instruments (Topic 326).

As discussed in Note 15 to the consolidated financial statements, the Company has changed its method for accounting for its leases as of January 1, 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases.

Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control overOver Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
67


Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions

are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of indicators real estate investments may not be recoverable
As discussed in Notes 2 and 3 to the consolidated financial statements, the real estate investments, net balance as of December 31, 2020 was $4.9 billion. The Company reviews a real estate investment for impairment whenever events or changes in circumstances indicate that the carrying value of the real estate investment may not be recoverable.

We identified the evaluation of indicators real estate investments may not be recoverable as a critical audit matter. There is a high degree of subjective judgement in evaluating the events or changes in circumstances that may indicate the carrying value of real estate investments may not be recoverable. In particular, the judgments regarding the expected period the Company will hold the real estate investments and the impact of changes in market and tenant conditions on the determination of the recoverability of the real estate investments required a higher degree of auditor judgment.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the critical audit matter. This included controls related to the Company’s process to identify and evaluate events or changes in circumstances that may indicate the carrying amount of real estate investments may not be recoverable, including controls related to determining the period the Company will hold the real estate investments. We inquired of Company officials and inspected documents such as meeting minutes of the Board of Trustees to evaluate the likelihood that a real estate investment would be sold prior to the estimated holding period. We also performed independent evaluations, including examining current tenant information including status of accounts receivable and committee minutes related to lease negotiations for indications that the carrying value of the real estate investments may not be recoverable.

68

Impairment of real estate investments and right‑of‑use assets
As discussed in Notes 2, 3, 4 and 15 to the consolidated financial statements, the real estate investments, net balance and operating lease right‑of‑use assets balance as of December 31, 2020 was $4.9 billion and $163.8 million, respectively. The Company reviews a property for impairment whenever events or changes in circumstances indicate that the carrying value of the property may not be recoverable. The Company recognized impairment charges of $70.7 million on real estate investments and $15.0 million on the operating lease right‑of‑use assets, which are the amounts that the carrying value of the assets exceeded the estimated fair value.

We identified the assessment of the fair values of real estate investments and operating lease right‑of‑use assets based on recent independent appraisals used to determine the impairment charges as a critical audit matter. There is a high degree of subjective auditor judgment in evaluating the relevance of comparable land sales, market rents, capitalization rates, and discount rates used to determine the fair value of these assets.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the critical audit matter. This included controls related to the determination of comparable land sales, market rents, capitalization rates and discount rates. We involved valuation professionals with specialized skills and knowledge, who assisted in:

•Comparing the Company’s estimated fair value of land to a range of independently developed estimates based on publicly available and comparable land sales.

•Comparing the Company’s estimated assumptions of market rents, capitalization rates, and discount rates to a range of independently developed estimates based on publicly available industry data.

Collectability of lease receivables
As discussed in Notes 2 and 5 to the consolidated financial statements, the Company assesses the probability of collecting lease receivables on a lease‑by‑lease basis. The evaluation primarily consists of reviewing past due account balances and considering such factors as the credit quality of the Company’s tenants, historical trends of the tenants, current economic conditions, and changes in customer payment terms. Whenever the results of that assessment, events, or changes in circumstances indicate that it is no longer probable that the Company will be able to collect substantially all lease receivables or future lease payments, the Company records a charge to rental revenue for the outstanding receivable balance and suspends revenue recognition. The Company recorded charges to rental revenue of $65.1 million during the year ended December 31, 2020.

We identified the evaluation of the probability of collection of substantially all lease receivables as a critical audit matter. The assessment required subjective auditor judgment to evaluate the financial strength of tenants and the expected operating performance of the leased property.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s determination of lease receivable collectability. This included controls related to the evaluation of the financial strength of tenants, and the expected operating performance of the leased property. To assess the financial strength of tenants and the expected operating performance of the leased property, for certain tenants we evaluated (1) the aging of outstanding accounts receivable, (2) recent payment history, (3) certain publicly available information about the tenants, and (4) property financial information regarding the tenant.


/s/ KPMG LLP


We have served as the Company’s auditor since 2002.

Kansas City, Missouri
February 28, 201925, 2021

69
EPR PROPERTIES
Consolidated Balance Sheets
(Dollars in thousands except share data)
 December 31,
 2018 2017
Assets   
Rental properties, net of accumulated depreciation of $883,174 and $741,334 at December 31, 2018 and 2017, respectively$5,024,057
 $4,604,231
Land held for development34,177
 33,692
Property under development287,546
 257,629
Mortgage notes and related accrued interest receivable517,467
 970,749
Investment in direct financing leases, net20,558
 57,903
Investment in joint ventures34,486
 5,602
Cash and cash equivalents5,872
 41,917
Restricted cash12,635
 17,069
Accounts receivable, net98,369
 93,693
Other assets96,223
 109,008
Total assets$6,131,390
 $6,191,493
Liabilities and Equity   
Liabilities:   
Accounts payable and accrued liabilities$168,463
 $136,929
Common dividends payable26,765
 25,203
Preferred dividends payable6,034
 4,982
Unearned rents and interest79,051
 68,227
Debt2,986,054
 3,028,827
Total liabilities3,266,367
 3,264,168
Equity:   
Common Shares, $.01 par value; 100,000,000 shares authorized; and 77,226,443 and 76,858,632 shares issued at December 31, 2018 and 2017, respectively772
 769
Preferred Shares, $.01 par value; 25,000,000 shares authorized:   
5,394,050 and 5,399,050 Series C convertible shares issued at December 31, 2018 and 2017; liquidation preference of $134,851,25054
 54
3,447,381 and 3,449,115 Series E convertible shares issued at December 31, 2018 and 2017, respectively; liquidation preference of $86,184,52534
 34
6,000,000 Series G shares issued at December 31, 2018 and 2017; liquidation preference of $150,000,00060
 60
Additional paid-in-capital3,504,494
 3,478,986
Treasury shares at cost: 2,878,587 and 2,733,552 common shares at December 31, 2018 and 2017, respectively(130,728) (121,591)
Accumulated other comprehensive income12,085
 12,483
Distributions in excess of net income(521,748) (443,470)
Total equity$2,865,023
 $2,927,325
Total liabilities and equity$6,131,390
 $6,191,493
See accompanying notes to consolidated financial statements.


EPR PROPERTIES
Consolidated Statements of Income
(Dollars in thousands except per share data)
 Year Ended December 31,
 2018 2017 2016
Rental revenue$556,363
 $484,203
 $415,184
Other income2,076
 3,095
 9,039
Mortgage and other financing income142,292
 88,693
 69,019
Total revenue700,731
 575,991
 493,242
Property operating expense30,756
 31,653
 22,602
Other expense443
 242
 5
General and administrative expense48,889
 43,383
 37,543
Severance expense5,938
 —
 —
Litigation settlement expense2,090
 —
 —
Costs associated with loan refinancing or payoff31,958
 1,549
 905
Gain on early extinguishment of debt—
 (977) —
Interest expense, net135,507
 133,124
 97,144
Transaction costs3,698
 523
 7,869
Impairment charges27,283
 10,195
 —
Depreciation and amortization153,430
 132,946
 107,573
Income before equity in income from joint ventures and other items260,739
 223,353
 219,601
Equity in (loss) income from joint ventures(22) 72
 619
Gain on sale of real estate3,037
 41,942
 5,315
Gain on sale of investment in a direct financing lease5,514
 —
 —
Income before income taxes269,268
 265,367
 225,535
Income tax expense(2,285) (2,399) (553)
Net income266,983
 262,968
 224,982
Preferred dividend requirements(24,142) (24,293) (23,806)
Preferred share redemption costs—
 (4,457) —
Net income available to common shareholders of EPR Properties$242,841
 $234,218
 $201,176
Per share data attributable to EPR Properties common shareholders:     
Basic earnings per share data:     
Net income available to common shareholders$3.27
 $3.29
 $3.17
Diluted earnings per share data:     
Net income available to common shareholders$3.27
 $3.29
 $3.17
Shares used for computation (in thousands):     
Basic74,292
 71,191
 63,381
Diluted74,337
 71,254
 63,474

EPR PROPERTIES
Consolidated Balance Sheets
(Dollars in thousands except share data)
 December 31,
 20202019
Assets
Real estate investments, net of accumulated depreciation of $1,062,087 and $989,254 at December 31, 2020 and 2019, respectively$4,851,302 $5,197,308 
Land held for development23,225 28,080 
Property under development57,630 36,756 
Operating lease right-of-use assets163,766 211,187 
Mortgage notes and related accrued interest receivable365,628 357,391 
Investment in joint ventures28,208 34,317 
Cash and cash equivalents1,025,577 528,763 
Restricted cash2,433 2,677 
Accounts receivable116,193 86,858 
Other assets70,223 94,174 
Total assets$6,704,185 $6,577,511 
Liabilities and Equity
Liabilities:
Accounts payable and accrued liabilities$105,379 $122,939 
Operating lease liabilities202,223 235,650 
Common dividends payable36 29,424 
Preferred dividends payable6,034 6,034 
Unearned rents and interest65,485 74,829 
Debt3,694,443 3,102,830 
Total liabilities4,073,600 3,571,706 
Equity:
Common Shares, $0.01 par value; 100,000,000 shares authorized; and 81,917,876 and 81,588,489 shares issued at December 31, 2020 and 2019, respectively819 816 
Preferred Shares, $0.01 par value; 25,000,000 shares authorized:
5,394,050 Series C convertible shares issued at December 31, 2020 and 2019; liquidation preference of $134,851,25054 54 
3,447,381 Series E convertible shares issued at December 31, 2020 and 2019; liquidation preference of $86,184,52534 34 
6,000,000 Series G shares issued at December 31, 2020 and 2019; liquidation preference of $150,000,00060 60 
Additional paid-in-capital3,857,632 3,834,858 
Treasury shares at cost: 7,315,087 and 3,125,569 common shares at December 31, 2020 and 2019, respectively(261,238)(147,435)
Accumulated other comprehensive income216 7,275 
Distributions in excess of net income(966,992)(689,857)
Total equity$2,630,585 $3,005,805 
Total liabilities and equity$6,704,185 $6,577,511 
See accompanying notes to consolidated financial statements.


70
EPR PROPERTIES
Consolidated Statements of Comprehensive Income
(Dollars in thousands)
 Year Ended December 31,
 2018 2017 2016
Net income$266,983
 $262,968
 $224,982
Other comprehensive income (loss):     
Foreign currency translation adjustment(16,177) 12,569
 5,142
Change in unrealized gain (loss) on derivatives15,779
 (7,820) (3,030)
Comprehensive income attributable to EPR Properties$266,585
 $267,717
 $227,094


EPR PROPERTIES
Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income
(Dollars in thousands except per share data)
 Year Ended December 31,
 202020192018
Rental revenue$372,176 $593,022 $509,086 
Other income9,139 25,920 2,076 
Mortgage and other financing income33,346 33,027 128,759 
Total revenue414,661 651,969 639,921 
Property operating expense58,587 60,739 29,654 
Other expense16,474 29,667 443 
General and administrative expense42,596 46,371 48,889 
Severance expense2,868 2,364 5,938 
Litigation settlement expense0 0 2,090 
Costs associated with loan refinancing or payoff1,632 38,269 31,958 
Interest expense, net157,675 142,002 135,870 
Transaction costs5,436 23,789 3,698 
Credit loss expense30,695 0 0 
Impairment charges85,657 2,206 27,283 
Depreciation and amortization170,333 158,834 138,395 
(Loss) income before equity in loss from joint ventures, other items and discontinued operations(157,292)147,728 215,703 
Equity in loss from joint ventures(4,552)(381)(22)
Impairment charges on joint ventures(3,247)0 0 
Gain on sale of real estate50,119 4,174 3,037 
Gain on sale of investment in a direct financing lease0 0 5,514 
(Loss) income before income taxes(114,972)151,521 224,232 
Income tax (expense) benefit(16,756)3,035 (2,285)
(Loss) income from continuing operations$(131,728)$154,556 $221,947 
Discontinued operations:
Income from discontinued operations before other items0 37,241 45,036 
Impairment on public charter school portfolio sale0 (21,433)0 
Gain on sale of real estate from discontinued operations0 31,879 0 
Income from discontinued operations0 47,687 45,036 
Net (loss) income(131,728)202,243 266,983 
Preferred dividend requirements(24,136)(24,136)(24,142)
Net (loss) income available to common shareholders of EPR Properties$(155,864)$178,107 $242,841 
Net (loss) income available to common shareholders of EPR Properties per share:
Continuing operations$(2.05)$1.70 $2.66 
Discontinued operations0 0.62 0.61 
Basic$(2.05)$2.32 $3.27 
Continuing operations$(2.05)$1.70 $2.66 
Discontinued operations0 0.62 0.61 
Diluted$(2.05)$2.32 $3.27 
Shares used for computation (in thousands):
Basic75,994 76,746 74,292 
Diluted75,994 76,782 74,337 
Other comprehensive (loss) income:
Net (loss) income$(131,728)$202,243 $266,983 
Foreign currency translation adjustment3,494 9,253 (16,177)
Change in unrealized (loss) gain on derivatives(10,553)(14,063)15,779 
Comprehensive (loss) income attributable to EPR Properties$(138,787)$197,433 $266,585 
See accompanying notes to consolidated financial statements.

71


EPR PROPERTIES
Consolidated Statements of Changes in Equity
Years Ended December 31, 2020, 2019 and 2018
(Dollars in thousands)
 EPR Properties Shareholders’ Equity 
 Common StockPreferred StockAdditional
paid-in capital		Treasury
shares		Accumulated
other
comprehensive
income (loss)		Distributions
in excess of
net income (loss)		Total
 SharesParSharesPar
Balance at December 31, 201776,858,632 $769 14,848,165 $148 $3,478,986 $(121,591)$12,483 $(443,470)$2,927,325 
Restricted share units issued to Trustees23,571 — — — — — — — 0 
Issuance of nonvested shares, net of cancellations295,202 3 — — 4,588 (617)— — 3,974 
Purchase of common shares for vesting— — — — — (7,156)— — (7,156)
Share-based compensation expense— — — — 15,111 — — — 15,111 
Share-based compensation included in severance expense— — — — 3,218 — — — 3,218 
Foreign currency translation adjustment— — — — — — (16,177)— (16,177)
Change in unrealized gain on derivatives— — — — — — 15,779 — 15,779 
Net income— — — — — — — 266,983 266,983 
Issuances of common shares20,553 0 — — 1,286 — — — 1,286 
Conversion of Series E Convertible Preferred shares to common shares800 — (1,734)0 — — — — 0 
Conversion of Series C Convertible Preferred shares to common shares1,964 — (5,000)0 — — — — 0 
Stock option exercises, net25,721 0 — — 1,305 (1,364)— — (59)
Dividends to common shareholders ($4.32 per share)— — — — — — — (321,119)(321,119)
Dividends to Series C preferred shareholders ($1.4375 per share)— — — — — — — (7,760)(7,760)
Dividends to Series E preferred shareholders ($2.25 per share)— — — — — — — (7,757)(7,757)
Dividends to Series G preferred shareholders ($1.4375 per share)— — — — — — — (8,625)(8,625)
Balance at December 31, 201877,226,443 $772 14,841,431 $148 $3,504,494 $(130,728)$12,085 $(521,748)$2,865,023 
Restricted share units issued to Trustees27,392 — — — — — — — 0 
Issuance of nonvested shares, net of cancellations208,755 2 — — 4,926 (498)— — 4,430 
Purchase of common shares for vesting— — — — — (9,691)— — (9,691)
Share-based compensation expense— — — — 13,180 — — — 13,180 
Share-based compensation included in severance expense— — — — 580 — — — 580 
Foreign currency translation adjustment— — — — — — 9,253 — 9,253 
Change in unrealized loss on derivatives— — — — — — (14,063)— (14,063)
Net income— — — — — — — 202,243 202,243 
Issuances of common shares4,007,113 41 — — 305,893 — — — 305,934 
Stock option exercises, net118,786 1 — — 5,785 (6,518)— — (732)
Dividends to common shareholders ($4.50 per share)— — — — — — — (346,216)(346,216)
Dividends to Series C preferred shareholders ($1.4375 per share)— — — — — — — (7,756)(7,756)
Dividends to Series E preferred shareholders ($2.25 per share)— — — — — — — (7,756)(7,756)
Dividends to Series G preferred shareholders ($1.4375 per share)— — — — — — — (8,624)(8,624)
Balance at December 31, 201981,588,489 $816 14,841,431 $148 $3,834,858 $(147,435)$7,275 $(689,857)$3,005,805 
Continued on next page.
72

EPR PROPERTIES
Consolidated Statements of Changes in Equity
Years Ended December 31, 2018, 2017 and 2016
(Dollars in thousands)
 EPR Properties Shareholders’ Equity  
 Common Stock Preferred Stock 
Additional
paid-in capital
 
Treasury
shares
 
Accumulated
other
comprehensive
income (loss)
 
Distributions
in excess of
net income
 Total
 Shares Par Shares Par  
Balance at December 31, 201563,195,182
 $632
 13,850,000
 $139
 $2,508,445
 $(97,328) $5,622
 $(343,642) $2,073,868
Restricted share units issued to Trustees15,805
 —
 —
 —
 —
 —
 —
 —
 —
Issuance of nonvested shares, net300,752
 3
 —
 —
 4,472
 —
 —
 —
 4,475
Purchase of common shares for vesting—
 —
 —
 —
 —
 (4,211) —
 —
 (4,211)
Amortization of nonvested shares and restricted share units—
 —
 —
 —
 10,255
 —
 —
 —
 10,255
Share option expense—
 —
 —
 —
 909
 —
 —
 —
 909
Foreign currency translation adjustment—
 —
 —
 —
 —
 —
 5,142
 —
 5,142
Change in unrealized gain (loss) on derivatives—
 —
 —
 —
 —
 —
 (3,030) —
 (3,030)
Net income—
 —
 —
 —
 —
 —
 —
 224,982
 224,982
Issuances of common shares2,521,071
 26
 —
 —
 142,822
 —
 —
 —
 142,848
Conversion of Series C Convertible Preferred shares to common shares358
 —
 (950) —
 —
 —
 —
 —
 —
Stock option exercises, net230,319
 2
 —
 —
 10,143
 (11,633) —
 —
 (1,488)
Dividends to common and preferred shareholders—
 —
 —
 —
 —
 —
 —
 (267,849) (267,849)
Balance at December 31, 201666,263,487
 $663
 13,849,050
 $139
 $2,677,046
 $(113,172) $7,734
 $(386,509) $2,185,901
Restricted share units issued to Trustees19,030
 —
 —
 —
 —
 —
 —
 —
 —
Issuance of nonvested shares, net296,914
 3
 —
 —
 5,585
 (90) —
 —
 5,498
Purchase of common shares for vesting—
 —
 —
 —
 —
 (6,729) —
 —
 (6,729)
Amortization of nonvested shares and restricted share units—
 —
 —
 —
 13,446
 —
 —
 —
 13,446
Share option expense—
 —
 —
 —
 696
 —
 —
 —
 696
Foreign currency translation adjustment—
 —
 —
 —
 —
 —
 12,569
 —
 12,569
Change in unrealized gain (loss) on derivatives—
 —
 —
 —
 —
 —
 (7,820) —
 (7,820)
Net income—
 —
 —
 —
 —
 —
 —
 262,968
 262,968
Issuances of common shares1,398,280
 14
 —
 —
 99,322
 —
 —
 —
 99,336
Issuance of common shares for acquisition8,851,264
 89
 —
 —
 657,384
 —
 —
 —
 657,473
Conversion of Series E Convertible Preferred shares to common shares404
 —
 (885) (1) —
 —
 —
 —
 (1)
Issuance of Series G Preferred Shares—
 —
 6,000,000
 60
 144,430
 —
 —
 —
 144,490
Redemption of Series F Preferred Shares—
 —
 (5,000,000) (50) (120,518) —
 —
 (4,457) (125,025)
Stock option exercises, net29,253
 —
 —
 —
 1,595
 (1,600) —
 —
 (5)
Dividends to common and preferred shareholders—
 —
 —
 —
 —
 —
 —
 (315,472) (315,472)
Balance at December 31, 201776,858,632
 $769
 14,848,165
 $148
 $3,478,986
 $(121,591) $12,483
 $(443,470) $2,927,325
Continued on next page.                 
EPR PROPERTIES
Consolidated Statements of Changes in Equity
Years Ended December 31, 2020, 2019 and 2018
(Dollars in thousands) (continued)
 EPR Properties Shareholders’ Equity 
 Common StockPreferred StockAdditional
paid-in capital		Treasury
shares		Accumulated
other
comprehensive
income (loss)		Distributions
in excess of
net income (loss)		Total
 SharesParSharesPar
Continued from previous page.
Balance at December 31, 201981,588,489 $816 14,841,431 $148 $3,834,858 $(147,435)$7,275 $(689,857)$3,005,805 
Credit loss expense for implementation of Current Expected Credit Loss standard— — — — — — — (2,163)(2,163)
Restricted share units issued to Trustees74,767 1 — — — — — — 1 
Issuance of nonvested shares and performance shares, net of cancellations217,034 2 — — 6,505 (359)— — 6,148 
Purchase of common shares for vesting— — — — — (7,387)— — (7,387)
Share-based compensation expense— — — — 13,819 — — — 13,819 
Share-based compensation included in severance expense— — — — 1,258 — — — 1,258 
Foreign currency translation adjustment— — — — — — 3,494 — 3,494 
Change in unrealized loss on derivatives— — — — — — (10,553)— (10,553)
Net loss— — — — — — — (131,728)(131,728)
Issuances of common shares36,176 0 — — 1,129 — — — 1,129 
Repurchase of common shares— — — — — (105,994)— — (105,994)
Stock option exercises, net1,410 0 — — 63 (63)— — 0 
Dividend equivalents accrued on performance shares— — — — — — — (50)(50)
Dividends to common shareholders ($1.515 per share)— — — — — — — (119,058)(119,058)
Dividends to Series C preferred shareholders ($1.4375 per share)— — — — — — — (7,756)(7,756)
Dividends to Series E preferred shareholders ($2.25 per share)— — — — — — — (7,756)(7,756)
Dividends to Series G preferred shareholders ($1.4375 per share)— — — — — — — (8,624)(8,624)
Balance at December 31, 202081,917,876 $819 14,841,431 $148 $3,857,632 $(261,238)$216 $(966,992)$2,630,585 

EPR PROPERTIES
Consolidated Statements of Changes in Equity
Years Ended December 31, 2018, 2017 and 2016
(Dollars in thousands) (continued)
 EPR Properties Shareholders’ Equity  
 Common Stock Preferred Stock 
Additional
paid-in capital
 
Treasury
shares
 
Accumulated
other
comprehensive
income (loss)
 
Distributions
in excess of
net income
 Total
 Shares Par Shares Par  
Continued from previous page.                

Balance at December 31, 201776,858,632
 $769
 14,848,165
 $148
 $3,478,986
 $(121,591) $12,483
 $(443,470) $2,927,325
Restricted share units issued to Trustees23,571
 —
 —
 —
 —
 —
 —
 —
 —
Issuance of nonvested shares, net295,202
 3
 —
 —
 4,588
 (617) —
 —
 3,974
Purchase of common shares for vesting—
 —
 —
 —
 —
 (7,156) —
 —
 (7,156)
Amortization of nonvested shares and restricted share units—
 —
 —
 —
 14,826
 —
 —
 —
 14,826
Share option expense—
 —
 —
 —
 285
 —
 —
 —
 285
Share-based compensation included in severance expense—
 —
 —
 —
 3,218
 —
 —
 —
 3,218
Foreign currency translation adjustment—
 —
 —
 —
 —
 —
 (16,177) —
 (16,177)
Change in unrealized gain (loss) on derivatives—
 —
 —
 —
 —
 —
 15,779
 —
 15,779
Net income—
 —
 —
 —
 —
 —
 —
 266,983
 266,983
Issuances of common shares20,553
 —
 —
 —
 1,286
 —
 —
 —
 1,286
Conversion of Series E Convertible Preferred shares to common shares800
 —
 (1,734) —
 —
 —
 —
 —
 —
Conversion of Series C Convertible Preferred shares to common shares1,964
 —
 (5,000) —
 —
 —
 —
 —
 —
Stock option exercises, net25,721
 —
 —
 —
 1,305
 (1,364) —
 —
 (59)
Dividends to common and preferred shareholders—
 —
 —
 —
 —
 —
 —
 (345,261) (345,261)
Balance at December 31, 201877,226,443
 $772
 14,841,431
 $148
 $3,504,494
 $(130,728) $12,085
 $(521,748) $2,865,023


See accompanying notes to consolidated financial statements.

73


EPR PROPERTIES
Consolidated Statements of Cash Flows
(Dollars in thousands)

 Year Ended December 31,
 202020192018
Operating activities:
Net (loss) income$(131,728)$202,243 $266,983 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Impairment charges85,657 23,639 27,283 
Impairment charges on joint ventures3,247 0 0 
Gain on sale of real estate(50,119)(36,053)(3,037)
Gain on insurance recovery(809)0 0 
Deferred income tax expense (benefit), net15,246 (4,115)573 
Credit loss expense30,695 0 0 
Gain on sale of investment in a direct financing lease0 0 (5,514)
Costs associated with loan refinancing or payoff1,632 38,450 31,958 
Equity in loss from joint ventures4,552 381 22 
Distributions from joint ventures0 112 567 
Depreciation and amortization170,333 171,763 153,430 
Amortization of deferred financing costs6,606 6,192 5,797 
Amortization of above/below market leases and tenant allowances, net(480)(343)(581)
Share-based compensation expense to management and Trustees13,819 13,180 15,111 
Share-based compensation expense included in severance expense1,258 580 3,218 
Change in assets and liabilities:
Operating lease assets and liabilities344 1,194 0 
Mortgage notes accrued interest receivable(7,576)(381)(517)
Accounts receivable(47,383)(1,385)(22,300)
Direct financing lease receivable0 (186)(563)
Other assets(2,698)(1,301)(1,055)
Accounts payable and accrued liabilities(16,128)27,540 4,979 
Unearned rents and interest(11,195)(1,980)7,974 
Net cash provided by operating activities65,273 439,530 484,328 
Investing activities:
Acquisition of and investments in real estate and other assets(38,714)(500,629)(187,460)
Proceeds from sale of real estate227,742 216,020 22,134 
Proceeds from sale of public charter school portfolio0 449,555 0 
Investment in unconsolidated joint ventures(1,690)(325)(29,473)
Proceeds from settlement of derivative0 0 30,796 
Investment in mortgage notes receivable(8,141)(142,456)(36,105)
Proceeds from mortgage note receivable paydown481 217,459 335,168 
Investment in promissory notes receivable(6,134)(12,271)(7,863)
Proceeds from promissory note receivable paydown103 3,738 7,500 
Proceeds from insurance recovery809 0 0 
Proceeds from sale of investment in direct financing leases, net0 0 43,447 
Additions to properties under development(40,470)(134,586)(274,956)
Net cash provided (used) by investing activities133,986 96,505 (96,812)
Financing activities:
Proceeds from long-term debt facilities and senior unsecured notes750,000 962,000 908,000 
Principal payments on debt(160,000)(866,735)(949,684)
Deferred financing fees paid(6,330)(9,386)(8,642)
Costs associated with loan refinancing or payoff (cash portion)(1,632)(36,918)(28,650)
Net proceeds from issuance of common shares972 305,556 956 
Impact of stock option exercises, net0 (732)(62)
Purchase of common shares for treasury for vesting(7,387)(9,691)(7,156)
Purchase of common shares under share repurchase program(105,994)0 0 
Dividends paid to shareholders(172,460)(367,317)(342,315)
Net cash provided (used) by financing activities297,169 (23,223)(427,553)
Effect of exchange rate changes on cash142 121 (442)
Net change in cash and cash equivalents and restricted cash496,570 512,933 (40,479)
Cash and cash equivalents and restricted cash at beginning of the year531,440 18,507 58,986 
Cash and cash equivalents and restricted cash at end of the year$1,028,010 $531,440 $18,507 
Supplemental information continued on next page.
74

EPR PROPERTIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
 Year Ended December 31,
 2018 2017 2016
Operating activities:     
Net income attributable to EPR Properties$266,983
 $262,968
 $224,982
Adjustments to reconcile net income to net cash provided by operating activities:     
Gain on early extinguishment of debt—
 (977) —
Impairment charges27,283
 10,195
 —
Gain on sale of real estate(3,037) (41,942) (5,315)
Gain on insurance recovery—
 (606) (4,684)
Deferred income tax expense (benefit)573
 812
 (1,065)
Non-cash fee income—
 —
 (1,588)
Gain on sale of investment in a direct financing lease(5,514) —
 —
Costs associated with loan refinancing or payoff31,958
 1,549
 905
Equity in loss (income) from joint ventures22
 (72) (619)
Distributions from joint ventures567
 442
 816
Depreciation and amortization153,430
 132,946
 107,573
Amortization of deferred financing costs5,797
 6,167
 4,787
Amortization of above/below-market leases and tenant allowances, net(581) (107) 183
Share-based compensation expense to management and trustees15,111
 14,142
 11,164
Share-based compensation expense included in severance expense3,218
 —
 —
(Increase) decrease in mortgage notes accrued interest receivable(517) 467
 572
(Increase) decrease in accounts receivable, net(22,300) 8,866
 (37,627)
Increase in direct financing lease receivable(563) (1,208) (3,255)
Increase in other assets(1,055) (1,691) (3,320)
Increase in accounts payable and accrued liabilities4,979
 260
 17,025
Increase (decrease) in unearned rents and interest7,974
 6,061
 (5,172)
Net cash provided by operating activities484,328
 398,272
 305,362
Investing activities:     
Acquisition of and investments in rental properties and other assets(187,460) (397,556) (219,169)
Proceeds from sale of real estate22,134
 191,569
 23,860
Investment in unconsolidated joint ventures(29,473) —
 —
Proceeds from settlement of derivative30,796
 —
 —
Investment in mortgage notes receivable(36,105) (133,697) (192,539)
Proceeds from mortgage note receivable paydown335,168
 21,784
 72,072
Investment in promissory notes receivable(7,863) (1,928) (1,546)
Proceeds from promissory note receivable paydown7,500
 1,599
 —
Proceeds from sale of infrastructure related to issuance of revenue bonds—
 —
 43,462
Proceeds from insurance recovery—
 606
 4,610
Proceeds from sale of investment in direct financing leases, net43,447
 —
 20,951
Additions to properties under development(274,956) (384,449) (413,848)
Net cash used by investing activities(96,812) (702,072) (662,147)
Financing activities:     
Proceeds from long-term debt facilities and senior unsecured notes908,000
 1,371,000
 1,380,000
Principal payments on debt(949,684) (823,288) (865,266)
Deferred financing fees paid(8,642) (14,318) (14,385)
Costs associated with loan refinancing or payoff (cash portion)(28,650) (7) (482)
Net proceeds from issuance of common shares956
 99,069
 142,628
Net proceeds from issuance of preferred shares—
 144,490
 —
Redemption of preferred shares—
 (125,025) —
Impact of stock option exercises, net(62) (5) (1,488)
Purchase of common shares for treasury for vesting(7,156) (6,729) (4,211)
Dividends paid to shareholders(342,315) (311,721) (265,662)
Net cash (used) provided by financing activities(427,553) 333,466
 371,134
Effect of exchange rate changes on cash(442) 241
 (131)
Net (decrease) increase in cash and cash equivalents and restricted cash(40,479) 29,907
 14,218
Cash and cash equivalents and restricted cash at beginning of the year58,986
 29,079
 14,861
Cash and cash equivalents and restricted cash at end of the year$18,507
 $58,986
 $29,079
Supplemental information continued on next page.     

EPR PROPERTIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
Continued from previous page.
EPR PROPERTIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
Continued from previous page.
EPR PROPERTIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
Continued from previous page.
Year Ended December 31,
2018 2017 2016 Year Ended December 31,
      202020192018
Reconciliation of cash and cash equivalents and restricted cash:     Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents at beginning of the year$41,917
 $19,335
 $4,283
Cash and cash equivalents at beginning of the year$528,763 $5,872 $41,917 
Restricted cash at beginning of the year17,069
 9,744
 10,578
Restricted cash at beginning of the year2,677 12,635 17,069 
Cash and cash equivalents and restricted cash at beginning of the year$58,986
 $29,079
 $14,861
Cash and cash equivalents and restricted cash at beginning of the year$531,440 $18,507 $58,986 
     
Cash and cash equivalents at end of the year$5,872
 $41,917
 $19,335
Cash and cash equivalents at end of the year$1,025,577 $528,763 $5,872 
Restricted cash at end of the year12,635
 17,069
 9,744
Restricted cash at end of the year2,433 2,677 12,635 
Cash and cash equivalents and restricted cash at end of the year$18,507
 $58,986
 $29,079
Cash and cash equivalents and restricted cash at end of the year$1,028,010 $531,440 $18,507 
     
Supplemental schedule of non-cash activity:     Supplemental schedule of non-cash activity:
Transfer of property under development to rental property$228,572
 $408,593
 $454,922
Transfer of property under development to real estate investmentsTransfer of property under development to real estate investments$20,657 $354,568 $228,572 
Issuance of nonvested shares and restricted share units at fair value, including nonvested shares issued for payment of bonuses$18,252
 $24,062
 $19,626
Issuance of nonvested shares and restricted share units at fair value, including nonvested shares issued for payment of bonuses$20,062 $17,590 $18,252 
Conversion or reclassification of mortgage notes receivable to rental properties$155,185
 $9,237
 $—
Conversion of rental property to mortgage note receivable$—
 $11,897
 $—
Issuance of common shares for acquisition$—
 $657,473
 $—
Assumption of liabilities net of accounts receivable for acquisition$—
 $12,083
 $—
Transfer of investment in direct financing lease to rental properties$—
 $35,807
 $—
Sale of investment in direct financing leases, net in exchange for mortgage note receivable$—
 $—
 $70,304
Credit loss expense related to adoption of ASC Topic 326Credit loss expense related to adoption of ASC Topic 326$2,163 $0 $0 
Conversion or reclassification of mortgage notes receivable to real estate investmentsConversion or reclassification of mortgage notes receivable to real estate investments$0 $0 $155,185 
Mortgage note received for sale of real estate investmentsMortgage note received for sale of real estate investments$0 $27,423 $0 
Amounts related to adoption of ASC Topic 842:Amounts related to adoption of ASC Topic 842:
Operating lease right-of-use assetsOperating lease right-of-use assets$0 $229,620 $0 
Operating lease liabilitiesOperating lease liabilities$0 $253,486 $0 
Sub-lessor straight-line receivableSub-lessor straight-line receivable$0 $24,454 $0 
Acquisition of real estate in exchange for assumption of debt at fair valueAcquisition of real estate in exchange for assumption of debt at fair value$0 $14,000 $0 
Assumption of debtAssumption of debt$0 $18,585 $0 
     
Supplemental disclosure of cash flow information:     Supplemental disclosure of cash flow information:
Cash paid during the year for interest$145,559
 $136,345
 $96,410
Cash paid during the year for interest$152,393 $143,530 $145,559 
Cash paid during the year for income taxes$1,363
 $1,499
 $1,684
Cash paid during the year for income taxes$1,507 $1,842 $1,363 
Interest cost capitalized$9,903
 $9,879
 $10,697
Interest cost capitalized$1,233 $5,326 $9,903 
Increase in accrued capital expenditures$32,993
 $333
 $6,035
Change in accrued capital expendituresChange in accrued capital expenditures$(12,376)$(35,155)$32,993 
See accompanying notes to consolidated financial statements.

75

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018



1. Organization


Description of Business
EPR Properties (the Company) iswas formed on August 22, 1997 as a specialtyMaryland real estate investment trust (REIT) organized, and an initial public offering of the Company's common shares of beneficial interest (common shares) was completed on August 29, 1997 in Maryland. TheNovember 18, 1997. Since that time, the Company develops, owns, leases and finances propertieshas been a leading Experiential net lease REIT specializing in select market segments primarily related to Entertainment, Recreationenduring experiential properties. The Company's underwriting is centered on key industry and Education.property cash flow criteria, as well as the credit metrics of the Company's tenants and customers. The Company’s properties are located in the United States and Canada.


2. Summary of Significant Accounting Policies


Principles of Consolidation
The consolidated financial statements include the accounts of EPR Properties and its subsidiaries, all of which are wholly owned.


Risks and Uncertainties
On March 11, 2020, the World Health Organization declared a novel strain of coronavirus (COVID-19) a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the Company’s business is highly uncertain and difficult to predict, as information is rapidly evolving. The outbreak of COVID-19 has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving and many jurisdictions within the United States and abroad reacted by instituting quarantines, mandating business and school closures and restricting travel. As a result, the COVID-19 pandemic has severely impacted experiential real estate properties, given that such properties involve congregate social activity and discretionary consumer spending. Substantially all the Company's non-theatre locations and many of the Company's theatre locations have re-opened as of December 31, 2020. However, certain theatre locations remain closed due to local restrictions or operator decision to close as a result of the impact of the COVID-19 pandemic, specifically the decision by many movie studios to delay the release of blockbuster movies in hopes that larger audiences will be available as additional markets open. The severity of the impact of the COVID-19 pandemic on the Company’s business will depend on a number of factors, including, but not limited to, the scope, severity and duration of the pandemic, the actions taken to contain the outbreak or mitigate its impact, the development and distribution of vaccines and the efficacy of those vaccines, the public’s confidence in the health and safety measures implemented by the Company's tenants and borrowers, and the direct and indirect economic effects of the outbreak and containment measures, all of which are uncertain and cannot be predicted. During 2020, the COVID-19 pandemic negatively affected the Company's business, and could continue to have material, adverse effects on the Company's financial condition, results of operations and cash flows.

The Company’s consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods presented. The Company considered the impact of the COVID-19 pandemic on the assumptions and estimates used in determining the Company’s financial condition and results of operations for the year ended December 31, 2020. The following were adverse impacts to its financial statements and business during the year ended December 31, 2020:

•The Company wrote-off receivables from tenants and straight-line rent receivables totaling $65.1 million directly to rental revenue in the accompanying consolidated statements of (loss) income and comprehensive (loss) income upon determination that the collectibility of these receivables or future lease payments from these tenants were no longer probable. Additionally, the Company determined that future rental revenue related to these tenants, including American-Multi Cinema, Inc. (AMC) and Regal Cinemas (Regal), a subsidiary of Cineworld Group, will be recognized on a cash basis. The straight line rent receivable
76

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
represented $38.0 million of this write-off and was comprised of $26.5 million of straight-line rent receivable and $11.5 million of sub-lessor ground lease straight-line rent receivable.
•The Company reduced rental revenue by$13.6 million due to rent abatements.
•The Company deferred approximately $76.0 million of amounts due from tenants and $3.4 million due from borrowers that were booked as receivables. Additionally, the Company has amounts due from tenants that were not booked as receivables as the full amounts were not deemed probable of collection as a result of the COVID-19 pandemic. The amounts not booked as receivables remain obligations of the tenants and will be recognized as revenue when received. The repayment terms for all of these deferments vary by tenant or borrower.
•The Company recognized $85.7 million in impairment charges during the year ended December 31, 2020, which was comprised of $70.7 million of impairments of real estate investments, and $15.0 million of impairments of operating lease right-of-use assets. The Company also recognized impairment charges on joint ventures of $3.2 million related to its equity investments in 3 theatre projects located in China.
•The Company increased its expected credit losses by $30.7 million from its implementation estimate of $2.2 million. This increase was primarily due to credit loss expense related to fully reserving the outstanding principal balance of $12.6 million and unfunded commitment to fund $12.9 million, totaling $25.5 million, related to notes receivable from 1 borrower, as a result of recent changes in the borrower's financial status due to the impact of the COVID-19 pandemic. The remaining increase was due to economic uncertainty and the rapidly changing environment surrounding the pandemic.
•The Company recognized a full valuation allowance of $18.0 million during the third quarter 2020 on the Company's net deferred tax assets related to the Company's taxable REIT subsidiary (TRS) and Canadian tax paying entity as a result of the uncertainty of realization caused by the impact of the COVID-19 pandemic. At December 31, 2020, the Company had a valuation allowance totaling $24.9 million on its net deferred tax assets.
•On March 20, 2020, the Company borrowed $750.0 million under its unsecured revolving credit facility as a precautionary measure to increase the Company's cash position and preserve financial flexibility given the global uncertainty caused by the COVID-19 pandemic. On December 30, 2020, the Company paid down its revolving credit facility by $160.0 million, following the sale of 6 private schools and 4 early childhood education centers. Subsequent to year-end, the Company paid down an additional $500.0 million on its revolving credit facility.
•The Company amended the agreement which governs its unsecured revolving credit facility and its unsecured term loan facility (Consolidated Credit Agreement) and the agreement which governs its private placement notes (Note Purchase Agreement). The amendments modified certain provisions and waived the Company's obligation to comply with certain covenants under these debt agreements during the Covenant Relief Period in light of the uncertainty related to impacts of the COVID-19 pandemic on the Company and its tenants and borrowers. The Company pays higher interest costs during the Covenant Relief Period. The amendments to the Consolidated Credit Agreement and Note Purchase Agreement also impose additional restrictions on the Company during the Covenant Relief Period, including limitations on making investments, incurring indebtedness, making capital expenditures, paying dividends or making other distributions, repurchasing the Company's shares, voluntarily prepaying certain indebtedness, encumbering certain assets and maintaining a minimum liquidity amount, in each case subject to certain exceptions. See Note 8 for additional details. The term "Covenant Relief Period," as used in these notes to consolidated financial statements, generally means the period of time beginning on June 29, 2020 and ending on (i) December 31, 2021, in the case of the Company's Consolidated Credit Agreement, or (ii) October 1, 2021 (subject to extension to January 1, 2022 at the Company's election, subject to certain conditions), in the case of the Company's Note Purchase Agreement governing its private placement notes. The Company has the right under certain circumstances to terminate the Covenant Relief Period earlier.
•In connection with the loan amendments discussed above, certain of the Company's key subsidiaries guaranteed the Company's obligations based on the Company's unsecured debt ratings. If the Company's unsecured debt rating is further downgraded by Moody's, it will be required to pledge the equity interest in certain subsidiary guarantors to secure its obligations under its unsecured credit facilities and private placement notes. See Note 8 for additional details.

77

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
On June 29, 2020, the effective date of the loan amendments discussed above, the Company suspended its share repurchase plan. Prior to the effective date, during the year ended December 31, 2020, the Company repurchased 4,066,716 common shares under the share repurchase program for approximately $106.0 million. The repurchases were made under a Rule 10b5-1 trading plan.

The monthly cash dividends to common shareholders were suspended following the common share dividend paid on May 15, 2020 to shareholders of record as of April 30, 2020. The suspension of the monthly cash dividend to common shareholders will continue through the Covenant Relief Period, except as may be necessary to maintain REIT status and to not owe income tax.

On July 31, 2020, the Company entered into a Forbearance Agreement (the Forbearance Agreement), a Master Lease Agreement (the Master Lease) and seven amended lease agreements (the Transitional Leases and collectively with the Master Lease, the Leases) with AMC, its affiliate tenants of the Company (AMC and such affiliates, collectively, AMC Tenant), and AMC Entertainment Holdings, Inc. (Guarantor), relating to all 53 properties leased to AMC Tenant (the Leased Properties) on the date the agreement was executed. These agreements restructured the then-existing lease terms for the Leased Properties in light of the continuing impact of the COVID-19 pandemic on AMC Tenant's operations. Effective July 1, 2020, the Leased Properties are leased to AMC Tenant pursuant to the following leases:

•Master Lease relating to 46 Leased Properties (the Master Lease Properties); and
•NaN Transitional Leases relating to 7 Leased Properties (the Transitional Properties). These leases were subsequently terminated by the Company during 2020.

In addition, AMC Tenant and the Company entered into the following related agreements:

•Security Agreement granting to the Company a security interest subordinated to AMC's secured credit agreements and indentures in all of AMC Tenant’s property located at the Leased Properties to secure AMC Tenant’s obligations to the Company under the Forbearance Agreement and the Leases;
•Guaranty providing a guaranty by Guarantor of AMC Tenant’s obligations to the Company under the Forbearance Agreement and the Leases; and
•Capital Improvements Agreement providing a financial mechanism for the Company to provide AMC Tenant with up to $35 million of funds to complete improvements to the Master Lease Properties in exchange for increased annual fixed rent.

The prior leases for the 46 Master Lease Properties were replaced with a single Master Lease. The Company agreed to reduce total annual fixed rent on the 46 Master Lease Properties by approximately $19.4 million to approximately $87.8 million (including approximately $6.8 million of ground rent and the repayment of deferral amounts for the months of April, May and June 2020 which the Company had agreed to defer and amortize as part of fixed rent over the first 14 years of the Master Lease term).

The Master Lease Properties have been divided into four tranches, with the initial term of each tranche expiring on a different date: June 30, 2034, June 30, 2035, June 30, 2036 and June 30, 2037. The AMC Tenant may exercise up to 3 5-year extensions for each tranche. If AMC Tenant elects not to exercise an extension option with respect to a tranche, fixed rent will be reduced by the fair market rental value of Master Lease Properties included in such tranche at that time, determined in accordance with the Master Lease. Upon the expiration of the initial term of each tranche or expiration of any extension option of each tranche and the election by AMC Tenant to further extend the term of such tranche, AMC Tenant may elect to remove up to 2 Master Lease Properties included in the tranche, which will result in a reduction in the annual fixed rent equal to the fair market rental value of such removed Master Lease Properties at that time, determined in accordance with the Master Lease. AMC Tenant may not remove more than 10 Master Lease Properties in total and not more than 3 Master Lease Properties per tranche during the entirety of the Master Lease term.

78

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
Pursuant to the Leases and the Forbearance Agreement, commencing on July 1, 2020 and continuing through December 31, 2020, in lieu of monthly fixed rent AMC Tenant agreed to pay percentage rent of 15% of total gross receipts during such month, not to exceed the deferred monthly fixed rent for the Leased Properties. The difference between the scheduled monthly fixed rent and the percentage rent actually paid to the Company for the Master Lease became additional deferred rent that, beginning in February 2021, will be added to fixed cash rent and amortized over the remaining portion of the first 14 years of the term of the Master Lease and beginning January 2021 will be rent due related to the Transitional Leases amortized over the prior lease terms. Accordingly, the new annual contractual rent under the Master Lease will increase from $87.8 million to $90.7 million by February 2021 (including approximately $4.9 million of ground rent).

The Leases are triple-net leases requiring AMC Tenant to be responsible at all times for taxes, assessments, maintenance and operating costs, common area charges, association fees, ground rent, insurance premiums, utility charges and similar pass-through charges. Fixed rent of the Master Lease (excluding the portion attributable to deferred rent) will increase by 7.5% every 5 years during the term and any extensions.

Each lease for the 7 Transitional Properties was amended by the parties. The Company agreed to reduce the aggregate annual fixed rent on the Transitional Properties by approximately $6.2 million to approximately $8.1 million (including approximately $1.2 million of ground rent and the repayment of deferral amounts for the months of April, May and June 2020 which the Company had agreed to defer and amortize as part of fixed rent over the remaining terms of the new leases).

The Company had the right to terminate each Transitional Lease by giving the AMC Tenant 90 days' prior notice of termination. Upon termination of a Transitional Lease by the Company, AMC Tenant agreed to (1) cooperate with the Company in transitioning the applicable Transitional Property to a new operator to ensure seamless transfer of management and re-branding, and (2) transfer certain property, including fixtures, furnishings and equipment, located or used at the applicable Transitional Property in exchange for a credit to the unpaid deferred amount due under the Transitional Lease. Prior to December 31, 2020, the Company terminated all Transitional Leases with AMC. The total amount deferred under each Transitional Lease prior to the Company terminating these agreements is still due by AMC and is scheduled to be paid over what would have been the remaining terms of the related property leases.

In March 2020, the Company's employees transitioned to a fully remote work force to protect the safety and well-being of the Company's personnel. The Company's prior investments in technology, business continuity planning and cyber-security protocols have enabled the Company to continue working with limited operational impacts.

Variable Interest Entities
The Company consolidates certain entities when it is deemed to be the primary beneficiary in a variable interest entity (VIE) in which it has a controlling financial interest in accordance with the consolidation guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). The equity method of accounting is applied to entities in which the Company is not the primary beneficiary as defined in the Consolidation Topic of the FASB ASC or does not have effective control,Topic on Consolidation (Topic 810), but can exercise significant influence over the entity with respect to its operations and major decisions.


The Company’s variable interest in VIEs currently are in the form of equity ownership and loans provided by the Company to a VIE or other partner. The Company examines specific criteria and uses its judgment when determining if the Company is the primary beneficiary of a VIE. The primary beneficiary generally is defined as the party with the controlling financial interest. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. As of December 31, 2020 and 2019, the Company does not have any investments in consolidated VIEs.

79

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
Use of Estimates
Management of the Company has made estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with U.S. generally accepted accounting principles generally accepted in the United States of America.(GAAP). Actual results could differ from those estimates.


Rental PropertiesReal Estate Investments
Rental propertiesReal estate investments are carried at costinitial recorded value less accumulated depreciation. Costs incurred for the acquisition and development of the properties are capitalized. In addition, the Company capitalizes certain costs that relate to property under development including interest and a portion of internal legal personnel costs. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which generally are estimated to be 30 years to 40 years for buildings, three years to 25 years for furniture, fixtures and equipment and 10 years to 20 years for site improvements. Tenant improvements, including allowances, are depreciated over the shorter of the baselease term of the lease or the estimated useful life and leasehold interests are depreciated over the useful life of the underlying ground lease. Expenditures for ordinary maintenance and repairs are charged to operations in the period incurred. Significant renovations and improvements, which improve or extend the useful life of the asset, are capitalized and depreciated over their estimated useful life.


Management reviews a propertythe Company's real estate investments, including operating lease right-of-use assets, for impairment whenever events or changes in circumstances indicate that the carrying value of a property may not be recoverable. The review of recoverabilityrecoverable, which is based on an estimate of undiscounted future cash flows expected to result from its use and eventual disposition. If impairment exists due to the inability to recover the carrying value of the property, an impairment loss is recorded to the extent that the carrying value of the property exceeds its estimated fair value.


The Company evaluates the held-for-sale classification of its real estate as of the end of each quarter. Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value less costs to sell. Assets are generally classified as held for sale once management has initiated an active program to market them for sale and it is probable the assets will be sold within one year. On occasion, the Company will receive unsolicited offers from third parties to buy individual Company properties. Under these circumstances, the Company will classify the properties as held for sale when a sales contract is executed with no contingencies and the prospective buyer has funds at risk to ensure performance.


Real Estate Acquisitions
Upon acquisition of real estate properties, the Company evaluates the acquisition to determine if it is a business combination or an asset acquisition. In January 2017, the Company elected to adopt Accounting Standards Update

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 2017 and 2016

(ASU) No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The update clarified the definition of a business with the objective of adding guidance to assist entities with evaluating whether acquisitions should be accounted for as business combinations or asset acquisitions. As a result, the Company expects that fewer of its real estate acquisitions will be accounted for as business combinations.

If the acquisition is determined to be an asset acquisition, the Company records the purchase price and other related costs incurred to the acquired tangible assets (consisting of land, building, site improvements, tenant improvements, leasehold interests and furniture, fixtures and equipment) and identified intangible assets and liabilities (consisting of in-place leases, above and below-market leases, tradenames, contract value and assumed financing that is determined to be above or below-market terms) on a relative fair value basis. In addition, costs incurred for asset acquisitions including transaction costs, are capitalized.


If the acquisition is determined to be a business combination, the Company records the fair value of acquired tangible assets (consisting of land, building, site improvements, tenant improvements, leasehold interests and furniture, fixtures and equipment) and identified intangible assets and liabilities (consisting of in-place leases, above and below-market leases, tradenames, contract value and assumed financing that is determined to be above or below-market terms) as well as any noncontrolling interest. In addition, acquisition-relatedAcquisition-related costs in connection with business combinations are expensed as incurred. Costs related to such transactions, as well asincurred and included in transaction costs associated with terminated transactions and pre-opening costs, are included in the accompanying consolidated statements of (loss) income asand comprehensive (loss) income.

In addition to acquisition-related costs in connection with business combinations, transaction costs include costs associated with terminated transactions, pre-opening costs and certain leasing and tenant transition costs. Transaction costs expensed totaled $3.7 $5.4 million, $0.5$23.8 million and $7.9$3.7 million for the years ended December 31, 2020, 2019 and 2018, 2017 and 2016, respectively.


For rental propertyreal estate acquisitions (asset acquisitions or business combinations), the fair value (or relative fair value in an asset acquisition) of the tangible assets is determined by valuing the property as if it were vacant based on management’s determination of the relative fair values of the assets. Management determines the “as if vacant” fair value of a property using recent independent appraisals or methods similar to those used by independent appraisers. For land acquired with a rental property acquisition,Land is valued using the sales comparison approach which uses available market data from recent comparable land sales is used as an input to estimate the fair value. Site improvements and tenant improvements are valued using the cost approach which uses replacement cost data obtained from industry recognized guides less depreciation as an input to estimate the fair value. The building is valued either using the cost approach described above or a combination of the cost and the income approach. The
80

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
income approach uses market leasing assumptions to estimate the fair value of the land.property as if vacant. The cost and income approaches are reconciled to arrive at an estimated building fair value.


Intangibles
The fair value of acquired in-place leases also includes management’s estimate, on a lease-by-lease basis, of the present value of the following amounts: (i) the value associated with avoiding the cost of originating the acquired in-place leases (i.e. the market cost to execute the leases, including leasing commissions, legal and other related costs); (ii) the value associated with lost revenue related to tenant reimbursable operating costs estimated to be incurred during the assumed re-leasing period, (i.e. real estate taxes, insurance and other operating expenses); (iii) the value associated with lost rental revenue from existing leases during the assumed re-leasing period; and (iv) the value associated with avoided tenant improvement costs or other inducements to secure a tenant lease. These values are amortized over the remaining initial lease term of the respective leases.
 
In determining the fair value of acquired above and below-market leases, the Company considers many factors. On a lease-by-lease basis, management considers the present value of the difference between the contractual amounts to be paid pursuant to the leases and management’s estimate of fair market lease rates. For above-market leases management considers such differences over the remaining non-cancelable lease terms and for below-market leases, management considers such differences over the remaining initial lease terms plus any fixed rate renewal periods.terms. The capitalized above-market lease values are amortized as a reduction of rental income over the remaining non-cancelablelease terms of the respective leases. The capitalized below-market lease values are amortized as an increase to rental income over the remaining initial lease terms of the respective leases. The lease term includes the minimum base term plus any fixed rate renewal periods.extension options that are reasonably certain to be exercised. Management considers several factors in determining the discount rate used in the present value calculations, including the credit risks associated with the respective tenants.


If debt is assumed in the acquisition, the determination of whether it is above or below-market is based upon a comparison of similar financing terms for similar rental propertiesreal estate investments at the time of the acquisition.


In determining the fair value of tradenames, the Company historically uses the relief from royalty method, which estimates the fair value of hypothetical royalty income that could be generated if the intangible asset was licensed from an independent third-party.

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 2017 and 2016



In determining the fair value of a contract intangible, the Company considers the present value of the difference between the estimated "with" and "without" scenarios. The "with" scenario presents the contract in place and the "without" scenario incorporates the potential profits that may be lost over the period without the contract in place. The capitalized contract value is amortized over the estimated useful life of the underlying asset.


The excess of the cost of an acquired business (in a business combination) over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed is recorded as goodwill. Goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired.
Management of the Company reviews the carrying value of intangible assets for impairment on an annual basis.
Intangible assets and liabilities (included in Other assets and Accounts payable and accrued liabilities in the accompanying consolidated balance sheets) consist of the following at December 31 (in thousands):
81

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
 2018 2017
Assets:   
In-place leases, net of accumulated amortization of $7.7 million and $5.5 million, respectively$21,749
 $21,512
Above-market lease, net of accumulated amortization of $1.0 million and $0.8 million, respectively154
 351
Tradenames, net of accumulated amortization of $53 thousand and $23 thousand, respectively (1)9,110
 6,313
Contract value, net of accumulated amortization of $183 thousand and $0, respectively10,785
 —
Goodwill693
 693
Total intangible assets, net$42,491
 $28,869
    
Liabilities:   
Below-market lease, net of accumulated amortization of $0.7 million and $0.3 million, respectively$(8,100) $(8,792)
20202019
Assets:
In-place leases, net of accumulated amortization of $13.9 million and $10.8 million, respectively$21,684 $24,528 
Above-market lease, net of accumulated amortization of $1.2 million and $1.1 million, respectively354 71 
Tradenames, net of accumulated amortization of $317 thousand and $184 thousand, respectively (1)8,847 8,980 
Contract value, net of accumulated amortization of $914 thousand and $548 thousand, respectively10,054 10,420 
Goodwill693 693 
Total intangible assets, net$41,632 $44,692 
Liabilities:
Below-market lease, net of accumulated amortization of $1.5 million and $1.1 million, respectively$8,397 $8,934 
(1) At December 31, 2018,2020 and 2019, $5.4 million in tradenames had indefinite lives and were not amortized.
Aggregate lease intangible amortization included in expense was $2.9$5.6 million $2.0, $3.7 million and $1.4$2.9 million for the years ended December 31, 2018, 20172020, 2019 and 2016,2018, respectively. The net amount amortized as an increase to rental revenue for capitalized above and below-market lease intangibles was $0.6$0.5 million, $0.4 million and $0.1$0.6 million for the years ended December 31, 2020, 2019 and 2018, and 2017, respectively. The net amount amortized as a decrease to rental revenue for capitalized above and below-market lease intangibles was $0.2 million for the year ended December 31, 2016.

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 2017 and 2016

Future amortization of in-place leases, net, above-market lease, net, tradenames, net, contract value, net and below-market lease, net at December 31, 20182020 is as follows (in thousands):
In place leasesTradenames (1)Contract ValueAbove-market leaseBelow-market lease
Year:
2021$3,283 $133 $365 $51 $(456)
20222,658 133 365 46 (437)
20232,654 133 365 46 (415)
20242,095 133 365 46 (396)
20252,085 133 365 46 (387)
Thereafter8,909 2,827 8,229 119 (6,306)
Total$21,684 $3,492 $10,054 $354 $(8,397)
Weighted average amortization period (years)11.227.227.57.530.1
(1) Excludes $5.4 million in tradenames with indefinite lives.
 In place leases Tradenames (1) Contract Value Above-market lease Below-market lease
Year:         
2019$3,109
 $125
 $365
 $101
 $(450)
20202,834
 125
 365
 6
 (438)
20212,466
 125
 365
 6
 (408)
20221,826
 125
 365
 6
 (373)
20231,777
 125
 365
 6
 (351)
Thereafter9,737
 3,132
 8,960
 29
 (6,080)
Total$21,749
 $3,757
 $10,785
 $154
 $(8,100)
          
Weighted average amortization period (years)10.9
 30.6
 29.5
 4.1
 31.0
          
(1) Excludes $5.4 million in tradenames with indefinite lives.


Deferred Financing Costs
Deferred financing costs are amortized over the terms of the related debt obligations or mortgage note receivable as applicable. Deferred financing costs of $33.9of $35.6 million and $32.9and $37.2 million as of December 31, 20182020 and 2017,2019, respectively, are shown as a reduction of debt. The deferred financing costscosts of $5.0$4.8 million and $6.5and $3.5 million as of December 31, 20182020 and 2017,2019, respectively, related to the unsecured revolving credit facility are included in other assets.


Capitalized Development CostsReportable Segments
The Company capitalizes certain costs that relate to property under development including interest and a portion of internal legal personnel costs.

Operating Segments
The Company has four2 reportable operating segments: Entertainment, Recreation,Experiential and Education. The Experiential segment includes the following property types: theatres, eat & play (including seven theatres located in entertainment districts), attractions, ski, experiential lodging, gaming, cultural and fitness & wellness. The Education segment
82

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and Other.2018
includes the following property types: early childhood education centers and private schools. See Note 2019 for financial information related to these reportable segments.

Rental Revenue
The Company leases real estate to its tenants primarily under leases that are predominately classified as operating segments.

Revenue Recognition
leases. The Company's leases generally provide for rent escalations throughout the lease terms. Rents that are fixed and determinable are recognized on a straight-line basis over the non-cancellable termslease term. Base rent escalations that include a variable component are recognized upon the occurrence of the leases.specified event as defined in the Company's lease agreements. Many of the Company's leasing arrangements include options to extend the lease, which are not included in the minimum lease terms unless it is reasonably certain to be exercised. Straight-line rental revenue is subject to an evaluation for collectability,collectibility, and the Company records a provision for lossesdirect write-off against rental revenuesrevenue if collectabilitycollectibility of these future rents is not reasonably assured.probable. For the year ended December 31, 2020, the Company recognized straight-line write-offs totaling $38.0 million, which were comprised of $26.5 million of straight-line accounts receivable and $11.5 million of sub-lessor ground lease straight-line accounts receivable. Straight-line rental revenue, net of write-offs, was a reduction to total rental revenue of $24.5 million for the year ended December 31, 2020. For the year ended December 31, 2019, the Company recognized straight-line write-offs of $1.4 million (of which $1.2 million has been classified within discontinued operations). There were no straight-line write-offs recognized during the year ended December 31, 2018. For the years ended December 31, 2018, 20172019 and 2016,2018, the Company recognized $10.2 million, $4.3 million and $17.0 million, respectively, of straight-line rental revenue, net of write-offs. Basewrite-offs of $13.6 million (of which $3.0 million has been classified within discontinued operations) and $10.2 million (of which $5.5 million has been classified within discontinued operations), respectively.

Substantially all the Company's customers' operations were temporarily closed for a portion of the year ended December 31, 2020, as a result of the COVID-19 pandemic. Many of the Company's non-theatre locations have re-opened. However, certain of the Company's theatre locations remain closed due to local restrictions or operator decision to close as a result of the impact of the COVID-19 pandemic, specifically the decision by many movie studios to delay the release of films. In response, the Company has agreed to defer rent escalationfor a substantial portion of its customers. On April 10, 2020, the FASB issued a Staff Q&A on leases that are dependentTopic 842 and Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic. In reliance upon increasesthe FASB Staff Q&A, the Company has not treated qualifying deferrals or rent concessions during the period effected by the COVID-19 pandemic as lease modifications. While deferments for this and future periods delay rent payments, these deferments generally do not release customers from the obligation to pay the deferred amounts in the Consumer Price Index (CPI)future. Deferred rent amounts are reflected in the Company's financial statements as accounts receivable if collection is determined to be probable or recognized when received as variable lease payments if collection is determined to not be probable. Certain agreements with tenants where remaining lease terms are extended, or other changes are made that do not qualify for the treatment in the FASB Staff Q&A, are treated as lease modifications. In these circumstances, upon an executed lease modification, if the tenant is not being recognized on a cash basis, the contractual rent reflected in accounts receivable and straight-line rent receivable will be amortized over the remaining term of the lease against rental revenue. In limited cases, customers may be entitled to the abatement of rent during governmentally imposed prohibitions on business operations which is recognized when known.in the period to which it relates, or the Company may provide rent concessions to tenants. In cases where the Company provides concessions to tenants to which they are not otherwise entitled, those amounts will be recognized in the period in which the concession is granted unless the changes are accounted for as lease modifications.

Most of the Company’s lease contracts are triple-net leases, which require the tenants to make payments directly to third parties for lessor costs (such as property taxes and insurance) associated with the properties. In accordance with Topic 842, the Company does not include these payments made by the lessees to third parties in rental revenue or property operating expenses. In certain situations, the Company pays these lessor costs directly to third-parties and the tenants reimburse the Company. In accordance with Topic 842, these payments are presented on a gross basis in rental revenue and property operating expense. During the year ended December 31, 2020 and 2019, the Company recognized $2.2 million and $6.9 million, respectively, related to the gross-up of these reimbursed expenses which are included in rental revenue and property operating expenses.

Certain of the Company's leases, particularly at its entertainment districts, require the tenants to make payments to the Company for property related expenses such as common area maintenance. The Company has elected to
83

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
combine these non-lease components with the lease components in rental revenue. For the years ended December 31, 2020, 2019 and 2018, 2017the non-lease components included in rental revenue totaled $12.9 million, $16.0 million and 2016, the Company recognized $15.4$15.3 million, $15.6 million and $15.6 million, respectively, of tenant reimbursements that related to the operations of its entertainment retail centers. Certain reclassifications have been made to the 2017 and 2016 presentation to conform to the 2018 presentation to combine tenant reimbursements with rental revenue.respectively.


In addition, most of the Company's tenants are subject to additional rents (above base rents) if gross revenues of the properties exceed certain thresholds defined in the lease agreements (percentage rents). Percentage rents as well as participating interest for those mortgage agreements that contain similar such clauses are recognized at the time when specific triggering events occur as provided by the lease or mortgage agreements.agreement. Rental revenue included percentage rents of $10.7 $8.6 million, $7.8$15.0 million and $4.7 million for the years ended December 31, 2018, 2017 and 2016, respectively. Mortgage and other financing income included participating interest income of $0.7 million and $0.8$10.7 million for the years ended December 31, 20172020, 2019 and 2016,2018, respectively. There was no participating interest income recognizedFurthermore, due to the impact of the COVID-19 pandemic, certain of the Company's tenants paid a portion of base rent in 2020 based on a percentage of gross revenue. This variable rent totaled $5.2 million for the year ended December 31, 2018. For2020.

The Company regularly evaluates the years ended December 31, 2018, 2017collectibility of its receivables on a lease by lease basis. The evaluation primarily consists of reviewing past due account balances and 2016, mortgageconsidering such factors as the credit quality of the Company's tenants, historical trends of the tenant, current economic conditions and other financing income also included $74.7 million, $0.8 million and $3.6 million, respectively,changes in prepayment fees related to mortgage notes that were paid fully in advance of their maturity dates.

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 2017 and 2016


Direct financing lease income is recognized oncustomer payment terms. When the effective interest method to produce a level yield on funds not yet recovered. Estimated unguaranteed residual values at the datecollectibility of lease inception represent management's initial estimates of fair valuereceivables or future lease payments are no longer probable, the Company records a direct write-off of the leased assets at the expiration of the lease, notreceivable to exceed original cost. Significant assumptions used in estimating residual values include estimated netrental revenue and recognizes future rental revenue on a cash flows over the remaining lease term and expected future real estate values. The Company evaluates on an annual basis (or more frequently if necessary) the collectability of its direct financing lease receivable and unguaranteed residual value to determine whether they are impaired. A direct financing lease receivable is considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the existing contractual terms. When a direct financing lease receivable is considered to be impaired, the amount of loss is calculated by comparing the recorded investment to the value determined by discounting the expected future cash flows at the direct financing lease receivable's effective interest rate or to the fair value of the underlying collateral, less costs to sell, if such receivable is collateralized.basis.


Property Sales
Sales of real estate properties are recognized when a contract exists and the purchaser has obtained control of the property. Gains on sales of properties are recognized in full in a partial sale of nonfinancial assets, to the extent control is not retained. Any noncontrolling interest retained by the seller would, accordingly, be measured at fair value.


The Company evaluates each sale or disposal transaction to determine if it meets the criteria to qualify as discontinued operations. A discontinued operation is a component of an entity or group of components that have been disposed of or are classified as held for sale and represent a strategic shift that has or will have a major effect on the Company's operations and financial results. If the sale or disposal transaction does not meet the criteria, the operations and related gain or loss on sale is included in income from continuing operations. Certain reclassifications have been made to prior period amounts to conform to the current period presentation for assets that qualify for presentation as discontinued operations. See Note 17 for further details.
Allowance for Doubtful Accounts
Accounts receivable is reduced by an allowance for amounts where collection is not probable. The Company’s accounts receivable balance is comprised primarily of rents and operating cost recoveries due from tenants as well as accrued rental rate increases to be received over the life of the existing leases. The Company regularly evaluates the adequacy of its allowance for doubtful accounts. The evaluation primarily consists of reviewing past due account balances and considering such factors as the credit quality of the Company’s tenants, historical trends of the tenant and/or other debtor, current economic conditions and changes in customer payment terms. Additionally, with respect to tenants in bankruptcy, the Company estimates the expected recovery through bankruptcy claims and increases the allowance for amounts deemed uncollectible. These estimates have a direct impact on the Company's net income. The allowance for doubtful accounts was $2.9 million and $7.5 million at December 31, 2018 and 2017, respectively.


Mortgage Notes and Other Notes Receivable
Mortgage notes and other notes receivable, including related accrued interest receivable, consist of loans originated by the Company and the related accrued and unpaid interest income as of the balance sheet date. Mortgage notes and other notes receivable are initially recorded at the amount advanced to the borrower.borrower less allowance for credit loss. Interest income is recognized using the effective interest method based on the stated interest rate over estimatethe estimated life of the note. Premiums and discounts are amortized or accreted into income over the estimated life of the note using the effective interest method.

The Company evaluatesadopted Accounting Standards Update (ASU) No. 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326) effective January 1, 2020, which requires allowance for credit losses to be recorded to reflect that all mortgage notes and notes receivable have some inherent risk of loss regardless of credit quality, collateral, or other mitigating factors. The Company adopted the collectabilitystandard on the effective date and used the effective date as the date of both interestinitial application. Accordingly, comparative periods have not been recast, and principalrequired disclosures will not be provided for dates and periods prior to January 1, 2020. On the effective date, the Company recognized credit loss expense through retained earnings and the corresponding allowance for credit losses of approximately $2.2 million, which was comprised of $2.1 million related to mortgage notes receivable and $0.1 million related to notes receivable (which are presented within other assets in the accompanying consolidated balance sheet). While Topic 326 does not require any particular method for determining the reserves, it does specify that it should be based on relevant information about past events, including historical loss experience, current portfolio and market conditions, as well as reasonable and supportable forecasts for the term of each mortgage note or note receivable. The Company uses a forward-looking commercial real estate forecasting tool to estimate its current expected credit losses (CECL) for each of its loans to determine whether it is impaired. A loan is considered to be impaired when, based on current informationmortgage notes and events, the Company determines that it is probable that it will be unable to collect all amounts due according to the existing contractual terms. An insignificant delay or shortfall in amounts of payments does not necessarily result in the loan being identified as impaired. When a loan is considered to be impaired, the amount of loss, if any, is calculated by comparing the recorded investment to the value determined by discounting the expected future cash flows at the loan’s effective interest rate or to the fair value of the Company’s interest in the underlying collateral, less costs to sell, if the loan is collateral dependent. For impaired loans, interest income is recognizednotes receivable on a cash basis, unless the Company determines based on the loan to estimated fair value ratio the loan should be on the cost recovery method, and any cash payments received would then be reflected as a reduction of principal. Interest income recognition is recommenced if and when the impaired loan becomes contractually current and performance is demonstrated to be resumed. There were no impaired loans at December 31, 2018 and 2017.

loan-by-loan basis.

84

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018

The CECL allowance required by Topic 326 is a valuation account that is deducted from the related mortgage note or note receivable.

Certain of the Company’s mortgage notes and notes receivable include commitments to fund incremental amounts to its borrowers. These future funding commitments are also subject to the CECL model. The allowance related to future funding is recorded as a liability and is included in Accounts payable and accrued liabilities in the accompanying consolidated balance sheet.

As permitted under Topic 326, the Company made an accounting policy election to not measure an allowance for credit losses for accrued interest receivables related to its mortgage notes and notes receivable. Accordingly, if accrued interest receivable is deemed to be uncollectible, the Company will record any necessary write-offs as a reversal of interest income. During the year ended December 31, 2020, the Company wrote off approximately $0.3 million of accrued interest income against interest income related to 1 note receivable. As of December 31, 2020, the Company believes that all outstanding accrued interest is collectible.

In the event the Company has a past due mortgage note or note receivable and the Company determines it is collateral dependent, the Company measures expected credit losses based on the fair value of the collateral. The Company evaluates the collectability of both interest and principal for each of its mortgage notes and notes receivable on a quarterly basis to determine if foreclosure is probable. As of December 31, 2020, the Company does not have any mortgage notes or notes receivable with past due principal balances.

Mortgage and Other Financing Income
Certain of the Company's borrowers are subject to additional interest based on certain thresholds defined in the mortgage agreements (participating interest). Participating interest income is recognized at the time when specific triggering events occur as provided by the mortgage agreement. Mortgage and other financing income included participating interest income of $0.6 million for the year ended December 31, 2019. NaN participating interest income was recognized for the years ended December 31, 2020 and 2018. In addition, for the years ended December 31, 2019 and 2018, mortgage and other financing income included $2.7 million (of which $1.8 million has been classified in discontinued operations) and $74.7 million, respectively, in prepayment fees related to mortgage notes that were paid fully in advance of their maturity date. NaN prepayment fees were recognized for the year ended December 31, 2020.

Income Taxes
The Company qualifies as a REIT under the Internal Revenue Code (the Code). A REIT that distributes at least 90% of its taxable income to its shareholders each year and which meets certain other conditions is not taxed on that portion of its taxable income which is distributed to its shareholders. The Company intends to continue to qualify as a REIT and distribute substantially all of its taxable income to its shareholders.


The Company is subject to income tax in certain instances in both the US and in certain foreign jurisdictions, as more fully described herein. The Company’s income tax expense includes deferred income tax expense or benefit, which represents the change in net deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. The Company evaluates the realizability of its deferred income tax assets and assesses the need for a valuation allowance for each jurisdiction for which it is subject to income tax. The realization of the deferred tax assets depends upon all positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of existing deferred tax assets.

The Company owns certain real estate assets which are subject to income tax in Canada. At December 31, 2018,2020, the net deferred tax assets related to the Company's Canadian operations totaled $10.0$17.0 million andresulting from the temporary differences between income for financial reporting purposes and taxable income relaterelating primarily to depreciation, capital improvements and straight-line rents. Due to the impacts of the COVID-19 pandemic, it is more likely than not the Company will not generate sufficient taxable income to realize the net deferred tax assets related to the Company's Canadian operations as of December 31, 2020 totaling $17.0 million.

85

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018

The Company has certain taxable REIT subsidiaries (TRSs), as permitted under the Code, through which it conducts certain business activities and are subject to federal and state income taxes on their net taxable income. The Company uses two such TRS entities exclusively to hold the operational aspect of the traditional REIT lodging structure for three recreation anchoredExperiential lodging properties that are facilitated by management agreements with eligible independent contractors. The real estate for these investments are held by the REIT either directly or through an investment in a joint venture and leased to the respective operations entity under a triple-net lease. Management has determined the real estate meets the requirements to be classified as qualified lodging facilities as required in a traditional REIT lodging structure.

One of the Company's TRSs holds four unconsolidated joint ventures located in China. The Company records these investments using the equity method; therefore, the income reported by the Company is net of income tax paid to the Chinese taxing authorities. In addition, the Company is liable for withholding taxes to China associated with the current and future dividend payments from the China joint ventures. The Company paid $62 thousand and $44 thousand in withholding taxes during the year ended December 31, 2018 and 2017, respectively, related to earnings repatriated.

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the Tax Reform Act). The legislation significantly changed the U.S. tax law by, among other things, lowering corporate income tax rates and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The Tax Reform Act permanently reduced the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. The Company recognized tax impacts related to deemed repatriated earnings and included these amounts in its consolidated financial statements for the year ended December 31, 2017 and 2018.


At December 31, 2018,2020, the net deferred tax assets related to the Company's TRSs totaled $729 thousand and$7.9 million resulting from the temporary differences between income for financial reporting purposes and taxable income relate primarily to net operating loss carryovers and pre-opening cost amortization. Due to the impacts of the COVID-19 pandemic, it is more likely than not the Company will not generate sufficient taxable income to realize the net deferred tax assets related to the Company's TRSs as of December 31, 2020 totaling $7.9 million.


As of December 31, 20182020 and 2017,2019, respectively, the Canadian operations and the Company's TRSs had deferred tax assets included in other assets in the accompanying consolidated balance sheet totaling approximately $14.1$28.5 million and $16.0$19.3 million and deferred tax liabilities included in accounts payable and accrued liabilities in the accompanying consolidated balance sheet totaling approximately $3.4$3.6 million and $3.9 million. At December 31, 2020, the Company had a valuation allowance offsetting the net deferred tax assets included in the accompanying consolidated balance sheet totaling $24.9 million. The Company’s consolidated deferred tax position is summarized as follows:follows (in thousands):

20202019
Fixed assets$18,077 $14,462 
Net operating losses6,546 1,656 
Start-up costs2,495 2,768 
Other1,392 367 
Total deferred tax assets$28,510 $19,253 
Capital improvements$(2,888)$(2,765)
Straight-line receivable(706)(1,097)
Other(9)(1)
Total deferred tax liabilities$(3,603)$(3,863)
Valuation allowance(24,907)0 
Net deferred tax asset$0 $15,390 
EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 2017 and 2016

 2018 2017
Fixed assets$12,948
 $15,445
Net operating losses359
 357
Start-up costs347
 —
Other457
 213
Total deferred tax assets$14,111
 $16,015
    
Capital improvements$(2,079) $(2,006)
Straight-line receivable(1,271) (1,891)
Other(1) —
Total deferred tax liabilities$(3,351) $(3,897)
    
Net deferred tax asset$10,760
 $12,118


Additionally, during the years ended December 31, 2018, 20172020, 2019 and 2016,2018, the Company recognized current income and withholding tax expense of $1.7$1.5 million, $1.6$1.1 million and $1.7 million, respectively, primarily related to certain state income taxes and foreign withholding tax. The table below details the current and deferred income tax benefit (expense) for the years ended December 31, 2018, 20172020, 2019 and 20162018 (in thousands):
202020192018
Current TRS income tax$7 $376 $(221)
Current state income tax expense(503)(405)(422)
Current foreign income tax3 0 0 
Current foreign withholding tax(1,018)(1,051)(1,069)
Deferred TRS income tax (expense) benefit(4,448)3,719 319 
Deferred foreign withholding tax0 0 0 
Deferred income tax (expense) benefit(10,797)396 (892)
Income tax benefit (expense)$(16,756)$3,035 $(2,285)

86
 2018 2017 2016
Current TRS income tax$(221) $(163) $(36)
Current state income tax expense(422) (360) (414)
Current foreign income tax—
 (36) (77)
Current foreign withholding tax(1,069) (1,071) (1,130)
Deferred TRS income tax319
 137
 273
Deferred foreign withholding tax—
 43
 39
Deferred income tax benefit (expense)(892) (949) 792
Income tax expense$(2,285) $(2,399) $(553)


EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
The Company's effective tax rate for the years ended December 31, 2020, 2019 and 2018 2017was 13.5%, 1.5% and 2016 was 0.8%, 0.9% and 0.2%, respectively. The differences between the income tax expense calculated at the statutory U.S. federal income tax rates and the actual income tax expense recorded for continuing operations is mostly attributable to the dividends paid deduction available for REITs.


Furthermore, the Company qualified as a REIT and distributed the necessary amount of taxable income such that no0 current U.S. federal income taxes were due for the years ended December 31, 2018, 20172020, 2019 and 2016.2018. Accordingly, no0 provision for current U.S. federal income taxes was recorded for any of those years. If the Company fails to qualify as a REIT in any taxable year, without the benefit of certain provisions, it will be subject to federal and state income taxes at regular corporate rates (including any applicable alternative minimum tax for years prior to January 1, 2018)2019) and may not be able to qualify as a REIT for four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company is subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed taxable income. Tax years 20152017 through 20172019 remain generally open to examination for U.S. federal income tax and state tax purposes and from 20132015 through 20172019 for Canadian income tax purposes. 


The Company’s policy is to recognize interest and penalties as general and administrative expense. The Company did not recognize any interest and penalties in 2018, 20172020, 2019 or 2016.2018. The Company did not have any accrued interest and penalties at December 31, 2018, 20172020, 2019 and 2016.2018. Additionally, the Company did not have any unrecorded tax benefits as of December 31, 2018, 20172020, 2019 and 20162018.



EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 2017 and 2016

ConcentrationsImpact of RiskRecently Issued Accounting Standards
On December 21, 2016, American Multi-Cinema, Inc. (AMC) announced that it closed its acquisition of Carmike Cinemas Inc. (Carmike). AMC was the lessee of a substantial portion (34%) of the megaplex theatre rental properties held by the Company at December 31, 2018. For the year ended December 31, 2018 and 2017, approximately $115.8 million or 16.5% and $114.4 million or 19.9% of the Company's total revenues were derived from rental payments by AMC. For the year ended December 31, 2016, approximately $90.0 million or 18.2% of the Company's total revenues were derived from rental payments by AMC and approximately $21.7 million or 4.4% of the Company's total revenues were derived from rental payments by Carmike. These rental payments are from AMC under the leases, or from its parent, AMC Entertainment, Inc. (AMCE), as the guarantor of AMC’s obligations under the leases. AMCE is wholly owned by AMC Entertainment Holdings, Inc. (AMCEH). AMCEH is a publicly held company (NYSE: AMC) and its consolidated financial information is publicly available as www.sec.gov.

Cash Equivalents
Cash equivalents include bank demand deposits.

Restricted Cash
Restricted cash represents cash held for a borrower’s debt service reserve for mortgage notes receivable, deposits required in connection with debt service, and payment of real estate taxes and capital improvements.
Share-Based Compensation
Share-based compensation to employees of the Company is granted pursuantSee Note 2 to the Company's Annual Incentive Program and Long-Term Incentive Plan. Share-based compensation to non-employee Trustees of the Company is granted pursuant to the Company's Trustee compensation program. Prior to May 12, 2016, share-based compensation granted to employees and non-employee Trustees were issued under the 2007 Equity Incentive Plan. The 2016 Equity Incentive Plan was approved by shareholders at the May 11, 2016 annual shareholder meeting and this plan replaced the 2007 Equity Incentive Plan. Accordingly, all share-based compensation granted on or after May 12, 2016 has been issued under the 2016 Equity Incentive Plan.

Share based compensation expense consists of share option expense and amortization of nonvested share grants issued to employees, and amortization of share units issued to non-employee Trustees for payment of their annual retainers. Share based compensation is included in general and administrative expense in the accompanying consolidated statements of income, and totaled $15.1 million, $14.1 million and $11.2 million for the years ended December 31, 2018, 2017 and 2016, respectively. Share-based compensation included in severance expense in the accompanying consolidated statements of income totaled $3.2 million for the year ended December 31, 2018 and related to the termination of the Amended and Restated Employment Agreement for the Company's former Senior Vice President and Chief Investment Officer, as well as another employee. See Note 15 to the consolidated financial statementsConsolidated Financial Statements included in this Annual Report on Form 10-K for further discussion.additional information on the impact of recently issued accounting standards on our business.


Share Options
Share optionsInflation
Investments by EPR are grantedfinanced with a combination of equity and debt. During inflationary periods, which are generally accompanied by rising interest rates, our ability to employees pursuantgrow may be adversely affected because the yield on new investments may increase at a slower rate than new borrowing costs.
A substantial portion of our leases provide for base and participating rent features. In addition, certain of our mortgage notes receivable similarly provide for base and participating interest. To the extent inflation causes tenant or borrower revenues at our properties to increase, we would participate in those revenue increases through our right to receive variable rent and annual percentage rent and/or participating interest over the base amounts, as applicable.
Our leases and mortgage notes receivable also may provide for escalation in base rents or interest in the event of increases in the Consumer Price Index, with generally a limit of 2% per annum, or fixed periodic increases. During deflationary periods, the escalations in base rents or interest that are dependent on increases in the Consumer Price Index in our leases and mortgage notes receivable may be adversely affected.
Our leases are generally triple-net leases requiring the tenants to pay substantially all expenses associated with the operation of the properties, thereby minimizing our exposure to increases in costs and operating expenses resulting from inflation. A portion of our leases are non-triple-net leases. These non-triple net leases represent approximately 18% of our total real estate square footage. To the extent any of those leases contain fixed expense reimbursement provisions or limitations, we may be subject to increases in costs resulting from inflation that are not fully passed through to tenants.
Some of our investments have been structured using more traditional REIT lodging structures or are managed through a third-party manager. In the traditional REIT lodging structure, we hold qualified lodging facilities under the REIT and we separately hold the operations of the facilities in taxable REIT subsidiaries (TRSs) which are facilitated by management agreements with eligible independent contractors. Under this structure and when we manage properties through a third-party manager, we rely on the performance of our properties and the ability of the properties' managers to increase revenues to keep pace with inflation which may be limited by competitive pressures.
Additionally, our general and administrative costs may be subject to increases resulting from inflation.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks, primarily relating to potential losses due to changes in interest rates and foreign currency exchange rates. We seek to mitigate the effects of fluctuations in interest rates by matching the term of new investments with new long-term fixed rate borrowings whenever possible. As of December 31, 2020, we had a $1.0 billion unsecured revolving credit facility with $590.0 million outstanding. Subsequent to December 31, 2020, we paid down $500.0 million on our revolving credit facility. We also had a $400.0 million unsecured term loan facility and a $25.0 million bond that bear interest at a floating rate but have been fixed through interest rate swap agreements.
As of December 31, 2020, we had a 65% investment interest in two unconsolidated real estate joint ventures related to two experiential lodging properties located in St. Petersburg Beach, Florida. At December 31, 2020, the joint venture had a secured mortgage loan with an outstanding balance of $85.0 million. The mortgage loan bears interest at an annual rate equal to the Long-Term Incentive Plan. greater of 6.00% or LIBOR plus 3.75%. The joint venture has an interest rate cap agreement to limit the variable portion of the interest rate (LIBOR) on this note to 3.0% from March 28, 2019 to April 1, 2023. In response to the COVID-19 pandemic, on May 28, 2020, the joint venture was granted a three-month interest deferral, which is required to be paid on the maturity date of the loan and is not considered a troubled debt restructuring.

64

We are subject to risks associated with debt financing, including the risk that existing indebtedness may not be refinanced or that the terms of such refinancing may not be as favorable as the terms of current indebtedness, particularly in light of the current economic uncertainty caused by the COVID-19 pandemic. The majority of our borrowings are subject to contractual agreements or mortgages which limit the amount of indebtedness we may incur. Accordingly, if we are unable to raise additional equity or borrow money due to these limitations, our ability to make additional real estate investments may be limited.
The following table presents the principal amounts, weighted average interest rates, and other terms required by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes as of December 31 (including the impact of the interest rate swap agreements described below):
Expected Maturities (dollars in millions)
20212022202320242025ThereafterTotalEstimated
Fair Value
December 31, 2020:
Fixed rate debt$— $— $675.0 $148.0 $300.0 $2,017.0 $3,140.0 $3,114.8 
Average interest rate— %— %4.76 %5.60 %4.50 %4.55 %4.67 %4.64 %
Variable rate debt$— $590.0 $— $— $— $— $590.0 $590.0 
Average interest rate (as of December 31, 2020)— %2.13 %— %— %— %— %2.13 %2.13 %
20202021202220232024ThereafterTotalEstimated
Fair Value
December 31, 2019:
Fixed rate debt$— $— $— $675.0 $148.0 $2,317.0 $3,140.0 $3,295.5 
Average interest rate— %— %— %4.02 %4.35 %4.44 %4.34 %3.45 %
Variable rate debt$— $— $— $— $— $— $— $— 
Average interest rate (as of December 31, 2019)— %— %— %— %— %— %— %— %

The fair value of share options grantedour debt as of December 31, 2020 and 2019 is estimated by discounting the future cash flows of each instrument using current market rates including current market spreads.
We are exposed to foreign currency risk against our functional currency, the U.S. dollar, on our four Canadian properties and the rents received from tenants of the properties are payable in CAD. In order to hedge our net investment in our four Canadian properties, we entered into two fixed-to-fixed cross-currency swaps, with a fixed notional value of $200.0 million CAD. These investments became effective on July 1, 2018, mature on July 1, 2023 and are designated as net investment hedges of our Canadian net investments. The net effect of this hedge is to lock in an exchange rate of $1.32 CAD per U.S. dollar on $200.0 million CAD of our foreign net investments. The cross-currency swaps also have a monthly settlement feature locked in at an exchange rate of $1.32 CAD per USD on $4.5 million of CAD annual cash flows, the datenet effect of grant usingwhich is an excluded component from the Black-Scholes option pricing model. Share options grantedeffectiveness testing of this hedge.
During the year ended December 31, 2020, we entered into three USD-CAD cross-currency swaps that were effective July 1, 2020 with a total fixed original notional value of $100.0 million CAD and $76.6 million USD. The net effect of these swaps is to employees vestlock in an exchange rate of $1.31 CAD per USD on approximately $7.2 million annual CAD denominated cash flows through June 2022.
For foreign currency derivatives designated as net investment hedges, the change in the fair value of the derivatives are reported in accumulated other comprehensive income (AOCI) as part of the cumulative translation adjustment. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated.
See Note 9 to the Consolidated Financial Statements in this Annual Report on Form 10-K for additional information on our derivative financial instruments and hedging activities.

65


Item 8.Financial Statements and Supplementary Data
EPR Properties

Contents
Report of Independent Registered Public Accounting Firm
Audited Financial Statements
Consolidated Balance Sheets
Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Financial Statement Schedules
Schedule II – Valuation and Qualifying Accounts
Schedule III - Real Estate and Accumulated Depreciation
66

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders
EPR Properties:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of EPR Properties and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of (loss) income and comprehensive (loss) income, changes in equity, and cash flows for each of the years in the three‑year period ended December 31, 2020, and the related notes and financial statement schedules II and III (collectively, the consolidated financial statements). We also have audited the Company’s internal control over afinancial reporting as of December 31, 2020, based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of four years and share option expenseDecember 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Adoption of New Accounting Pronouncements
As discussed in Note 2 to the consolidated financial statements, the Company has changed its method for accounting for expected credit losses as of January 1, 2020 due to the adoption of Accounting Standards Update (ASU) No. 2016‑13, Measurement of Credit Losses on Financial Instruments (Topic 326).

As discussed in Note 15 to the consolidated financial statements, the Company has changed its method for accounting for its leases as of January 1, 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases.

Basis for Opinions
The Company’s management is responsible for these options is recognized on a straight-line basisconsolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the vesting period. Expense recognized related to share options andeffectiveness of internal control over financial reporting, included in general and administrative expense in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of incomethe Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was $0.3maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
67


Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of indicators real estate investments may not be recoverable
As discussed in Notes 2 and 3 to the consolidated financial statements, the real estate investments, net balance as of December 31, 2020 was $4.9 billion. The Company reviews a real estate investment for impairment whenever events or changes in circumstances indicate that the carrying value of the real estate investment may not be recoverable.

We identified the evaluation of indicators real estate investments may not be recoverable as a critical audit matter. There is a high degree of subjective judgement in evaluating the events or changes in circumstances that may indicate the carrying value of real estate investments may not be recoverable. In particular, the judgments regarding the expected period the Company will hold the real estate investments and the impact of changes in market and tenant conditions on the determination of the recoverability of the real estate investments required a higher degree of auditor judgment.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the critical audit matter. This included controls related to the Company’s process to identify and evaluate events or changes in circumstances that may indicate the carrying amount of real estate investments may not be recoverable, including controls related to determining the period the Company will hold the real estate investments. We inquired of Company officials and inspected documents such as meeting minutes of the Board of Trustees to evaluate the likelihood that a real estate investment would be sold prior to the estimated holding period. We also performed independent evaluations, including examining current tenant information including status of accounts receivable and committee minutes related to lease negotiations for indications that the carrying value of the real estate investments may not be recoverable.

68

Impairment of real estate investments and right‑of‑use assets
As discussed in Notes 2, 3, 4 and 15 to the consolidated financial statements, the real estate investments, net balance and operating lease right‑of‑use assets balance as of December 31, 2020 was $4.9 billion and $163.8 million, $0.7respectively. The Company reviews a property for impairment whenever events or changes in circumstances indicate that the carrying value of the property may not be recoverable. The Company recognized impairment charges of $70.7 million on real estate investments and $0.9$15.0 million on the operating lease right‑of‑use assets, which are the amounts that the carrying value of the assets exceeded the estimated fair value.

We identified the assessment of the fair values of real estate investments and operating lease right‑of‑use assets based on recent independent appraisals used to determine the impairment charges as a critical audit matter. There is a high degree of subjective auditor judgment in evaluating the relevance of comparable land sales, market rents, capitalization rates, and discount rates used to determine the fair value of these assets.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the critical audit matter. This included controls related to the determination of comparable land sales, market rents, capitalization rates and discount rates. We involved valuation professionals with specialized skills and knowledge, who assisted in:

•Comparing the Company’s estimated fair value of land to a range of independently developed estimates based on publicly available and comparable land sales.

•Comparing the Company’s estimated assumptions of market rents, capitalization rates, and discount rates to a range of independently developed estimates based on publicly available industry data.

Collectability of lease receivables
As discussed in Notes 2 and 5 to the consolidated financial statements, the Company assesses the probability of collecting lease receivables on a lease‑by‑lease basis. The evaluation primarily consists of reviewing past due account balances and considering such factors as the credit quality of the Company’s tenants, historical trends of the tenants, current economic conditions, and changes in customer payment terms. Whenever the results of that assessment, events, or changes in circumstances indicate that it is no longer probable that the Company will be able to collect substantially all lease receivables or future lease payments, the Company records a charge to rental revenue for the yearsoutstanding receivable balance and suspends revenue recognition. The Company recorded charges to rental revenue of $65.1 million during the year ended December 31, 2018, 20172020.

We identified the evaluation of the probability of collection of substantially all lease receivables as a critical audit matter. The assessment required subjective auditor judgment to evaluate the financial strength of tenants and 2016, respectively.the expected operating performance of the leased property.


The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s determination of lease receivable collectability. This included controls related to the evaluation of the financial strength of tenants, and the expected operating performance of the leased property. To assess the financial strength of tenants and the expected operating performance of the leased property, for certain tenants we evaluated (1) the aging of outstanding accounts receivable, (2) recent payment history, (3) certain publicly available information about the tenants, and (4) property financial information regarding the tenant.


/s/ KPMG LLP

We have served as the Company’s auditor since 2002.
Kansas City, Missouri
February 25, 2021

69


EPR PROPERTIES
Consolidated Balance Sheets
(Dollars in thousands except share data)
 December 31,
 20202019
Assets
Real estate investments, net of accumulated depreciation of $1,062,087 and $989,254 at December 31, 2020 and 2019, respectively$4,851,302 $5,197,308 
Land held for development23,225 28,080 
Property under development57,630 36,756 
Operating lease right-of-use assets163,766 211,187 
Mortgage notes and related accrued interest receivable365,628 357,391 
Investment in joint ventures28,208 34,317 
Cash and cash equivalents1,025,577 528,763 
Restricted cash2,433 2,677 
Accounts receivable116,193 86,858 
Other assets70,223 94,174 
Total assets$6,704,185 $6,577,511 
Liabilities and Equity
Liabilities:
Accounts payable and accrued liabilities$105,379 $122,939 
Operating lease liabilities202,223 235,650 
Common dividends payable36 29,424 
Preferred dividends payable6,034 6,034 
Unearned rents and interest65,485 74,829 
Debt3,694,443 3,102,830 
Total liabilities4,073,600 3,571,706 
Equity:
Common Shares, $0.01 par value; 100,000,000 shares authorized; and 81,917,876 and 81,588,489 shares issued at December 31, 2020 and 2019, respectively819 816 
Preferred Shares, $0.01 par value; 25,000,000 shares authorized:
5,394,050 Series C convertible shares issued at December 31, 2020 and 2019; liquidation preference of $134,851,25054 54 
3,447,381 Series E convertible shares issued at December 31, 2020 and 2019; liquidation preference of $86,184,52534 34 
6,000,000 Series G shares issued at December 31, 2020 and 2019; liquidation preference of $150,000,00060 60 
Additional paid-in-capital3,857,632 3,834,858 
Treasury shares at cost: 7,315,087 and 3,125,569 common shares at December 31, 2020 and 2019, respectively(261,238)(147,435)
Accumulated other comprehensive income216 7,275 
Distributions in excess of net income(966,992)(689,857)
Total equity$2,630,585 $3,005,805 
Total liabilities and equity$6,704,185 $6,577,511 
See accompanying notes to consolidated financial statements.
70


EPR PROPERTIES
Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income
(Dollars in thousands except per share data)
 Year Ended December 31,
 202020192018
Rental revenue$372,176 $593,022 $509,086 
Other income9,139 25,920 2,076 
Mortgage and other financing income33,346 33,027 128,759 
Total revenue414,661 651,969 639,921 
Property operating expense58,587 60,739 29,654 
Other expense16,474 29,667 443 
General and administrative expense42,596 46,371 48,889 
Severance expense2,868 2,364 5,938 
Litigation settlement expense0 0 2,090 
Costs associated with loan refinancing or payoff1,632 38,269 31,958 
Interest expense, net157,675 142,002 135,870 
Transaction costs5,436 23,789 3,698 
Credit loss expense30,695 0 0 
Impairment charges85,657 2,206 27,283 
Depreciation and amortization170,333 158,834 138,395 
(Loss) income before equity in loss from joint ventures, other items and discontinued operations(157,292)147,728 215,703 
Equity in loss from joint ventures(4,552)(381)(22)
Impairment charges on joint ventures(3,247)0 0 
Gain on sale of real estate50,119 4,174 3,037 
Gain on sale of investment in a direct financing lease0 0 5,514 
(Loss) income before income taxes(114,972)151,521 224,232 
Income tax (expense) benefit(16,756)3,035 (2,285)
(Loss) income from continuing operations$(131,728)$154,556 $221,947 
Discontinued operations:
Income from discontinued operations before other items0 37,241 45,036 
Impairment on public charter school portfolio sale0 (21,433)0 
Gain on sale of real estate from discontinued operations0 31,879 0 
Income from discontinued operations0 47,687 45,036 
Net (loss) income(131,728)202,243 266,983 
Preferred dividend requirements(24,136)(24,136)(24,142)
Net (loss) income available to common shareholders of EPR Properties$(155,864)$178,107 $242,841 
Net (loss) income available to common shareholders of EPR Properties per share:
Continuing operations$(2.05)$1.70 $2.66 
Discontinued operations0 0.62 0.61 
Basic$(2.05)$2.32 $3.27 
Continuing operations$(2.05)$1.70 $2.66 
Discontinued operations0 0.62 0.61 
Diluted$(2.05)$2.32 $3.27 
Shares used for computation (in thousands):
Basic75,994 76,746 74,292 
Diluted75,994 76,782 74,337 
Other comprehensive (loss) income:
Net (loss) income$(131,728)$202,243 $266,983 
Foreign currency translation adjustment3,494 9,253 (16,177)
Change in unrealized (loss) gain on derivatives(10,553)(14,063)15,779 
Comprehensive (loss) income attributable to EPR Properties$(138,787)$197,433 $266,585 
See accompanying notes to consolidated financial statements.
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EPR PROPERTIES
Consolidated Statements of Changes in Equity
Years Ended December 31, 2020, 2019 and 2018
(Dollars in thousands)
 EPR Properties Shareholders’ Equity 
 Common StockPreferred StockAdditional
paid-in capital		Treasury
shares		Accumulated
other
comprehensive
income (loss)		Distributions
in excess of
net income (loss)		Total
 SharesParSharesPar
Balance at December 31, 201776,858,632 $769 14,848,165 $148 $3,478,986 $(121,591)$12,483 $(443,470)$2,927,325 
Restricted share units issued to Trustees23,571 — — — — — — — 0 
Issuance of nonvested shares, net of cancellations295,202 3 — — 4,588 (617)— — 3,974 
Purchase of common shares for vesting— — — — — (7,156)— — (7,156)
Share-based compensation expense— — — — 15,111 — — — 15,111 
Share-based compensation included in severance expense— — — — 3,218 — — — 3,218 
Foreign currency translation adjustment— — — — — — (16,177)— (16,177)
Change in unrealized gain on derivatives— — — — — — 15,779 — 15,779 
Net income— — — — — — — 266,983 266,983 
Issuances of common shares20,553 0 — — 1,286 — — — 1,286 
Conversion of Series E Convertible Preferred shares to common shares800 — (1,734)0 — — — — 0 
Conversion of Series C Convertible Preferred shares to common shares1,964 — (5,000)0 — — — — 0 
Stock option exercises, net25,721 0 — — 1,305 (1,364)— — (59)
Dividends to common shareholders ($4.32 per share)— — — — — — — (321,119)(321,119)
Dividends to Series C preferred shareholders ($1.4375 per share)— — — — — — — (7,760)(7,760)
Dividends to Series E preferred shareholders ($2.25 per share)— — — — — — — (7,757)(7,757)
Dividends to Series G preferred shareholders ($1.4375 per share)— — — — — — — (8,625)(8,625)
Balance at December 31, 201877,226,443 $772 14,841,431 $148 $3,504,494 $(130,728)$12,085 $(521,748)$2,865,023 
Restricted share units issued to Trustees27,392 — — — — — — — 0 
Issuance of nonvested shares, net of cancellations208,755 2 — — 4,926 (498)— — 4,430 
Purchase of common shares for vesting— — — — — (9,691)— — (9,691)
Share-based compensation expense— — — — 13,180 — — — 13,180 
Share-based compensation included in severance expense— — — — 580 — — — 580 
Foreign currency translation adjustment— — — — — — 9,253 — 9,253 
Change in unrealized loss on derivatives— — — — — — (14,063)— (14,063)
Net income— — — — — — — 202,243 202,243 
Issuances of common shares4,007,113 41 — — 305,893 — — — 305,934 
Stock option exercises, net118,786 1 — — 5,785 (6,518)— — (732)
Dividends to common shareholders ($4.50 per share)— — — — — — — (346,216)(346,216)
Dividends to Series C preferred shareholders ($1.4375 per share)— — — — — — — (7,756)(7,756)
Dividends to Series E preferred shareholders ($2.25 per share)— — — — — — — (7,756)(7,756)
Dividends to Series G preferred shareholders ($1.4375 per share)— — — — — — — (8,624)(8,624)
Balance at December 31, 201981,588,489 $816 14,841,431 $148 $3,834,858 $(147,435)$7,275 $(689,857)$3,005,805 
Continued on next page.
72

EPR PROPERTIES
Consolidated Statements of Changes in Equity
Years Ended December 31, 2020, 2019 and 2018
(Dollars in thousands) (continued)
 EPR Properties Shareholders’ Equity 
 Common StockPreferred StockAdditional
paid-in capital		Treasury
shares		Accumulated
other
comprehensive
income (loss)		Distributions
in excess of
net income (loss)		Total
 SharesParSharesPar
Continued from previous page.
Balance at December 31, 201981,588,489 $816 14,841,431 $148 $3,834,858 $(147,435)$7,275 $(689,857)$3,005,805 
Credit loss expense for implementation of Current Expected Credit Loss standard— — — — — — — (2,163)(2,163)
Restricted share units issued to Trustees74,767 1 — — — — — — 1 
Issuance of nonvested shares and performance shares, net of cancellations217,034 2 — — 6,505 (359)— — 6,148 
Purchase of common shares for vesting— — — — — (7,387)— — (7,387)
Share-based compensation expense— — — — 13,819 — — — 13,819 
Share-based compensation included in severance expense— — — — 1,258 — — — 1,258 
Foreign currency translation adjustment— — — — — — 3,494 — 3,494 
Change in unrealized loss on derivatives— — — — — — (10,553)— (10,553)
Net loss— — — — — — — (131,728)(131,728)
Issuances of common shares36,176 0 — — 1,129 — — — 1,129 
Repurchase of common shares— — — — — (105,994)— — (105,994)
Stock option exercises, net1,410 0 — — 63 (63)— — 0 
Dividend equivalents accrued on performance shares— — — — — — — (50)(50)
Dividends to common shareholders ($1.515 per share)— — — — — — — (119,058)(119,058)
Dividends to Series C preferred shareholders ($1.4375 per share)— — — — — — — (7,756)(7,756)
Dividends to Series E preferred shareholders ($2.25 per share)— — — — — — — (7,756)(7,756)
Dividends to Series G preferred shareholders ($1.4375 per share)— — — — — — — (8,624)(8,624)
Balance at December 31, 202081,917,876 $819 14,841,431 $148 $3,857,632 $(261,238)$216 $(966,992)$2,630,585 

See accompanying notes to consolidated financial statements.
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EPR PROPERTIES
Consolidated Statements of Cash Flows
(Dollars in thousands)

 Year Ended December 31,
 202020192018
Operating activities:
Net (loss) income$(131,728)$202,243 $266,983 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Impairment charges85,657 23,639 27,283 
Impairment charges on joint ventures3,247 0 0 
Gain on sale of real estate(50,119)(36,053)(3,037)
Gain on insurance recovery(809)0 0 
Deferred income tax expense (benefit), net15,246 (4,115)573 
Credit loss expense30,695 0 0 
Gain on sale of investment in a direct financing lease0 0 (5,514)
Costs associated with loan refinancing or payoff1,632 38,450 31,958 
Equity in loss from joint ventures4,552 381 22 
Distributions from joint ventures0 112 567 
Depreciation and amortization170,333 171,763 153,430 
Amortization of deferred financing costs6,606 6,192 5,797 
Amortization of above/below market leases and tenant allowances, net(480)(343)(581)
Share-based compensation expense to management and Trustees13,819 13,180 15,111 
Share-based compensation expense included in severance expense1,258 580 3,218 
Change in assets and liabilities:
Operating lease assets and liabilities344 1,194 0 
Mortgage notes accrued interest receivable(7,576)(381)(517)
Accounts receivable(47,383)(1,385)(22,300)
Direct financing lease receivable0 (186)(563)
Other assets(2,698)(1,301)(1,055)
Accounts payable and accrued liabilities(16,128)27,540 4,979 
Unearned rents and interest(11,195)(1,980)7,974 
Net cash provided by operating activities65,273 439,530 484,328 
Investing activities:
Acquisition of and investments in real estate and other assets(38,714)(500,629)(187,460)
Proceeds from sale of real estate227,742 216,020 22,134 
Proceeds from sale of public charter school portfolio0 449,555 0 
Investment in unconsolidated joint ventures(1,690)(325)(29,473)
Proceeds from settlement of derivative0 0 30,796 
Investment in mortgage notes receivable(8,141)(142,456)(36,105)
Proceeds from mortgage note receivable paydown481 217,459 335,168 
Investment in promissory notes receivable(6,134)(12,271)(7,863)
Proceeds from promissory note receivable paydown103 3,738 7,500 
Proceeds from insurance recovery809 0 0 
Proceeds from sale of investment in direct financing leases, net0 0 43,447 
Additions to properties under development(40,470)(134,586)(274,956)
Net cash provided (used) by investing activities133,986 96,505 (96,812)
Financing activities:
Proceeds from long-term debt facilities and senior unsecured notes750,000 962,000 908,000 
Principal payments on debt(160,000)(866,735)(949,684)
Deferred financing fees paid(6,330)(9,386)(8,642)
Costs associated with loan refinancing or payoff (cash portion)(1,632)(36,918)(28,650)
Net proceeds from issuance of common shares972 305,556 956 
Impact of stock option exercises, net0 (732)(62)
Purchase of common shares for treasury for vesting(7,387)(9,691)(7,156)
Purchase of common shares under share repurchase program(105,994)0 0 
Dividends paid to shareholders(172,460)(367,317)(342,315)
Net cash provided (used) by financing activities297,169 (23,223)(427,553)
Effect of exchange rate changes on cash142 121 (442)
Net change in cash and cash equivalents and restricted cash496,570 512,933 (40,479)
Cash and cash equivalents and restricted cash at beginning of the year531,440 18,507 58,986 
Cash and cash equivalents and restricted cash at end of the year$1,028,010 $531,440 $18,507 
Supplemental information continued on next page.
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EPR PROPERTIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
Continued from previous page.
 Year Ended December 31,
 202020192018
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents at beginning of the year$528,763 $5,872 $41,917 
Restricted cash at beginning of the year2,677 12,635 17,069 
Cash and cash equivalents and restricted cash at beginning of the year$531,440 $18,507 $58,986 
Cash and cash equivalents at end of the year$1,025,577 $528,763 $5,872 
Restricted cash at end of the year2,433 2,677 12,635 
Cash and cash equivalents and restricted cash at end of the year$1,028,010 $531,440 $18,507 
Supplemental schedule of non-cash activity:
Transfer of property under development to real estate investments$20,657 $354,568 $228,572 
Issuance of nonvested shares and restricted share units at fair value, including nonvested shares issued for payment of bonuses$20,062 $17,590 $18,252 
Credit loss expense related to adoption of ASC Topic 326$2,163 $0 $0 
Conversion or reclassification of mortgage notes receivable to real estate investments$0 $0 $155,185 
Mortgage note received for sale of real estate investments$0 $27,423 $0 
Amounts related to adoption of ASC Topic 842:
Operating lease right-of-use assets$0 $229,620 $0 
Operating lease liabilities$0 $253,486 $0 
Sub-lessor straight-line receivable$0 $24,454 $0 
Acquisition of real estate in exchange for assumption of debt at fair value$0 $14,000 $0 
Assumption of debt$0 $18,585 $0 
Supplemental disclosure of cash flow information:
Cash paid during the year for interest$152,393 $143,530 $145,559 
Cash paid during the year for income taxes$1,507 $1,842 $1,363 
Interest cost capitalized$1,233 $5,326 $9,903 
Change in accrued capital expenditures$(12,376)$(35,155)$32,993 
See accompanying notes to consolidated financial statements.
75

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018


Nonvested Shares Issued to Employees
1. Organization

Description of Business
EPR Properties (the Company) was formed on August 22, 1997 as a Maryland real estate investment trust (REIT), and an initial public offering of the Company's common shares of beneficial interest (common shares) was completed on November 18, 1997. Since that time, the Company has been a leading Experiential net lease REIT specializing in select enduring experiential properties. The Company's underwriting is centered on key industry and property cash flow criteria, as well as the credit metrics of the Company's tenants and customers. The Company’s properties are located in the United States and Canada.

2. Summary of Significant Accounting Policies

Principles of Consolidation
The consolidated financial statements include the accounts of EPR Properties and its subsidiaries, all of which are wholly owned.

Risks and Uncertainties
On March 11, 2020, the World Health Organization declared a novel strain of coronavirus (COVID-19) a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. The Company grants nonvested sharesis subject to employees pursuantrisks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the Company’s business is highly uncertain and difficult to bothpredict, as information is rapidly evolving. The outbreak of COVID-19 has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. The global impact of the Annual Incentive Programoutbreak has been rapidly evolving and many jurisdictions within the United States and abroad reacted by instituting quarantines, mandating business and school closures and restricting travel. As a result, the COVID-19 pandemic has severely impacted experiential real estate properties, given that such properties involve congregate social activity and discretionary consumer spending. Substantially all the Company's non-theatre locations and many of the Company's theatre locations have re-opened as of December 31, 2020. However, certain theatre locations remain closed due to local restrictions or operator decision to close as a result of the impact of the COVID-19 pandemic, specifically the decision by many movie studios to delay the release of blockbuster movies in hopes that larger audiences will be available as additional markets open. The severity of the impact of the COVID-19 pandemic on the Company’s business will depend on a number of factors, including, but not limited to, the scope, severity and duration of the pandemic, the actions taken to contain the outbreak or mitigate its impact, the development and distribution of vaccines and the Long-Term Incentive Plan. efficacy of those vaccines, the public’s confidence in the health and safety measures implemented by the Company's tenants and borrowers, and the direct and indirect economic effects of the outbreak and containment measures, all of which are uncertain and cannot be predicted. During 2020, the COVID-19 pandemic negatively affected the Company's business, and could continue to have material, adverse effects on the Company's financial condition, results of operations and cash flows.

The Company’s consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods presented. The Company considered the impact of the COVID-19 pandemic on the assumptions and estimates used in determining the Company’s financial condition and results of operations for the year ended December 31, 2020. The following were adverse impacts to its financial statements and business during the year ended December 31, 2020:

•The Company amortizes the expense relatedwrote-off receivables from tenants and straight-line rent receivables totaling $65.1 million directly to the nonvested shares awarded to employees under the Long-Term Incentive Plan and the premium awarded under the nonvested share alternative of the Annual Incentive Program on a straight-line basis over the future vesting period (three to four years). Expense recognized related to nonvested shares and included in general and administrative expenserental revenue in the accompanying consolidated statements of (loss) income was $13.5 million, $12.2 million and $9.2 million forcomprehensive (loss) income upon determination that the years ended December 31, 2018, 2017 and 2016, respectively. Expensecollectibility of these receivables or future lease payments from these tenants were no longer probable. Additionally, the Company determined that future rental revenue related to nonvested sharesthese tenants, including American-Multi Cinema, Inc. (AMC) and included in severance expense in the accompanying consolidated statementsRegal Cinemas (Regal), a subsidiary of income was $3.2 million for the year ended December 31, 2018 and related to the termination of the Amended and Restated Employment Agreement for the Company's former Senior Vice President and Chief Investment Officer, as well as another employee.

Restricted Share Units Issued to Non-Employee Trustees
The Company issues restricted share units to non-employee Trustees for payment of their annual retainers under the Company's Trustee compensation program. The fair value of the share units granted was based on the share price at the date of grant. The share units vest upon the earlier of the day preceding the next annual meeting of shareholders or a change of control. The settlement date for the shares is selected by the non-employee Trustee, and ranges from one year from the grant date to upon termination of service. This expense is amortized by the CompanyCineworld Group, will be recognized on a straight-line basis over the year of service by the non-employee Trustees. Total expense recognized related to shares issued to non-employee Trustees was $1.3 million, $1.3 million and $1.1 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Foreign Currency Translation
cash basis. The Company accounts for the operations of its Canadian properties in Canadian dollars. The assets and liabilities related to the Company’s Canadian properties and mortgage note are translated into U.S. dollars using the spot rates at the respective balance sheet dates; revenues and expenses are translated at average exchange rates. Resulting translation adjustments are recorded as a separate component of comprehensive income.

Derivative Instruments
In August 2017, the FASB issued ASU No. 2017-012, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The update amended existing guidance in order to better align a company's financial reporting for hedging activities with the economic objectives of those activities. It requires the Company to disclose the effect of its hedging activities on its consolidated statements of income and eliminated the periodic measurement and recognition of hedging ineffectiveness. The standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years, with early application of the guidance permitted. The Company elected to early adopt ASU No. 2017-012as of October 1, 2017. Early adoption had no impact on the Company's financial position or results of operations.

The Company has entered into certain derivative instruments to reduce exposure to fluctuations in foreign currency exchange rates and variable interest rates. The Company has established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. These derivatives consist of foreign currency forward contracts, cross currency swaps and interest rate swaps.

The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. For its net investment hedges,straight line rent receivable

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EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018

represented $38.0 million of this write-off and was comprised of $26.5 million of straight-line rent receivable and $11.5 million of sub-lessor ground lease straight-line rent receivable.
•The Company reduced rental revenue by$13.6 million due to rent abatements.
•The Company deferred approximately $76.0 million of amounts due from tenants and $3.4 million due from borrowers that were booked as receivables. Additionally, the Company has amounts due from tenants that were not booked as receivables as the full amounts were not deemed probable of collection as a result of the COVID-19 pandemic. The amounts not booked as receivables remain obligations of the tenants and will be recognized as revenue when received. The repayment terms for all of these deferments vary by tenant or borrower.
•The Company recognized $85.7 million in impairment charges during the year ended December 31, 2020, which was comprised of $70.7 million of impairments of real estate investments, and $15.0 million of impairments of operating lease right-of-use assets. The Company also recognized impairment charges on joint ventures of $3.2 million related to its equity investments in 3 theatre projects located in China.
•The Company increased its expected credit losses by $30.7 million from its implementation estimate of $2.2 million. This increase was primarily due to credit loss expense related to fully reserving the outstanding principal balance of $12.6 million and unfunded commitment to fund $12.9 million, totaling $25.5 million, related to notes receivable from 1 borrower, as a result of recent changes in the borrower's financial status due to the impact of the COVID-19 pandemic. The remaining increase was due to economic uncertainty and the rapidly changing environment surrounding the pandemic.
•The Company recognized a full valuation allowance of $18.0 million during the third quarter 2020 on the Company's net deferred tax assets related to the Company's taxable REIT subsidiary (TRS) and Canadian tax paying entity as a result of the uncertainty of realization caused by the impact of the COVID-19 pandemic. At December 31, 2020, the Company had a valuation allowance totaling $24.9 million on its net deferred tax assets.
•On March 20, 2020, the Company borrowed $750.0 million under its unsecured revolving credit facility as a precautionary measure to increase the Company's cash position and preserve financial flexibility given the global uncertainty caused by the COVID-19 pandemic. On December 30, 2020, the Company paid down its revolving credit facility by $160.0 million, following the sale of 6 private schools and 4 early childhood education centers. Subsequent to year-end, the Company paid down an additional $500.0 million on its revolving credit facility.
•The Company amended the agreement which governs its unsecured revolving credit facility and its unsecured term loan facility (Consolidated Credit Agreement) and the agreement which governs its private placement notes (Note Purchase Agreement). The amendments modified certain provisions and waived the Company's obligation to comply with certain covenants under these debt agreements during the Covenant Relief Period in light of the uncertainty related to impacts of the COVID-19 pandemic on the Company and its tenants and borrowers. The Company pays higher interest costs during the Covenant Relief Period. The amendments to the Consolidated Credit Agreement and Note Purchase Agreement also impose additional restrictions on the Company during the Covenant Relief Period, including limitations on making investments, incurring indebtedness, making capital expenditures, paying dividends or making other distributions, repurchasing the Company's shares, voluntarily prepaying certain indebtedness, encumbering certain assets and maintaining a minimum liquidity amount, in each case subject to certain exceptions. See Note 8 for additional details. The term "Covenant Relief Period," as used in these notes to consolidated financial statements, generally means the period of time beginning on June 29, 2020 and ending on (i) December 31, 2021, in the case of the Company's Consolidated Credit Agreement, or (ii) October 1, 2021 (subject to extension to January 1, 2022 at the Company's election, subject to certain conditions), in the case of the Company's Note Purchase Agreement governing its private placement notes. The Company has the right under certain circumstances to terminate the Covenant Relief Period earlier.
•In connection with the loan amendments discussed above, certain of the Company's key subsidiaries guaranteed the Company's obligations based on the Company's unsecured debt ratings. If the Company's unsecured debt rating is further downgraded by Moody's, it will be required to pledge the equity interest in certain subsidiary guarantors to secure its obligations under its unsecured credit facilities and private placement notes. See Note 8 for additional details.

77

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
On June 29, 2020, the effective date of the loan amendments discussed above, the Company suspended its share repurchase plan. Prior to the effective date, during the year ended December 31, 2020, the Company repurchased 4,066,716 common shares under the share repurchase program for approximately $106.0 million. The repurchases were made under a Rule 10b5-1 trading plan.

The monthly cash dividends to common shareholders were suspended following the common share dividend paid on May 15, 2020 to shareholders of record as of April 30, 2020. The suspension of the monthly cash dividend to common shareholders will continue through the Covenant Relief Period, except as may be necessary to maintain REIT status and to not owe income tax.

On July 31, 2020, the Company entered into a Forbearance Agreement (the Forbearance Agreement), a Master Lease Agreement (the Master Lease) and seven amended lease agreements (the Transitional Leases and collectively with the Master Lease, the Leases) with AMC, its affiliate tenants of the Company (AMC and such affiliates, collectively, AMC Tenant), and AMC Entertainment Holdings, Inc. (Guarantor), relating to all 53 properties leased to AMC Tenant (the Leased Properties) on the date the agreement was executed. These agreements restructured the then-existing lease terms for the Leased Properties in light of the continuing impact of the COVID-19 pandemic on AMC Tenant's operations. Effective July 1, 2020, the Leased Properties are leased to AMC Tenant pursuant to the following leases:

•Master Lease relating to 46 Leased Properties (the Master Lease Properties); and
•NaN Transitional Leases relating to 7 Leased Properties (the Transitional Properties). These leases were subsequently terminated by the Company during 2020.

In addition, AMC Tenant and the Company entered into the following related agreements:

•Security Agreement granting to the Company a security interest subordinated to AMC's secured credit agreements and indentures in all of AMC Tenant’s property located at the Leased Properties to secure AMC Tenant’s obligations to the Company under the Forbearance Agreement and the Leases;
•Guaranty providing a guaranty by Guarantor of AMC Tenant’s obligations to the Company under the Forbearance Agreement and the Leases; and
•Capital Improvements Agreement providing a financial mechanism for the Company to provide AMC Tenant with up to $35 million of funds to complete improvements to the Master Lease Properties in exchange for increased annual fixed rent.

The prior leases for the 46 Master Lease Properties were replaced with a single Master Lease. The Company agreed to reduce total annual fixed rent on the 46 Master Lease Properties by approximately $19.4 million to approximately $87.8 million (including approximately $6.8 million of ground rent and the repayment of deferral amounts for the months of April, May and June 2020 which the Company had agreed to defer and amortize as part of fixed rent over the first 14 years of the Master Lease term).

The Master Lease Properties have been divided into four tranches, with the initial term of each tranche expiring on a different date: June 30, 2034, June 30, 2035, June 30, 2036 and June 30, 2037. The AMC Tenant may exercise up to 3 5-year extensions for each tranche. If AMC Tenant elects not to exercise an extension option with respect to a tranche, fixed rent will be reduced by the fair market rental value of Master Lease Properties included in such tranche at that time, determined in accordance with the Master Lease. Upon the expiration of the initial term of each tranche or expiration of any extension option of each tranche and the election by AMC Tenant to further extend the term of such tranche, AMC Tenant may elect to remove up to 2 Master Lease Properties included in the tranche, which will result in a reduction in the annual fixed rent equal to the fair market rental value of such removed Master Lease Properties at that time, determined in accordance with the Master Lease. AMC Tenant may not remove more than 10 Master Lease Properties in total and not more than 3 Master Lease Properties per tranche during the entirety of the Master Lease term.

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EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
Pursuant to the Leases and the Forbearance Agreement, commencing on July 1, 2020 and continuing through December 31, 2020, in lieu of monthly fixed rent AMC Tenant agreed to pay percentage rent of 15% of total gross receipts during such month, not to exceed the deferred monthly fixed rent for the Leased Properties. The difference between the scheduled monthly fixed rent and the percentage rent actually paid to the Company for the Master Lease became additional deferred rent that, beginning in February 2021, will be added to fixed cash rent and amortized over the remaining portion of the first 14 years of the term of the Master Lease and beginning January 2021 will be rent due related to the Transitional Leases amortized over the prior lease terms. Accordingly, the new annual contractual rent under the Master Lease will increase from $87.8 million to $90.7 million by February 2021 (including approximately $4.9 million of ground rent).

The Leases are triple-net leases requiring AMC Tenant to be responsible at all times for taxes, assessments, maintenance and operating costs, common area charges, association fees, ground rent, insurance premiums, utility charges and similar pass-through charges. Fixed rent of the Master Lease (excluding the portion attributable to deferred rent) will increase by 7.5% every 5 years during the term and any extensions.

Each lease for the 7 Transitional Properties was amended by the parties. The Company agreed to reduce the aggregate annual fixed rent on the Transitional Properties by approximately $6.2 million to approximately $8.1 million (including approximately $1.2 million of ground rent and the repayment of deferral amounts for the months of April, May and June 2020 which the Company had agreed to defer and amortize as part of fixed rent over the remaining terms of the new leases).

The Company had the right to terminate each Transitional Lease by giving the AMC Tenant 90 days' prior notice of termination. Upon termination of a Transitional Lease by the Company, AMC Tenant agreed to (1) cooperate with the Company in transitioning the applicable Transitional Property to a new operator to ensure seamless transfer of management and re-branding, and (2) transfer certain property, including fixtures, furnishings and equipment, located or used at the applicable Transitional Property in exchange for a credit to the unpaid deferred amount due under the Transitional Lease. Prior to December 31, 2020, the Company terminated all Transitional Leases with AMC. The total amount deferred under each Transitional Lease prior to the Company terminating these agreements is still due by AMC and is scheduled to be paid over what would have been the remaining terms of the related property leases.

In March 2020, the Company's employees transitioned to a fully remote work force to protect the safety and well-being of the Company's personnel. The Company's prior investments in technology, business continuity planning and cyber-security protocols have enabled the Company to continue working with limited operational impacts.

Variable Interest Entities
The Company consolidates certain entities when it is deemed to be the primary beneficiary in a variable interest entity (VIE) in which it has a controlling financial interest in accordance with the consolidation guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). The equity method of accounting is applied to entities in which the Company is not the primary beneficiary as defined in the FASB ASC Topic on Consolidation (Topic 810), but can exercise significant influence over the entity with respect to its operations and major decisions.

The Company’s variable interest in VIEs currently are in the form of equity ownership and loans provided by the Company to a VIE or other partner. The Company examines specific criteria and uses its judgment when determining if the Company is the primary beneficiary of a VIE. The primary beneficiary generally is defined as the party with the controlling financial interest. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. As of December 31, 2020 and 2019, the Company does not have any investments in consolidated VIEs.

79

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
Use of Estimates
Management of the Company has made estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP). Actual results could differ from those estimates.

Real Estate Investments
Real estate investments are carried at initial recorded value less accumulated depreciation. Costs incurred for the acquisition and development of the properties are capitalized. In addition, the Company capitalizes certain costs that relate to property under development including interest and a portion of internal legal personnel costs. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which generally are estimated to be 30 years to 40 years for buildings, three years to 25 years for furniture, fixtures and equipment and 10 years to 20 years for site improvements. Tenant improvements, including allowances, are depreciated over the shorter of the lease term or the estimated useful life and leasehold interests are depreciated over the useful life of the underlying ground lease.

Management reviews the Company's real estate investments, including operating lease right-of-use assets, for impairment whenever events or changes in circumstances indicate that the carrying value of a property may not be recoverable, which is based on an estimate of undiscounted future cash flows expected to result from its use and eventual disposition. If impairment exists due to the inability to recover the carrying value of the property, an impairment loss is recorded to the extent that the carrying value of the property exceeds its estimated fair value.

The Company evaluates the held-for-sale classification of its real estate as of the end of each quarter. Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value less costs to sell. Assets are generally classified as held for sale once management has initiated an active program to market them for sale and it is probable the assets will be sold within one year. On occasion, the Company will receive unsolicited offers from third parties to buy individual Company properties. Under these circumstances, the Company will classify the properties as held for sale when a sales contract is executed with no contingencies and the prospective buyer has funds at risk to ensure performance.

Real Estate Acquisitions
Upon acquisition of real estate properties, the Company evaluates the acquisition to determine if it is a business combination or an asset acquisition. If the acquisition is determined to be an asset acquisition, the Company records the purchase price and other related costs incurred to the acquired tangible assets and identified intangible assets and liabilities on a relative fair value basis. In addition, costs incurred for asset acquisitions including transaction costs, are capitalized.

If the acquisition is determined to be a business combination, the Company records the fair value of acquired tangible assets and identified intangible assets and liabilities as well as any noncontrolling interest. Acquisition-related costs in connection with business combinations are expensed as incurred and included in transaction costs in the accompanying consolidated statements of (loss) income and comprehensive (loss) income.

In addition to acquisition-related costs in connection with business combinations, transaction costs include costs associated with terminated transactions, pre-opening costs and certain leasing and tenant transition costs. Transaction costs expensed totaled $5.4 million, $23.8 million and $3.7 million for the years ended December 31, 2020, 2019 and 2018, respectively.

For real estate acquisitions (asset acquisitions or business combinations), the fair value (or relative fair value in an asset acquisition) of the tangible assets is determined by valuing the property using recent independent appraisals or methods similar to those used by independent appraisers. Land is valued using the sales comparison approach which uses available market data from recent comparable land sales as an input to estimate the fair value. Site improvements and tenant improvements are valued using the cost approach which uses replacement cost data obtained from industry recognized guides less depreciation as an input to estimate the fair value. The building is valued either using the cost approach described above or a combination of the cost and the income approach. The
80

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
income approach uses market leasing assumptions to estimate the fair value of the property as if vacant. The cost and income approaches are reconciled to arrive at an estimated building fair value.

Intangibles
The fair value of acquired in-place leases also includes management’s estimate, on a lease-by-lease basis, of the present value of the following amounts: (i) the value associated with avoiding the cost of originating the acquired in-place leases (i.e. the market cost to execute the leases, including leasing commissions, legal and other related costs); (ii) the value associated with lost revenue related to tenant reimbursable operating costs estimated to be incurred during the assumed re-leasing period, (i.e. real estate taxes, insurance and other operating expenses); (iii) the value associated with lost rental revenue from existing leases during the assumed re-leasing period; and (iv) the value associated with avoided tenant improvement costs or other inducements to secure a tenant lease. These values are amortized over the lease term of the respective leases.
In determining the fair value of acquired above and below-market leases, the Company considers many factors. On a lease-by-lease basis, management considers the present value of the difference between the contractual amounts to be paid pursuant to the leases and management’s estimate of fair market lease rates. For above-market leases and below-market leases, management considers such differences over the lease terms. The capitalized above-market lease values are amortized as a reduction of rental income over the lease terms of the respective leases. The capitalized below-market lease values are amortized as an increase to rental income over the lease terms of the respective leases. The lease term includes the minimum base term plus any extension options that are reasonably certain to be exercised. Management considers several factors in determining the discount rate used in the present value calculations, including the credit risks associated with the respective tenants.

If debt is assumed in the acquisition, the determination of whether it is above or below-market is based upon a comparison of similar financing terms for similar real estate investments at the time of the acquisition.

In determining the fair value of tradenames, the Company historically uses the relief from royalty method, which estimates the fair value of hypothetical royalty income that could be generated if the intangible asset was licensed from an independent third-party.

In determining the fair value of a contract intangible, the Company considers the present value of the difference between the estimated "with" and "without" scenarios. The "with" scenario presents the contract in place and the "without" scenario incorporates the potential profits that may be lost over the period without the contract in place. The capitalized contract value is amortized over the estimated useful life of the underlying asset.

The excess of the cost of an acquired business (in a business combination) over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed is recorded as goodwill. Goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired.
Management of the Company reviews the carrying value of intangible assets for impairment on an annual basis.
Intangible assets and liabilities (included in Other assets and Accounts payable and accrued liabilities in the accompanying consolidated balance sheets) consist of the following at December 31 (in thousands):
81

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
20202019
Assets:
In-place leases, net of accumulated amortization of $13.9 million and $10.8 million, respectively$21,684 $24,528 
Above-market lease, net of accumulated amortization of $1.2 million and $1.1 million, respectively354 71 
Tradenames, net of accumulated amortization of $317 thousand and $184 thousand, respectively (1)8,847 8,980 
Contract value, net of accumulated amortization of $914 thousand and $548 thousand, respectively10,054 10,420 
Goodwill693 693 
Total intangible assets, net$41,632 $44,692 
Liabilities:
Below-market lease, net of accumulated amortization of $1.5 million and $1.1 million, respectively$8,397 $8,934 
(1) At December 31, 2020 and 2019, $5.4 million in tradenames had indefinite lives and were not amortized.
Aggregate lease intangible amortization included in expense was $5.6 million, $3.7 million and $2.9 million for the years ended December 31, 2020, 2019 and 2018, respectively. The net amount amortized as an increase to rental revenue for capitalized above and below-market lease intangibles was $0.5 million, $0.4 million and $0.6 million for the years ended December 31, 2020, 2019 and 2018, respectively.
Future amortization of in-place leases, net, above-market lease, net, tradenames, net, contract value, net and below-market lease, net at December 31, 2020 is as follows (in thousands):
In place leasesTradenames (1)Contract ValueAbove-market leaseBelow-market lease
Year:
2021$3,283 $133 $365 $51 $(456)
20222,658 133 365 46 (437)
20232,654 133 365 46 (415)
20242,095 133 365 46 (396)
20252,085 133 365 46 (387)
Thereafter8,909 2,827 8,229 119 (6,306)
Total$21,684 $3,492 $10,054 $354 $(8,397)
Weighted average amortization period (years)11.227.227.57.530.1
(1) Excludes $5.4 million in tradenames with indefinite lives.

Deferred Financing Costs
Deferred financing costs are amortized over the terms of the related debt obligations or mortgage note receivable as applicable. Deferred financing costs of $35.6 million and $37.2 million as of December 31, 2020 and 2019, respectively, are shown as a reduction of debt. The deferred financing costs of $4.8 million and $3.5 million as of December 31, 2020 and 2019, respectively, related to the unsecured revolving credit facility are included in other assets.

Reportable Segments
The Company has 2 reportable operating segments: Experiential and Education. The Experiential segment includes the following property types: theatres, eat & play (including seven theatres located in entertainment districts), attractions, ski, experiential lodging, gaming, cultural and fitness & wellness. The Education segment
82

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
includes the following property types: early childhood education centers and private schools. See Note 19 for financial information related to these reportable segments.

Rental Revenue
The Company leases real estate to its tenants primarily under leases that are predominately classified as operating leases. The Company's leases generally provide for rent escalations throughout the lease terms. Rents that are fixed are recognized on a straight-line basis over the lease term. Base rent escalations that include a variable component are recognized upon the occurrence of the specified event as defined in the Company's lease agreements. Many of the Company's leasing arrangements include options to extend the lease, which are not included in the minimum lease terms unless it is reasonably certain to be exercised. Straight-line rental revenue is subject to an evaluation for collectibility, and the Company records a direct write-off against rental revenue if collectibility of these future rents is not probable. For the year ended December 31, 2020, the Company recognized straight-line write-offs totaling $38.0 million, which were comprised of $26.5 million of straight-line accounts receivable and $11.5 million of sub-lessor ground lease straight-line accounts receivable. Straight-line rental revenue, net of write-offs, was a reduction to total rental revenue of $24.5 million for the year ended December 31, 2020. For the year ended December 31, 2019, the Company recognized straight-line write-offs of $1.4 million (of which $1.2 million has been classified within discontinued operations). There were no straight-line write-offs recognized during the year ended December 31, 2018. For the years ended December 31, 2019 and 2018, the Company recognized straight-line rental revenue, net of write-offs of $13.6 million (of which $3.0 million has been classified within discontinued operations) and $10.2 million (of which $5.5 million has been classified within discontinued operations), respectively.

Substantially all the Company's customers' operations were temporarily closed for a portion of the year ended December 31, 2020, as a result of the COVID-19 pandemic. Many of the Company's non-theatre locations have re-opened. However, certain of the Company's theatre locations remain closed due to local restrictions or operator decision to close as a result of the impact of the COVID-19 pandemic, specifically the decision by many movie studios to delay the release of films. In response, the Company has agreed to defer rent for a substantial portion of its customers. On April 10, 2020, the FASB issued a Staff Q&A on Topic 842 and Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic. In reliance upon the FASB Staff Q&A, the Company has not treated qualifying deferrals or rent concessions during the period effected by the COVID-19 pandemic as lease modifications. While deferments for this and future periods delay rent payments, these deferments generally do not release customers from the obligation to pay the deferred amounts in the future. Deferred rent amounts are reflected in the Company's financial statements as accounts receivable if collection is determined to be probable or recognized when received as variable lease payments if collection is determined to not be probable. Certain agreements with tenants where remaining lease terms are extended, or other changes are made that do not qualify for the treatment in the FASB Staff Q&A, are treated as lease modifications. In these circumstances, upon an executed lease modification, if the tenant is not being recognized on a cash basis, the contractual rent reflected in accounts receivable and straight-line rent receivable will be amortized over the remaining term of the lease against rental revenue. In limited cases, customers may be entitled to the abatement of rent during governmentally imposed prohibitions on business operations which is recognized in the period to which it relates, or the Company may provide rent concessions to tenants. In cases where the Company provides concessions to tenants to which they are not otherwise entitled, those amounts will be recognized in the period in which the concession is granted unless the changes are accounted for as lease modifications.

Most of the Company’s lease contracts are triple-net leases, which require the tenants to make payments directly to third parties for lessor costs (such as property taxes and insurance) associated with the properties. In accordance with Topic 842, the Company does not include these payments made by the lessees to third parties in rental revenue or property operating expenses. In certain situations, the Company pays these lessor costs directly to third-parties and the tenants reimburse the Company. In accordance with Topic 842, these payments are presented on a gross basis in rental revenue and property operating expense. During the year ended December 31, 2020 and 2019, the Company recognized $2.2 million and $6.9 million, respectively, related to the gross-up of these reimbursed expenses which are included in rental revenue and property operating expenses.

Certain of the Company's leases, particularly at its entertainment districts, require the tenants to make payments to the Company for property related expenses such as common area maintenance. The Company has elected to assess hedge effectiveness
83

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
combine these non-lease components with the lease components in rental revenue. For the years ended December 31, 2020, 2019 and 2018, the non-lease components included in rental revenue totaled $12.9 million, $16.0 million and $15.3 million, respectively.

In addition, most of the Company's tenants are subject to additional rents (above base rents) if gross revenues of the properties exceed certain thresholds defined in the lease agreements (percentage rents). Percentage rents are recognized at the time when specific triggering events occur as provided by the lease agreement. Rental revenue included percentage rents of $8.6 million, $15.0 million and $10.7 million for the years ended December 31, 2020, 2019 and 2018, respectively. Furthermore, due to the impact of the COVID-19 pandemic, certain of the Company's tenants paid a portion of base rent in 2020 based on a percentage of gross revenue. This variable rent totaled $5.2 million for the year ended December 31, 2020.

The Company regularly evaluates the collectibility of its receivables on a lease by lease basis. The evaluation primarily consists of reviewing past due account balances and considering such factors as the credit quality of the Company's tenants, historical trends of the tenant, current economic conditions and changes in customer payment terms. When the collectibility of lease receivables or future lease payments are no longer probable, the Company records a direct write-off of the receivable to rental revenue and recognizes future rental revenue on a cash basis.

Property Sales
Sales of real estate properties are recognized when a contract exists and the purchaser has obtained control of the property. Gains on sales of properties are recognized in full in a partial sale of nonfinancial assets, to the extent control is not retained. Any noncontrolling interest retained by the seller would, accordingly, be measured at fair value.

The Company evaluates each sale or disposal transaction to determine if it meets the criteria to qualify as discontinued operations. A discontinued operation is a component of an entity or group of components that have been disposed of or are classified as held for sale and represent a strategic shift that has or will have a major effect on the Company's operations and financial results. If the sale or disposal transaction does not meet the criteria, the operations and related gain or loss on sale is included in income from continuing operations. Certain reclassifications have been made to prior period amounts to conform to the current period presentation for assets that qualify for presentation as discontinued operations. See Note 17 for further details.

Mortgage Notes and Other Notes Receivable
Mortgage notes and other notes receivable, including related accrued interest receivable, consist of loans originated by the Company and the related accrued and unpaid interest income as of the balance sheet date. Mortgage notes and other notes receivable are initially recorded at the amount advanced to the borrower less allowance for credit loss. Interest income is recognized using athe effective interest method based on changes in spot exchange ratesthe stated interest rate over the estimated life of the note. Premiums and recorddiscounts are amortized or accreted into income over the changes inestimated life of the fair value amounts excluded fromnote using the assessment of effectiveness into earnings on a systematic and rational basis. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.effective interest method.


The Company's policy is to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Recently Adopted Accounting Pronouncements
On January 1, 2018, the Company adopted Accounting Standards Update (ASU) No. 2016-18, Statement2016-13, Measurement of Cash Flows,Credit Losses on Financial Instruments (Topic 326) effective January 1, 2020, which requires allowance for credit losses to be recorded to reflect that all mortgage notes and certain reclassificationsnotes receivable have some inherent risk of loss regardless of credit quality, collateral, or other mitigating factors. The Company adopted the standard on the effective date and used the effective date as the date of initial application. Accordingly, comparative periods have not been maderecast, and required disclosures will not be provided for dates and periods prior to prior period balancesJanuary 1, 2020. On the effective date, the Company recognized credit loss expense through retained earnings and the corresponding allowance for credit losses of approximately $2.2 million, which was comprised of $2.1 million related to conformmortgage notes receivable and $0.1 million related to current presentationnotes receivable (which are presented within other assets in the consolidated statement of cash flows. Under ASU No. 2016-18, transfers to or from restricted cash which have been previously shown in the Company's operating activities section of the accompanying consolidated statementbalance sheet). While Topic 326 does not require any particular method for determining the reserves, it does specify that it should be based on relevant information about past events, including historical loss experience, current portfolio and market conditions, as well as reasonable and supportable forecasts for the term of cash flowseach mortgage note or note receivable. The Company uses a forward-looking commercial real estate forecasting tool to estimate its current expected credit losses (CECL) for each of its mortgage notes and notes receivable on a loan-by-loan basis.
84

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
The CECL allowance required by Topic 326 is a valuation account that is deducted from the related mortgage note or note receivable.

Certain of the Company’s mortgage notes and notes receivable include commitments to fund incremental amounts to its borrowers. These future funding commitments are now requiredalso subject to the CECL model. The allowance related to future funding is recorded as a liability and is included in Accounts payable and accrued liabilities in the accompanying consolidated balance sheet.

As permitted under Topic 326, the Company made an accounting policy election to not measure an allowance for credit losses for accrued interest receivables related to its mortgage notes and notes receivable. Accordingly, if accrued interest receivable is deemed to be shownuncollectible, the Company will record any necessary write-offs as parta reversal of interest income. During the year ended December 31, 2020, the Company wrote off approximately $0.3 million of accrued interest income against interest income related to 1 note receivable. As of December 31, 2020, the Company believes that all outstanding accrued interest is collectible.

In the event the Company has a past due mortgage note or note receivable and the Company determines it is collateral dependent, the Company measures expected credit losses based on the fair value of the total change in cashcollateral. The Company evaluates the collectability of both interest and cash equivalentsprincipal for each of its mortgage notes and restricted cashnotes receivable on a quarterly basis to determine if foreclosure is probable. As of December 31, 2020, the Company does not have any mortgage notes or notes receivable with past due principal balances.

Mortgage and Other Financing Income
Certain of the Company's borrowers are subject to additional interest based on certain thresholds defined in the consolidated statementsmortgage agreements (participating interest). Participating interest income is recognized at the time when specific triggering events occur as provided by the mortgage agreement. Mortgage and other financing income included participating interest income of cash flows.$0.6 million for the year ended December 31, 2019. NaN participating interest income was recognized for the years ended December 31, 2020 and 2018. In addition, on January 1, 2018, the Company adopted ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. The ASU clarifies the treatment of several cash flow issues with the objective of reducing diversity in practice. The adoption of this ASU had no impact to the Company's financial position, results of operations or presentation in the consolidated statement of cash flows.

On January 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers (ASC 606) and ASC Topic 610-20, Other Income: Gains and Losses from the Derecognition of Non-financial Assets (ASC 610-20) using a modified retrospective (cumulative effect) method of adoption. The core principle of ASC 606 is that an entity will recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers when it satisfies performance obligations. The Company’s primary source of revenue is from lease revenue (which is excluded from the revenue standard but will be impacted upon adoption of the lease standard inyears ended December 31, 2019 discussed in Impact of Recently Issued Accounting Standards) and 2018, mortgage and other financing income (which is notincluded $2.7 million (of which $1.8 million has been classified in scope of the revenue standard). ASC 610-20 provides guidance on how entities recognize salesdiscontinued operations) and $74.7 million, respectively, in prepayment fees related to non-customers including presentation of gain or loss on a net basis in the consolidated statements of income. The Company has concluded that its property sales represent transactions with non-customers. The Company had two property sale transactions that occurred in 2017 in which the Company received an aggregate of $12.3 million in mortgage notes receivable as full considerationthat were paid fully in advance of their maturity date. NaN prepayment fees were recognized for the sales. The mortgage notes require interest only payments until maturity and the Company determined in 2017 that these transactions qualified as sales; however, the gain on each sale was deferred. Upon adoption of ASC 610-20 on January 1, 2018, the Company determined that these transactions did not qualify for de-recognition. Accordingly, the Company recorded an adjustment in the year ended December 31, 2020.

Income Taxes
The Company qualifies as a REIT under the Internal Revenue Code (the Code). A REIT that distributes at least 90% of its taxable income to its shareholders each year and which meets certain other conditions is not taxed on that portion of its taxable income which is distributed to its shareholders. The Company intends to continue to qualify as a REIT and distribute substantially all of its taxable income to its shareholders.

The Company is subject to income tax in certain instances in both the US and in certain foreign jurisdictions, as more fully described herein. The Company’s income tax expense includes deferred income tax expense or benefit, which represents the change in net deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. The Company evaluates the realizability of its deferred income tax assets and assesses the need for a valuation allowance for each jurisdiction for which it is subject to income tax. The realization of the deferred tax assets depends upon all positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of existing deferred tax assets.

The Company owns certain real estate assets which are subject to income tax in Canada. At December 31, 2020, the net deferred tax assets related to the Company's Canadian operations totaled $17.0 million resulting from the temporary differences between income for financial reporting purposes and taxable income relating primarily to depreciation, capital improvements and straight-line rents. Due to the impacts of the COVID-19 pandemic, it is more likely than not the Company will not generate sufficient taxable income to realize the net deferred tax assets related to the Company's Canadian operations as of December 31, 2020 totaling $17.0 million.
85

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018

The Company has certain taxable REIT subsidiaries (TRSs), as permitted under the Code, through which it conducts certain business activities and are subject to federal and state income taxes on their net taxable income. The Company uses two such TRS entities exclusively to hold the operational aspect of the traditional REIT lodging structure for three Experiential lodging properties that are facilitated by management agreements with eligible independent contractors. The real estate for these investments are held by the REIT either directly or through an investment in a joint venture and leased to the respective operations entity under a triple-net lease. Management has determined the real estate meets the requirements to be classified as qualified lodging facilities as required in a traditional REIT lodging structure.

At December 31, 2020, the net deferred tax assets related to the Company's TRSs totaled $7.9 million resulting from the temporary differences between income for financial reporting purposes and taxable income relate primarily to net operating loss carryovers and pre-opening cost amortization. Due to the impacts of the COVID-19 pandemic, it is more likely than not the Company will not generate sufficient taxable income to realize the net deferred tax assets related to the Company's TRSs as of December 31, 2020 totaling $7.9 million.

As of December 31, 2020 and 2019, respectively, the Canadian operations and the Company's TRSs had deferred tax assets included in other assets in the accompanying consolidated balance sheet totaling approximately $28.5 million and $19.3 million and deferred tax liabilities included in accounts payable and accrued liabilities in the accompanying consolidated balance sheet totaling approximately $3.6 million and $3.9 million. At December 31, 2020, the Company had a valuation allowance offsetting the net deferred tax assets included in the accompanying consolidated balance sheet totaling $24.9 million. The Company’s consolidated deferred tax position is summarized as follows (in thousands):
20202019
Fixed assets$18,077 $14,462 
Net operating losses6,546 1,656 
Start-up costs2,495 2,768 
Other1,392 367 
Total deferred tax assets$28,510 $19,253 
Capital improvements$(2,888)$(2,765)
Straight-line receivable(706)(1,097)
Other(9)(1)
Total deferred tax liabilities$(3,603)$(3,863)
Valuation allowance(24,907)0 
Net deferred tax asset$0 $15,390 

Additionally, during the years ended December 31, 2020, 2019 and 2018, the Company recognized current income and withholding tax expense of $1.5 million, $1.1 million and $1.7 million, respectively, primarily related to reclassify these assets from mortgage notes receivablecertain state income taxes and foreign withholding tax. The table below details the current and deferred income tax benefit (expense) for the years ended December 31, 2020, 2019 and 2018 (in thousands):
202020192018
Current TRS income tax$7 $376 $(221)
Current state income tax expense(503)(405)(422)
Current foreign income tax3 0 0 
Current foreign withholding tax(1,018)(1,051)(1,069)
Deferred TRS income tax (expense) benefit(4,448)3,719 319 
Deferred foreign withholding tax0 0 0 
Deferred income tax (expense) benefit(10,797)396 (892)
Income tax benefit (expense)$(16,756)$3,035 $(2,285)

86

EPR PROPERTIES
Notes to rental propertiesConsolidated Financial Statements
December 31, 2020, 2019 and 2018
The Company's effective tax rate for the years ended December 31, 2020, 2019 and 2018 was 13.5%, 1.5% and 0.8%, respectively. The differences between the income tax expense calculated at the statutory U.S. federal income tax rates and the actual income tax expense recorded for continuing operations is mostly attributable to the dividends paid deduction available for REITs.

Furthermore, the Company qualified as a REIT and distributed the necessary amount of taxable income such that 0 current U.S. federal income taxes were due for the years ended December 31, 2020, 2019 and 2018. Accordingly, 0 provision for current U.S. federal income taxes was recorded for any of those years. If the Company fails to qualify as a REIT in any taxable year, without the benefit of certain provisions, it will be subject to federal and state income taxes at regular corporate rates (including any applicable alternative minimum tax for years prior to January 1, 2019) and may not be able to qualify as a REIT for four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company is subject to certain state and local taxes on its consolidated balance sheet. All other salesincome and property, and federal income and excise taxes on its undistributed taxable income. Tax years 2017 through 2019 remain generally open to examination for U.S. federal income tax and state tax purposes and from 2015 through 2019 for Canadian income tax purposes. 

The Company’s policy is to recognize interest and penalties as general and administrative expense. The Company did not recognize any interest and penalties in 2020, 2019 or 2018. The Company did not have any accrued interest and penalties at December 31, 2020, 2019 and 2018. Additionally, the Company did not have any unrecorded tax benefits as of real estate were all cash transactions in which the purchaser obtained control of the property, therefore, there was no cumulative adjustment recognized to beginning retained earnings as a result of adopting ASC 610-20.December 31, 2020, 2019 and 2018.


Impact of Recently Issued Accounting Standards
See Note 2 to the Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information on the impact of recently issued accounting standards on our business.

Inflation
Investments by EPR are financed with a combination of equity and debt. During inflationary periods, which are generally accompanied by rising interest rates, our ability to grow may be adversely affected because the yield on new investments may increase at a slower rate than new borrowing costs.
A substantial portion of our leases provide for base and participating rent features. In February 2016,addition, certain of our mortgage notes receivable similarly provide for base and participating interest. To the FASBextent inflation causes tenant or borrower revenues at our properties to increase, we would participate in those revenue increases through our right to receive variable rent and annual percentage rent and/or participating interest over the base amounts, as applicable.
Our leases and mortgage notes receivable also may provide for escalation in base rents or interest in the event of increases in the Consumer Price Index, with generally a limit of 2% per annum, or fixed periodic increases. During deflationary periods, the escalations in base rents or interest that are dependent on increases in the Consumer Price Index in our leases and mortgage notes receivable may be adversely affected.
Our leases are generally triple-net leases requiring the tenants to pay substantially all expenses associated with the operation of the properties, thereby minimizing our exposure to increases in costs and operating expenses resulting from inflation. A portion of our leases are non-triple-net leases. These non-triple net leases represent approximately 18% of our total real estate square footage. To the extent any of those leases contain fixed expense reimbursement provisions or limitations, we may be subject to increases in costs resulting from inflation that are not fully passed through to tenants.
Some of our investments have been structured using more traditional REIT lodging structures or are managed through a third-party manager. In the traditional REIT lodging structure, we hold qualified lodging facilities under the REIT and we separately hold the operations of the facilities in taxable REIT subsidiaries (TRSs) which are facilitated by management agreements with eligible independent contractors. Under this structure and when we manage properties through a third-party manager, we rely on the performance of our properties and the ability of the properties' managers to increase revenues to keep pace with inflation which may be limited by competitive pressures.
Additionally, our general and administrative costs may be subject to increases resulting from inflation.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks, primarily relating to potential losses due to changes in interest rates and foreign currency exchange rates. We seek to mitigate the effects of fluctuations in interest rates by matching the term of new investments with new long-term fixed rate borrowings whenever possible. As of December 31, 2020, we had a $1.0 billion unsecured revolving credit facility with $590.0 million outstanding. Subsequent to December 31, 2020, we paid down $500.0 million on our revolving credit facility. We also had a $400.0 million unsecured term loan facility and a $25.0 million bond that bear interest at a floating rate but have been fixed through interest rate swap agreements.
As of December 31, 2020, we had a 65% investment interest in two unconsolidated real estate joint ventures related to two experiential lodging properties located in St. Petersburg Beach, Florida. At December 31, 2020, the joint venture had a secured mortgage loan with an outstanding balance of $85.0 million. The mortgage loan bears interest at an annual rate equal to the greater of 6.00% or LIBOR plus 3.75%. The joint venture has an interest rate cap agreement to limit the variable portion of the interest rate (LIBOR) on this note to 3.0% from March 28, 2019 to April 1, 2023. In response to the COVID-19 pandemic, on May 28, 2020, the joint venture was granted a three-month interest deferral, which is required to be paid on the maturity date of the loan and is not considered a troubled debt restructuring.

64

We are subject to risks associated with debt financing, including the risk that existing indebtedness may not be refinanced or that the terms of such refinancing may not be as favorable as the terms of current indebtedness, particularly in light of the current economic uncertainty caused by the COVID-19 pandemic. The majority of our borrowings are subject to contractual agreements or mortgages which limit the amount of indebtedness we may incur. Accordingly, if we are unable to raise additional equity or borrow money due to these limitations, our ability to make additional real estate investments may be limited.
The following table presents the principal amounts, weighted average interest rates, and other terms required by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes as of December 31 (including the impact of the interest rate swap agreements described below):
Expected Maturities (dollars in millions)
20212022202320242025ThereafterTotalEstimated
Fair Value
December 31, 2020:
Fixed rate debt$— $— $675.0 $148.0 $300.0 $2,017.0 $3,140.0 $3,114.8 
Average interest rate— %— %4.76 %5.60 %4.50 %4.55 %4.67 %4.64 %
Variable rate debt$— $590.0 $— $— $— $— $590.0 $590.0 
Average interest rate (as of December 31, 2020)— %2.13 %— %— %— %— %2.13 %2.13 %
20202021202220232024ThereafterTotalEstimated
Fair Value
December 31, 2019:
Fixed rate debt$— $— $— $675.0 $148.0 $2,317.0 $3,140.0 $3,295.5 
Average interest rate— %— %— %4.02 %4.35 %4.44 %4.34 %3.45 %
Variable rate debt$— $— $— $— $— $— $— $— 
Average interest rate (as of December 31, 2019)— %— %— %— %— %— %— %— %

The fair value of our debt as of December 31, 2020 and 2019 is estimated by discounting the future cash flows of each instrument using current market rates including current market spreads.
We are exposed to foreign currency risk against our functional currency, the U.S. dollar, on our four Canadian properties and the rents received from tenants of the properties are payable in CAD. In order to hedge our net investment in our four Canadian properties, we entered into two fixed-to-fixed cross-currency swaps, with a fixed notional value of $200.0 million CAD. These investments became effective on July 1, 2018, mature on July 1, 2023 and are designated as net investment hedges of our Canadian net investments. The net effect of this hedge is to lock in an exchange rate of $1.32 CAD per U.S. dollar on $200.0 million CAD of our foreign net investments. The cross-currency swaps also have a monthly settlement feature locked in at an exchange rate of $1.32 CAD per USD on $4.5 million of CAD annual cash flows, the net effect of which is an excluded component from the effectiveness testing of this hedge.
During the year ended December 31, 2020, we entered into three USD-CAD cross-currency swaps that were effective July 1, 2020 with a total fixed original notional value of $100.0 million CAD and $76.6 million USD. The net effect of these swaps is to lock in an exchange rate of $1.31 CAD per USD on approximately $7.2 million annual CAD denominated cash flows through June 2022.
For foreign currency derivatives designated as net investment hedges, the change in the fair value of the derivatives are reported in accumulated other comprehensive income (AOCI) as part of the cumulative translation adjustment. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated.
See Note 9 to the Consolidated Financial Statements in this Annual Report on Form 10-K for additional information on our derivative financial instruments and hedging activities.

65


Item 8.Financial Statements and Supplementary Data
EPR Properties

Contents
Report of Independent Registered Public Accounting Firm
Audited Financial Statements
Consolidated Balance Sheets
Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Financial Statement Schedules
Schedule II – Valuation and Qualifying Accounts
Schedule III - Real Estate and Accumulated Depreciation
66

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders
EPR Properties:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of EPR Properties and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of (loss) income and comprehensive (loss) income, changes in equity, and cash flows for each of the years in the three‑year period ended December 31, 2020, and the related notes and financial statement schedules II and III (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2020, based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Adoption of New Accounting Pronouncements
As discussed in Note 2 to the consolidated financial statements, the Company has changed its method for accounting for expected credit losses as of January 1, 2020 due to the adoption of Accounting Standards Update (ASU) No. 2016‑13, Measurement of Credit Losses on Financial Instruments (Topic 326).

As discussed in Note 15 to the consolidated financial statements, the Company has changed its method for accounting for its leases as of January 1, 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases,Leases.

Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by issuing ASU No. 2016-02,management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
67


Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which amends existing accounting standardsthey relate.

Evaluation of indicators real estate investments may not be recoverable
As discussed in Notes 2 and 3 to the consolidated financial statements, the real estate investments, net balance as of December 31, 2020 was $4.9 billion. The Company reviews a real estate investment for lease accountingimpairment whenever events or changes in circumstances indicate that the carrying value of the real estate investment may not be recoverable.

We identified the evaluation of indicators real estate investments may not be recoverable as a critical audit matter. There is a high degree of subjective judgement in evaluating the events or changes in circumstances that may indicate the carrying value of real estate investments may not be recoverable. In particular, the judgments regarding the expected period the Company will hold the real estate investments and is intendedthe impact of changes in market and tenant conditions on the determination of the recoverability of the real estate investments required a higher degree of auditor judgment.

The following are the primary procedures we performed to improve financial reportingaddress this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the critical audit matter. This included controls related to the Company’s process to identify and evaluate events or changes in circumstances that may indicate the carrying amount of real estate investments may not be recoverable, including controls related to determining the period the Company will hold the real estate investments. We inquired of Company officials and inspected documents such as meeting minutes of the Board of Trustees to evaluate the likelihood that a real estate investment would be sold prior to the estimated holding period. We also performed independent evaluations, including examining current tenant information including status of accounts receivable and committee minutes related to lease transactions.negotiations for indications that the carrying value of the real estate investments may not be recoverable.

68

Impairment of real estate investments and right‑of‑use assets
As discussed in Notes 2, 3, 4 and 15 to the consolidated financial statements, the real estate investments, net balance and operating lease right‑of‑use assets balance as of December 31, 2020 was $4.9 billion and $163.8 million, respectively. The Company reviews a property for impairment whenever events or changes in circumstances indicate that the carrying value of the property may not be recoverable. The Company recognized impairment charges of $70.7 million on real estate investments and $15.0 million on the operating lease right‑of‑use assets, which are the amounts that the carrying value of the assets exceeded the estimated fair value.

We identified the assessment of the fair values of real estate investments and operating lease right‑of‑use assets based on recent independent appraisals used to determine the impairment charges as a critical audit matter. There is a high degree of subjective auditor judgment in evaluating the relevance of comparable land sales, market rents, capitalization rates, and discount rates used to determine the fair value of these assets.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the critical audit matter. This included controls related to the determination of comparable land sales, market rents, capitalization rates and discount rates. We involved valuation professionals with specialized skills and knowledge, who assisted in:

•Comparing the Company’s estimated fair value of land to a range of independently developed estimates based on publicly available and comparable land sales.

•Comparing the Company’s estimated assumptions of market rents, capitalization rates, and discount rates to a range of independently developed estimates based on publicly available industry data.

Collectability of lease receivables
As discussed in Notes 2 and 5 to the consolidated financial statements, the Company assesses the probability of collecting lease receivables on a lease‑by‑lease basis. The evaluation primarily consists of reviewing past due account balances and considering such factors as the credit quality of the Company’s tenants, historical trends of the tenants, current economic conditions, and changes in customer payment terms. Whenever the results of that assessment, events, or changes in circumstances indicate that it is no longer probable that the Company will be able to collect substantially all lease receivables or future lease payments, the Company records a charge to rental revenue for the outstanding receivable balance and suspends revenue recognition. The Company recorded charges to rental revenue of $65.1 million during the year ended December 31, 2020.

We identified the evaluation of the probability of collection of substantially all lease receivables as a critical audit matter. The assessment required subjective auditor judgment to evaluate the financial strength of tenants and the expected operating performance of the leased property.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s determination of lease receivable collectability. This included controls related to the evaluation of the financial strength of tenants, and the expected operating performance of the leased property. To assess the financial strength of tenants and the expected operating performance of the leased property, for certain tenants we evaluated (1) the aging of outstanding accounts receivable, (2) recent payment history, (3) certain publicly available information about the tenants, and (4) property financial information regarding the tenant.


/s/ KPMG LLP

We have served as the Company’s auditor since 2002.
Kansas City, Missouri
February 25, 2021
69


EPR PROPERTIES
Consolidated Balance Sheets
(Dollars in thousands except share data)
 December 31,
 20202019
Assets
Real estate investments, net of accumulated depreciation of $1,062,087 and $989,254 at December 31, 2020 and 2019, respectively$4,851,302 $5,197,308 
Land held for development23,225 28,080 
Property under development57,630 36,756 
Operating lease right-of-use assets163,766 211,187 
Mortgage notes and related accrued interest receivable365,628 357,391 
Investment in joint ventures28,208 34,317 
Cash and cash equivalents1,025,577 528,763 
Restricted cash2,433 2,677 
Accounts receivable116,193 86,858 
Other assets70,223 94,174 
Total assets$6,704,185 $6,577,511 
Liabilities and Equity
Liabilities:
Accounts payable and accrued liabilities$105,379 $122,939 
Operating lease liabilities202,223 235,650 
Common dividends payable36 29,424 
Preferred dividends payable6,034 6,034 
Unearned rents and interest65,485 74,829 
Debt3,694,443 3,102,830 
Total liabilities4,073,600 3,571,706 
Equity:
Common Shares, $0.01 par value; 100,000,000 shares authorized; and 81,917,876 and 81,588,489 shares issued at December 31, 2020 and 2019, respectively819 816 
Preferred Shares, $0.01 par value; 25,000,000 shares authorized:
5,394,050 Series C convertible shares issued at December 31, 2020 and 2019; liquidation preference of $134,851,25054 54 
3,447,381 Series E convertible shares issued at December 31, 2020 and 2019; liquidation preference of $86,184,52534 34 
6,000,000 Series G shares issued at December 31, 2020 and 2019; liquidation preference of $150,000,00060 60 
Additional paid-in-capital3,857,632 3,834,858 
Treasury shares at cost: 7,315,087 and 3,125,569 common shares at December 31, 2020 and 2019, respectively(261,238)(147,435)
Accumulated other comprehensive income216 7,275 
Distributions in excess of net income(966,992)(689,857)
Total equity$2,630,585 $3,005,805 
Total liabilities and equity$6,704,185 $6,577,511 
See accompanying notes to consolidated financial statements.
70


EPR PROPERTIES
Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income
(Dollars in thousands except per share data)
 Year Ended December 31,
 202020192018
Rental revenue$372,176 $593,022 $509,086 
Other income9,139 25,920 2,076 
Mortgage and other financing income33,346 33,027 128,759 
Total revenue414,661 651,969 639,921 
Property operating expense58,587 60,739 29,654 
Other expense16,474 29,667 443 
General and administrative expense42,596 46,371 48,889 
Severance expense2,868 2,364 5,938 
Litigation settlement expense0 0 2,090 
Costs associated with loan refinancing or payoff1,632 38,269 31,958 
Interest expense, net157,675 142,002 135,870 
Transaction costs5,436 23,789 3,698 
Credit loss expense30,695 0 0 
Impairment charges85,657 2,206 27,283 
Depreciation and amortization170,333 158,834 138,395 
(Loss) income before equity in loss from joint ventures, other items and discontinued operations(157,292)147,728 215,703 
Equity in loss from joint ventures(4,552)(381)(22)
Impairment charges on joint ventures(3,247)0 0 
Gain on sale of real estate50,119 4,174 3,037 
Gain on sale of investment in a direct financing lease0 0 5,514 
(Loss) income before income taxes(114,972)151,521 224,232 
Income tax (expense) benefit(16,756)3,035 (2,285)
(Loss) income from continuing operations$(131,728)$154,556 $221,947 
Discontinued operations:
Income from discontinued operations before other items0 37,241 45,036 
Impairment on public charter school portfolio sale0 (21,433)0 
Gain on sale of real estate from discontinued operations0 31,879 0 
Income from discontinued operations0 47,687 45,036 
Net (loss) income(131,728)202,243 266,983 
Preferred dividend requirements(24,136)(24,136)(24,142)
Net (loss) income available to common shareholders of EPR Properties$(155,864)$178,107 $242,841 
Net (loss) income available to common shareholders of EPR Properties per share:
Continuing operations$(2.05)$1.70 $2.66 
Discontinued operations0 0.62 0.61 
Basic$(2.05)$2.32 $3.27 
Continuing operations$(2.05)$1.70 $2.66 
Discontinued operations0 0.62 0.61 
Diluted$(2.05)$2.32 $3.27 
Shares used for computation (in thousands):
Basic75,994 76,746 74,292 
Diluted75,994 76,782 74,337 
Other comprehensive (loss) income:
Net (loss) income$(131,728)$202,243 $266,983 
Foreign currency translation adjustment3,494 9,253 (16,177)
Change in unrealized (loss) gain on derivatives(10,553)(14,063)15,779 
Comprehensive (loss) income attributable to EPR Properties$(138,787)$197,433 $266,585 
See accompanying notes to consolidated financial statements.
71


EPR PROPERTIES
Consolidated Statements of Changes in Equity
Years Ended December 31, 2020, 2019 and 2018
(Dollars in thousands)
 EPR Properties Shareholders’ Equity 
 Common StockPreferred StockAdditional
paid-in capital		Treasury
shares		Accumulated
other
comprehensive
income (loss)		Distributions
in excess of
net income (loss)		Total
 SharesParSharesPar
Balance at December 31, 201776,858,632 $769 14,848,165 $148 $3,478,986 $(121,591)$12,483 $(443,470)$2,927,325 
Restricted share units issued to Trustees23,571 — — — — — — — 0 
Issuance of nonvested shares, net of cancellations295,202 3 — — 4,588 (617)— — 3,974 
Purchase of common shares for vesting— — — — — (7,156)— — (7,156)
Share-based compensation expense— — — — 15,111 — — — 15,111 
Share-based compensation included in severance expense— — — — 3,218 — — — 3,218 
Foreign currency translation adjustment— — — — — — (16,177)— (16,177)
Change in unrealized gain on derivatives— — — — — — 15,779 — 15,779 
Net income— — — — — — — 266,983 266,983 
Issuances of common shares20,553 0 — — 1,286 — — — 1,286 
Conversion of Series E Convertible Preferred shares to common shares800 — (1,734)0 — — — — 0 
Conversion of Series C Convertible Preferred shares to common shares1,964 — (5,000)0 — — — — 0 
Stock option exercises, net25,721 0 — — 1,305 (1,364)— — (59)
Dividends to common shareholders ($4.32 per share)— — — — — — — (321,119)(321,119)
Dividends to Series C preferred shareholders ($1.4375 per share)— — — — — — — (7,760)(7,760)
Dividends to Series E preferred shareholders ($2.25 per share)— — — — — — — (7,757)(7,757)
Dividends to Series G preferred shareholders ($1.4375 per share)— — — — — — — (8,625)(8,625)
Balance at December 31, 201877,226,443 $772 14,841,431 $148 $3,504,494 $(130,728)$12,085 $(521,748)$2,865,023 
Restricted share units issued to Trustees27,392 — — — — — — — 0 
Issuance of nonvested shares, net of cancellations208,755 2 — — 4,926 (498)— — 4,430 
Purchase of common shares for vesting— — — — — (9,691)— — (9,691)
Share-based compensation expense— — — — 13,180 — — — 13,180 
Share-based compensation included in severance expense— — — — 580 — — — 580 
Foreign currency translation adjustment— — — — — — 9,253 — 9,253 
Change in unrealized loss on derivatives— — — — — — (14,063)— (14,063)
Net income— — — — — — — 202,243 202,243 
Issuances of common shares4,007,113 41 — — 305,893 — — — 305,934 
Stock option exercises, net118,786 1 — — 5,785 (6,518)— — (732)
Dividends to common shareholders ($4.50 per share)— — — — — — — (346,216)(346,216)
Dividends to Series C preferred shareholders ($1.4375 per share)— — — — — — — (7,756)(7,756)
Dividends to Series E preferred shareholders ($2.25 per share)— — — — — — — (7,756)(7,756)
Dividends to Series G preferred shareholders ($1.4375 per share)— — — — — — — (8,624)(8,624)
Balance at December 31, 201981,588,489 $816 14,841,431 $148 $3,834,858 $(147,435)$7,275 $(689,857)$3,005,805 
Continued on next page.
72

EPR PROPERTIES
Consolidated Statements of Changes in Equity
Years Ended December 31, 2020, 2019 and 2018
(Dollars in thousands) (continued)
 EPR Properties Shareholders’ Equity 
 Common StockPreferred StockAdditional
paid-in capital		Treasury
shares		Accumulated
other
comprehensive
income (loss)		Distributions
in excess of
net income (loss)		Total
 SharesParSharesPar
Continued from previous page.
Balance at December 31, 201981,588,489 $816 14,841,431 $148 $3,834,858 $(147,435)$7,275 $(689,857)$3,005,805 
Credit loss expense for implementation of Current Expected Credit Loss standard— — — — — — — (2,163)(2,163)
Restricted share units issued to Trustees74,767 1 — — — — — — 1 
Issuance of nonvested shares and performance shares, net of cancellations217,034 2 — — 6,505 (359)— — 6,148 
Purchase of common shares for vesting— — — — — (7,387)— — (7,387)
Share-based compensation expense— — — — 13,819 — — — 13,819 
Share-based compensation included in severance expense— — — — 1,258 — — — 1,258 
Foreign currency translation adjustment— — — — — — 3,494 — 3,494 
Change in unrealized loss on derivatives— — — — — — (10,553)— (10,553)
Net loss— — — — — — — (131,728)(131,728)
Issuances of common shares36,176 0 — — 1,129 — — — 1,129 
Repurchase of common shares— — — — — (105,994)— — (105,994)
Stock option exercises, net1,410 0 — — 63 (63)— — 0 
Dividend equivalents accrued on performance shares— — — — — — — (50)(50)
Dividends to common shareholders ($1.515 per share)— — — — — — — (119,058)(119,058)
Dividends to Series C preferred shareholders ($1.4375 per share)— — — — — — — (7,756)(7,756)
Dividends to Series E preferred shareholders ($2.25 per share)— — — — — — — (7,756)(7,756)
Dividends to Series G preferred shareholders ($1.4375 per share)— — — — — — — (8,624)(8,624)
Balance at December 31, 202081,917,876 $819 14,841,431 $148 $3,857,632 $(261,238)$216 $(966,992)$2,630,585 

See accompanying notes to consolidated financial statements.
73


EPR PROPERTIES
Consolidated Statements of Cash Flows
(Dollars in thousands)

 Year Ended December 31,
 202020192018
Operating activities:
Net (loss) income$(131,728)$202,243 $266,983 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Impairment charges85,657 23,639 27,283 
Impairment charges on joint ventures3,247 0 0 
Gain on sale of real estate(50,119)(36,053)(3,037)
Gain on insurance recovery(809)0 0 
Deferred income tax expense (benefit), net15,246 (4,115)573 
Credit loss expense30,695 0 0 
Gain on sale of investment in a direct financing lease0 0 (5,514)
Costs associated with loan refinancing or payoff1,632 38,450 31,958 
Equity in loss from joint ventures4,552 381 22 
Distributions from joint ventures0 112 567 
Depreciation and amortization170,333 171,763 153,430 
Amortization of deferred financing costs6,606 6,192 5,797 
Amortization of above/below market leases and tenant allowances, net(480)(343)(581)
Share-based compensation expense to management and Trustees13,819 13,180 15,111 
Share-based compensation expense included in severance expense1,258 580 3,218 
Change in assets and liabilities:
Operating lease assets and liabilities344 1,194 0 
Mortgage notes accrued interest receivable(7,576)(381)(517)
Accounts receivable(47,383)(1,385)(22,300)
Direct financing lease receivable0 (186)(563)
Other assets(2,698)(1,301)(1,055)
Accounts payable and accrued liabilities(16,128)27,540 4,979 
Unearned rents and interest(11,195)(1,980)7,974 
Net cash provided by operating activities65,273 439,530 484,328 
Investing activities:
Acquisition of and investments in real estate and other assets(38,714)(500,629)(187,460)
Proceeds from sale of real estate227,742 216,020 22,134 
Proceeds from sale of public charter school portfolio0 449,555 0 
Investment in unconsolidated joint ventures(1,690)(325)(29,473)
Proceeds from settlement of derivative0 0 30,796 
Investment in mortgage notes receivable(8,141)(142,456)(36,105)
Proceeds from mortgage note receivable paydown481 217,459 335,168 
Investment in promissory notes receivable(6,134)(12,271)(7,863)
Proceeds from promissory note receivable paydown103 3,738 7,500 
Proceeds from insurance recovery809 0 0 
Proceeds from sale of investment in direct financing leases, net0 0 43,447 
Additions to properties under development(40,470)(134,586)(274,956)
Net cash provided (used) by investing activities133,986 96,505 (96,812)
Financing activities:
Proceeds from long-term debt facilities and senior unsecured notes750,000 962,000 908,000 
Principal payments on debt(160,000)(866,735)(949,684)
Deferred financing fees paid(6,330)(9,386)(8,642)
Costs associated with loan refinancing or payoff (cash portion)(1,632)(36,918)(28,650)
Net proceeds from issuance of common shares972 305,556 956 
Impact of stock option exercises, net0 (732)(62)
Purchase of common shares for treasury for vesting(7,387)(9,691)(7,156)
Purchase of common shares under share repurchase program(105,994)0 0 
Dividends paid to shareholders(172,460)(367,317)(342,315)
Net cash provided (used) by financing activities297,169 (23,223)(427,553)
Effect of exchange rate changes on cash142 121 (442)
Net change in cash and cash equivalents and restricted cash496,570 512,933 (40,479)
Cash and cash equivalents and restricted cash at beginning of the year531,440 18,507 58,986 
Cash and cash equivalents and restricted cash at end of the year$1,028,010 $531,440 $18,507 
Supplemental information continued on next page.
74

EPR PROPERTIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
Continued from previous page.
 Year Ended December 31,
 202020192018
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents at beginning of the year$528,763 $5,872 $41,917 
Restricted cash at beginning of the year2,677 12,635 17,069 
Cash and cash equivalents and restricted cash at beginning of the year$531,440 $18,507 $58,986 
Cash and cash equivalents at end of the year$1,025,577 $528,763 $5,872 
Restricted cash at end of the year2,433 2,677 12,635 
Cash and cash equivalents and restricted cash at end of the year$1,028,010 $531,440 $18,507 
Supplemental schedule of non-cash activity:
Transfer of property under development to real estate investments$20,657 $354,568 $228,572 
Issuance of nonvested shares and restricted share units at fair value, including nonvested shares issued for payment of bonuses$20,062 $17,590 $18,252 
Credit loss expense related to adoption of ASC Topic 326$2,163 $0 $0 
Conversion or reclassification of mortgage notes receivable to real estate investments$0 $0 $155,185 
Mortgage note received for sale of real estate investments$0 $27,423 $0 
Amounts related to adoption of ASC Topic 842:
Operating lease right-of-use assets$0 $229,620 $0 
Operating lease liabilities$0 $253,486 $0 
Sub-lessor straight-line receivable$0 $24,454 $0 
Acquisition of real estate in exchange for assumption of debt at fair value$0 $14,000 $0 
Assumption of debt$0 $18,585 $0 
Supplemental disclosure of cash flow information:
Cash paid during the year for interest$152,393 $143,530 $145,559 
Cash paid during the year for income taxes$1,507 $1,842 $1,363 
Interest cost capitalized$1,233 $5,326 $9,903 
Change in accrued capital expenditures$(12,376)$(35,155)$32,993 
See accompanying notes to consolidated financial statements.
75

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018

1. Organization

Description of Business
EPR Properties (the Company) was formed on August 22, 1997 as a Maryland real estate investment trust (REIT), and an initial public offering of the Company's common shares of beneficial interest (common shares) was completed on November 18, 1997. Since that time, the Company has been a leading Experiential net lease REIT specializing in select enduring experiential properties. The Company's underwriting is centered on key industry and property cash flow criteria, as well as the credit metrics of the Company's tenants and customers. The Company’s properties are located in the United States and Canada.

2. Summary of Significant Accounting Policies

Principles of Consolidation
The consolidated financial statements include the accounts of EPR Properties and its subsidiaries, all of which are wholly owned.

Risks and Uncertainties
On March 11, 2020, the World Health Organization declared a novel strain of coronavirus (COVID-19) a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the Company’s business is highly uncertain and difficult to predict, as information is rapidly evolving. The outbreak of COVID-19 has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving and many jurisdictions within the United States and abroad reacted by instituting quarantines, mandating business and school closures and restricting travel. As a result, the COVID-19 pandemic has severely impacted experiential real estate properties, given that such properties involve congregate social activity and discretionary consumer spending. Substantially all the Company's non-theatre locations and many of the Company's theatre locations have re-opened as of December 31, 2020. However, certain theatre locations remain closed due to local restrictions or operator decision to close as a result of the impact of the COVID-19 pandemic, specifically the decision by many movie studios to delay the release of blockbuster movies in hopes that larger audiences will be available as additional markets open. The severity of the impact of the COVID-19 pandemic on the Company’s business will depend on a number of factors, including, but not limited to, the scope, severity and duration of the pandemic, the actions taken to contain the outbreak or mitigate its impact, the development and distribution of vaccines and the efficacy of those vaccines, the public’s confidence in the health and safety measures implemented by the Company's tenants and borrowers, and the direct and indirect economic effects of the outbreak and containment measures, all of which are uncertain and cannot be predicted. During 2020, the COVID-19 pandemic negatively affected the Company's business, and could continue to have material, adverse effects on the Company's financial condition, results of operations and cash flows.

The Company’s consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods presented. The Company considered the impact of the COVID-19 pandemic on the assumptions and estimates used in determining the Company’s financial condition and results of operations for the year ended December 31, 2020. The following were adverse impacts to its financial statements and business during the year ended December 31, 2020:

•The Company wrote-off receivables from tenants and straight-line rent receivables totaling $65.1 million directly to rental revenue in the accompanying consolidated statements of (loss) income and comprehensive (loss) income upon determination that the collectibility of these receivables or future lease payments from these tenants were no longer probable. Additionally, the Company determined that future rental revenue related to these tenants, including American-Multi Cinema, Inc. (AMC) and Regal Cinemas (Regal), a subsidiary of Cineworld Group, will be recognized on a cash basis. The straight line rent receivable
76

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
represented $38.0 million of this write-off and was comprised of $26.5 million of straight-line rent receivable and $11.5 million of sub-lessor ground lease straight-line rent receivable.
•The Company reduced rental revenue by$13.6 million due to rent abatements.
•The Company deferred approximately $76.0 million of amounts due from tenants and $3.4 million due from borrowers that were booked as receivables. Additionally, the Company has amounts due from tenants that were not booked as receivables as the full amounts were not deemed probable of collection as a result of the COVID-19 pandemic. The amounts not booked as receivables remain obligations of the tenants and will be recognized as revenue when received. The repayment terms for all of these deferments vary by tenant or borrower.
•The Company recognized $85.7 million in impairment charges during the year ended December 31, 2020, which was comprised of $70.7 million of impairments of real estate investments, and $15.0 million of impairments of operating lease right-of-use assets. The Company also recognized impairment charges on joint ventures of $3.2 million related to its equity investments in 3 theatre projects located in China.
•The Company increased its expected credit losses by $30.7 million from its implementation estimate of $2.2 million. This increase was primarily due to credit loss expense related to fully reserving the outstanding principal balance of $12.6 million and unfunded commitment to fund $12.9 million, totaling $25.5 million, related to notes receivable from 1 borrower, as a result of recent changes in the borrower's financial status due to the impact of the COVID-19 pandemic. The remaining increase was due to economic uncertainty and the rapidly changing environment surrounding the pandemic.
•The Company recognized a full valuation allowance of $18.0 million during the third quarter 2020 on the Company's net deferred tax assets related to the Company's taxable REIT subsidiary (TRS) and Canadian tax paying entity as a result of the uncertainty of realization caused by the impact of the COVID-19 pandemic. At December 31, 2020, the Company had a valuation allowance totaling $24.9 million on its net deferred tax assets.
•On March 20, 2020, the Company borrowed $750.0 million under its unsecured revolving credit facility as a precautionary measure to increase the Company's cash position and preserve financial flexibility given the global uncertainty caused by the COVID-19 pandemic. On December 30, 2020, the Company paid down its revolving credit facility by $160.0 million, following the sale of 6 private schools and 4 early childhood education centers. Subsequent to year-end, the Company paid down an additional $500.0 million on its revolving credit facility.
•The Company amended the agreement which governs its unsecured revolving credit facility and its unsecured term loan facility (Consolidated Credit Agreement) and the agreement which governs its private placement notes (Note Purchase Agreement). The amendments modified certain provisions and waived the Company's obligation to comply with certain covenants under these debt agreements during the Covenant Relief Period in light of the uncertainty related to impacts of the COVID-19 pandemic on the Company and its tenants and borrowers. The Company pays higher interest costs during the Covenant Relief Period. The amendments to the Consolidated Credit Agreement and Note Purchase Agreement also impose additional restrictions on the Company during the Covenant Relief Period, including limitations on making investments, incurring indebtedness, making capital expenditures, paying dividends or making other distributions, repurchasing the Company's shares, voluntarily prepaying certain indebtedness, encumbering certain assets and maintaining a minimum liquidity amount, in each case subject to certain exceptions. See Note 8 for additional details. The term "Covenant Relief Period," as used in these notes to consolidated financial statements, generally means the period of time beginning on June 29, 2020 and ending on (i) December 31, 2021, in the case of the Company's Consolidated Credit Agreement, or (ii) October 1, 2021 (subject to extension to January 1, 2022 at the Company's election, subject to certain conditions), in the case of the Company's Note Purchase Agreement governing its private placement notes. The Company has the right under certain circumstances to terminate the Covenant Relief Period earlier.
•In connection with the loan amendments discussed above, certain of the Company's key subsidiaries guaranteed the Company's obligations based on the Company's unsecured debt ratings. If the Company's unsecured debt rating is further downgraded by Moody's, it will be required to pledge the equity interest in certain subsidiary guarantors to secure its obligations under its unsecured credit facilities and private placement notes. See Note 8 for additional details.

77

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
On June 29, 2020, the effective date of the loan amendments discussed above, the Company suspended its share repurchase plan. Prior to the effective date, during the year ended December 31, 2020, the Company repurchased 4,066,716 common shares under the share repurchase program for approximately $106.0 million. The repurchases were made under a Rule 10b5-1 trading plan.

The monthly cash dividends to common shareholders were suspended following the common share dividend paid on May 15, 2020 to shareholders of record as of April 30, 2020. The suspension of the monthly cash dividend to common shareholders will continue through the Covenant Relief Period, except as may be necessary to maintain REIT status and to not owe income tax.

On July 31, 2020, the Company entered into a Forbearance Agreement (the Forbearance Agreement), a Master Lease Agreement (the Master Lease) and seven amended lease agreements (the Transitional Leases and collectively with the Master Lease, the Leases) with AMC, its affiliate tenants of the Company (AMC and such affiliates, collectively, AMC Tenant), and AMC Entertainment Holdings, Inc. (Guarantor), relating to all 53 properties leased to AMC Tenant (the Leased Properties) on the date the agreement was executed. These agreements restructured the then-existing lease terms for the Leased Properties in light of the continuing impact of the COVID-19 pandemic on AMC Tenant's operations. Effective July 1, 2020, the Leased Properties are leased to AMC Tenant pursuant to the following leases:

•Master Lease relating to 46 Leased Properties (the Master Lease Properties); and
•NaN Transitional Leases relating to 7 Leased Properties (the Transitional Properties). These leases were subsequently terminated by the Company during 2020.

In addition, AMC Tenant and the Company entered into the following related agreements:

•Security Agreement granting to the Company a security interest subordinated to AMC's secured credit agreements and indentures in all of AMC Tenant’s property located at the Leased Properties to secure AMC Tenant’s obligations to the Company under the Forbearance Agreement and the Leases;
•Guaranty providing a guaranty by Guarantor of AMC Tenant’s obligations to the Company under the Forbearance Agreement and the Leases; and
•Capital Improvements Agreement providing a financial mechanism for the Company to provide AMC Tenant with up to $35 million of funds to complete improvements to the Master Lease Properties in exchange for increased annual fixed rent.

The prior leases for the 46 Master Lease Properties were replaced with a single Master Lease. The Company agreed to reduce total annual fixed rent on the 46 Master Lease Properties by approximately $19.4 million to approximately $87.8 million (including approximately $6.8 million of ground rent and the repayment of deferral amounts for the months of April, May and June 2020 which the Company had agreed to defer and amortize as part of fixed rent over the first 14 years of the Master Lease term).

The Master Lease Properties have been divided into four tranches, with the initial term of each tranche expiring on a different date: June 30, 2034, June 30, 2035, June 30, 2036 and June 30, 2037. The AMC Tenant may exercise up to 3 5-year extensions for each tranche. If AMC Tenant elects not to exercise an extension option with respect to a tranche, fixed rent will be reduced by the fair market rental value of Master Lease Properties included in such tranche at that time, determined in accordance with the Master Lease. Upon the expiration of the initial term of each tranche or expiration of any extension option of each tranche and the election by AMC Tenant to further extend the term of such tranche, AMC Tenant may elect to remove up to 2 Master Lease Properties included in the tranche, which will result in a reduction in the annual fixed rent equal to the fair market rental value of such removed Master Lease Properties at that time, determined in accordance with the Master Lease. AMC Tenant may not remove more than 10 Master Lease Properties in total and not more than 3 Master Lease Properties per tranche during the entirety of the Master Lease term.

78

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
Pursuant to the Leases and the Forbearance Agreement, commencing on July 1, 2020 and continuing through December 31, 2020, in lieu of monthly fixed rent AMC Tenant agreed to pay percentage rent of 15% of total gross receipts during such month, not to exceed the deferred monthly fixed rent for the Leased Properties. The difference between the scheduled monthly fixed rent and the percentage rent actually paid to the Company for the Master Lease became additional deferred rent that, beginning in February 2021, will be added to fixed cash rent and amortized over the remaining portion of the first 14 years of the term of the Master Lease and beginning January 2021 will be rent due related to the Transitional Leases amortized over the prior lease terms. Accordingly, the new annual contractual rent under the Master Lease will increase from $87.8 million to $90.7 million by February 2021 (including approximately $4.9 million of ground rent).

The Leases are triple-net leases requiring AMC Tenant to be responsible at all times for taxes, assessments, maintenance and operating costs, common area charges, association fees, ground rent, insurance premiums, utility charges and similar pass-through charges. Fixed rent of the Master Lease (excluding the portion attributable to deferred rent) will increase by 7.5% every 5 years during the term and any extensions.

Each lease for the 7 Transitional Properties was amended by the parties. The Company agreed to reduce the aggregate annual fixed rent on the Transitional Properties by approximately $6.2 million to approximately $8.1 million (including approximately $1.2 million of ground rent and the repayment of deferral amounts for the months of April, May and June 2020 which the Company had agreed to defer and amortize as part of fixed rent over the remaining terms of the new leases).

The Company had the right to terminate each Transitional Lease by giving the AMC Tenant 90 days' prior notice of termination. Upon termination of a Transitional Lease by the Company, AMC Tenant agreed to (1) cooperate with the Company in transitioning the applicable Transitional Property to a new operator to ensure seamless transfer of management and re-branding, and (2) transfer certain property, including fixtures, furnishings and equipment, located or used at the applicable Transitional Property in exchange for a credit to the unpaid deferred amount due under the Transitional Lease. Prior to December 31, 2020, the Company terminated all Transitional Leases with AMC. The total amount deferred under each Transitional Lease prior to the Company terminating these agreements is still due by AMC and is scheduled to be paid over what would have been the remaining terms of the related property leases.

In March 2020, the Company's employees transitioned to a fully remote work force to protect the safety and well-being of the Company's personnel. The Company's prior investments in technology, business continuity planning and cyber-security protocols have enabled the Company to continue working with limited operational impacts.

Variable Interest Entities
The Company consolidates certain entities when it is deemed to be the primary beneficiary in a variable interest entity (VIE) in which it has a controlling financial interest in accordance with the consolidation guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). The equity method of accounting is applied to entities in which the Company is not the primary beneficiary as defined in the FASB ASC Topic on Consolidation (Topic 810), but can exercise significant influence over the entity with respect to its operations and major decisions.

The Company’s variable interest in VIEs currently are in the form of equity ownership and loans provided by the Company to a VIE or other partner. The Company examines specific criteria and uses its judgment when determining if the Company is the primary beneficiary of a VIE. The primary beneficiary generally is defined as the party with the controlling financial interest. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. As of December 31, 2020 and 2019, the Company does not have any investments in consolidated VIEs.

79

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
Use of Estimates
Management of the Company has made estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP). Actual results could differ from those estimates.

Real Estate Investments
Real estate investments are carried at initial recorded value less accumulated depreciation. Costs incurred for the acquisition and development of the properties are capitalized. In addition, the Company capitalizes certain costs that relate to property under development including interest and a portion of internal legal personnel costs. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which generally are estimated to be 30 years to 40 years for buildings, three years to 25 years for furniture, fixtures and equipment and 10 years to 20 years for site improvements. Tenant improvements, including allowances, are depreciated over the shorter of the lease term or the estimated useful life and leasehold interests are depreciated over the useful life of the underlying ground lease.

Management reviews the Company's real estate investments, including operating lease right-of-use assets, for impairment whenever events or changes in circumstances indicate that the carrying value of a property may not be recoverable, which is based on an estimate of undiscounted future cash flows expected to result from its use and eventual disposition. If impairment exists due to the inability to recover the carrying value of the property, an impairment loss is recorded to the extent that the carrying value of the property exceeds its estimated fair value.

The Company evaluates the held-for-sale classification of its real estate as of the end of each quarter. Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value less costs to sell. Assets are generally classified as held for sale once management has initiated an active program to market them for sale and it is probable the assets will be sold within one year. On occasion, the Company will receive unsolicited offers from third parties to buy individual Company properties. Under these circumstances, the Company will classify the properties as held for sale when a sales contract is executed with no contingencies and the prospective buyer has funds at risk to ensure performance.

Real Estate Acquisitions
Upon acquisition of real estate properties, the Company evaluates the acquisition to determine if it is a business combination or an asset acquisition. If the acquisition is determined to be an asset acquisition, the Company records the purchase price and other related costs incurred to the acquired tangible assets and identified intangible assets and liabilities on a relative fair value basis. In addition, costs incurred for asset acquisitions including transaction costs, are capitalized.

If the acquisition is determined to be a business combination, the Company records the fair value of acquired tangible assets and identified intangible assets and liabilities as well as any noncontrolling interest. Acquisition-related costs in connection with business combinations are expensed as incurred and included in transaction costs in the accompanying consolidated statements of (loss) income and comprehensive (loss) income.

In addition to acquisition-related costs in connection with business combinations, transaction costs include costs associated with terminated transactions, pre-opening costs and certain leasing and tenant transition costs. Transaction costs expensed totaled $5.4 million, $23.8 million and $3.7 million for the years ended December 31, 2020, 2019 and 2018, respectively.

For real estate acquisitions (asset acquisitions or business combinations), the fair value (or relative fair value in an asset acquisition) of the tangible assets is determined by valuing the property using recent independent appraisals or methods similar to those used by independent appraisers. Land is valued using the sales comparison approach which uses available market data from recent comparable land sales as an input to estimate the fair value. Site improvements and tenant improvements are valued using the cost approach which uses replacement cost data obtained from industry recognized guides less depreciation as an input to estimate the fair value. The building is valued either using the cost approach described above or a combination of the cost and the income approach. The
80

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
income approach uses market leasing assumptions to estimate the fair value of the property as if vacant. The cost and income approaches are reconciled to arrive at an estimated building fair value.

Intangibles
The fair value of acquired in-place leases also includes management’s estimate, on a lease-by-lease basis, of the present value of the following amounts: (i) the value associated with avoiding the cost of originating the acquired in-place leases (i.e. the market cost to execute the leases, including leasing commissions, legal and other related costs); (ii) the value associated with lost revenue related to tenant reimbursable operating costs estimated to be incurred during the assumed re-leasing period, (i.e. real estate taxes, insurance and other operating expenses); (iii) the value associated with lost rental revenue from existing leases during the assumed re-leasing period; and (iv) the value associated with avoided tenant improvement costs or other inducements to secure a tenant lease. These values are amortized over the lease term of the respective leases.
In determining the fair value of acquired above and below-market leases, the Company considers many factors. On a lease-by-lease basis, management considers the present value of the difference between the contractual amounts to be paid pursuant to the leases and management’s estimate of fair market lease rates. For above-market leases and below-market leases, management considers such differences over the lease terms. The capitalized above-market lease values are amortized as a reduction of rental income over the lease terms of the respective leases. The capitalized below-market lease values are amortized as an increase to rental income over the lease terms of the respective leases. The lease term includes the minimum base term plus any extension options that are reasonably certain to be exercised. Management considers several factors in determining the discount rate used in the present value calculations, including the credit risks associated with the respective tenants.

If debt is assumed in the acquisition, the determination of whether it is above or below-market is based upon a comparison of similar financing terms for similar real estate investments at the time of the acquisition.

In determining the fair value of tradenames, the Company historically uses the relief from royalty method, which estimates the fair value of hypothetical royalty income that could be generated if the intangible asset was licensed from an independent third-party.

In determining the fair value of a contract intangible, the Company considers the present value of the difference between the estimated "with" and "without" scenarios. The "with" scenario presents the contract in place and the "without" scenario incorporates the potential profits that may be lost over the period without the contract in place. The capitalized contract value is amortized over the estimated useful life of the underlying asset.

The excess of the cost of an acquired business (in a business combination) over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed is recorded as goodwill. Goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired.
Management of the Company reviews the carrying value of intangible assets for impairment on an annual basis.
Intangible assets and liabilities (included in Other assets and Accounts payable and accrued liabilities in the accompanying consolidated balance sheets) consist of the following at December 31 (in thousands):
81

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
20202019
Assets:
In-place leases, net of accumulated amortization of $13.9 million and $10.8 million, respectively$21,684 $24,528 
Above-market lease, net of accumulated amortization of $1.2 million and $1.1 million, respectively354 71 
Tradenames, net of accumulated amortization of $317 thousand and $184 thousand, respectively (1)8,847 8,980 
Contract value, net of accumulated amortization of $914 thousand and $548 thousand, respectively10,054 10,420 
Goodwill693 693 
Total intangible assets, net$41,632 $44,692 
Liabilities:
Below-market lease, net of accumulated amortization of $1.5 million and $1.1 million, respectively$8,397 $8,934 
(1) At December 31, 2020 and 2019, $5.4 million in tradenames had indefinite lives and were not amortized.
Aggregate lease intangible amortization included in expense was $5.6 million, $3.7 million and $2.9 million for the years ended December 31, 2020, 2019 and 2018, respectively. The net amount amortized as an increase to rental revenue for capitalized above and below-market lease intangibles was $0.5 million, $0.4 million and $0.6 million for the years ended December 31, 2020, 2019 and 2018, respectively.
Future amortization of in-place leases, net, above-market lease, net, tradenames, net, contract value, net and below-market lease, net at December 31, 2020 is as follows (in thousands):
In place leasesTradenames (1)Contract ValueAbove-market leaseBelow-market lease
Year:
2021$3,283 $133 $365 $51 $(456)
20222,658 133 365 46 (437)
20232,654 133 365 46 (415)
20242,095 133 365 46 (396)
20252,085 133 365 46 (387)
Thereafter8,909 2,827 8,229 119 (6,306)
Total$21,684 $3,492 $10,054 $354 $(8,397)
Weighted average amortization period (years)11.227.227.57.530.1
(1) Excludes $5.4 million in tradenames with indefinite lives.

Deferred Financing Costs
Deferred financing costs are amortized over the terms of the related debt obligations or mortgage note receivable as applicable. Deferred financing costs of $35.6 million and $37.2 million as of December 31, 2020 and 2019, respectively, are shown as a reduction of debt. The deferred financing costs of $4.8 million and $3.5 million as of December 31, 2020 and 2019, respectively, related to the unsecured revolving credit facility are included in other assets.

Reportable Segments
The Company has 2 reportable operating segments: Experiential and Education. The Experiential segment includes the following property types: theatres, eat & play (including seven theatres located in entertainment districts), attractions, ski, experiential lodging, gaming, cultural and fitness & wellness. The Education segment
82

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
includes the following property types: early childhood education centers and private schools. See Note 19 for financial information related to these reportable segments.

Rental Revenue
The Company leases real estate to its tenants primarily under leases that are predominately classified as operating leases. The Company's leases generally provide for rent escalations throughout the lease terms. Rents that are fixed are recognized on a straight-line basis over the lease term. Base rent escalations that include a variable component are recognized upon the occurrence of the specified event as defined in the Company's lease agreements. Many of the Company's leasing arrangements include options to extend the lease, which are not included in the minimum lease terms unless it is reasonably certain to be exercised. Straight-line rental revenue is subject to an evaluation for collectibility, and the Company records a direct write-off against rental revenue if collectibility of these future rents is not probable. For the year ended December 31, 2020, the Company recognized straight-line write-offs totaling $38.0 million, which were comprised of $26.5 million of straight-line accounts receivable and $11.5 million of sub-lessor ground lease straight-line accounts receivable. Straight-line rental revenue, net of write-offs, was a reduction to total rental revenue of $24.5 million for the year ended December 31, 2020. For the year ended December 31, 2019, the Company recognized straight-line write-offs of $1.4 million (of which $1.2 million has been classified within discontinued operations). There were no straight-line write-offs recognized during the year ended December 31, 2018. For the years ended December 31, 2019 and 2018, the Company recognized straight-line rental revenue, net of write-offs of $13.6 million (of which $3.0 million has been classified within discontinued operations) and $10.2 million (of which $5.5 million has been classified within discontinued operations), respectively.

Substantially all the Company's customers' operations were temporarily closed for a portion of the year ended December 31, 2020, as a result of the COVID-19 pandemic. Many of the Company's non-theatre locations have re-opened. However, certain of the Company's theatre locations remain closed due to local restrictions or operator decision to close as a result of the impact of the COVID-19 pandemic, specifically the decision by many movie studios to delay the release of films. In response, the Company has agreed to defer rent for a substantial portion of its customers. On April 10, 2020, the FASB issued a Staff Q&A on Topic 842 was subsequently amendedand Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic. In reliance upon the FASB Staff Q&A, the Company has not treated qualifying deferrals or rent concessions during the period effected by ASU No. 2018-01, Land Easement Practical Expedientthe COVID-19 pandemic as lease modifications. While deferments for Transitionthis and future periods delay rent payments, these deferments generally do not release customers from the obligation to Topic 842; ASU No. 2018-10, Codification Improvementspay the deferred amounts in the future. Deferred rent amounts are reflected in the Company's financial statements as accounts receivable if collection is determined to Topic 842; ASU No. 2018-11, Targeted Improvementsbe probable or recognized when received as variable lease payments if collection is determined to not be probable. Certain agreements with tenants where remaining lease terms are extended, or other changes are made that do not qualify for the treatment in the FASB Staff Q&A, are treated as lease modifications. In these circumstances, upon an executed lease modification, if the tenant is not being recognized on a cash basis, the contractual rent reflected in accounts receivable and ASU No. 2018-20, Narrow-Scope Improvementsstraight-line rent receivable will be amortized over the remaining term of the lease against rental revenue. In limited cases, customers may be entitled to the abatement of rent during governmentally imposed prohibitions on business operations which is recognized in the period to which it relates, or the Company may provide rent concessions to tenants. In cases where the Company provides concessions to tenants to which they are not otherwise entitled, those amounts will be recognized in the period in which the concession is granted unless the changes are accounted for Lessors.as lease modifications.


Most of the Company’s lease contracts are triple-net leases, which require the tenants to make payments directly to third parties for lessor costs (such as property taxes and insurance) associated with the properties. In accordance with Topic 842, will requirethe Company does not include these payments made by the lessees to classifythird parties in rental revenue or property operating expenses. In certain situations, the Company pays these lessor costs directly to third-parties and the tenants reimburse the Company. In accordance with Topic 842, these payments are presented on a gross basis in rental revenue and property operating expense. During the year ended December 31, 2020 and 2019, the Company recognized $2.2 million and $6.9 million, respectively, related to the gross-up of these reimbursed expenses which are included in rental revenue and property operating expenses.

Certain of the Company's leases, particularly at its entertainment districts, require the tenants to make payments to the Company for property related expenses such as either finance or operating leasescommon area maintenance. The Company has elected to
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EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
combine these non-lease components with the lease components in rental revenue. For the years ended December 31, 2020, 2019 and 2018, the non-lease components included in rental revenue totaled $12.9 million, $16.0 million and $15.3 million, respectively.

In addition, most of the Company's tenants are subject to additional rents (above base rents) if gross revenues of the properties exceed certain thresholds defined in the lease agreements (percentage rents). Percentage rents are recognized at the time when specific triggering events occur as provided by the lease agreement. Rental revenue included percentage rents of $8.6 million, $15.0 million and $10.7 million for the years ended December 31, 2020, 2019 and 2018, respectively. Furthermore, due to the impact of the COVID-19 pandemic, certain of the Company's tenants paid a portion of base rent in 2020 based on certaina percentage of gross revenue. This variable rent totaled $5.2 million for the year ended December 31, 2020.

The Company regularly evaluates the collectibility of its receivables on a lease by lease basis. The evaluation primarily consists of reviewing past due account balances and considering such factors as the credit quality of the Company's tenants, historical trends of the tenant, current economic conditions and changes in customer payment terms. When the collectibility of lease receivables or future lease payments are no longer probable, the Company records a direct write-off of the receivable to rental revenue and recognizes future rental revenue on a cash basis.

Property Sales
Sales of real estate properties are recognized when a contract exists and the purchaser has obtained control of the property. Gains on sales of properties are recognized in full in a partial sale of nonfinancial assets, to the extent control is not retained. Any noncontrolling interest retained by the seller would, accordingly, be measured at fair value.

The Company evaluates each sale or disposal transaction to determine if it meets the criteria to qualify as discontinued operations. A discontinued operation is a component of an entity or group of components that have been disposed of or are classified as held for sale and represent a strategic shift that has or will have a major effect on the Company's operations and financial results. If the sale or disposal transaction does not meet the criteria, the operations and related gain or loss on sale is included in income from continuing operations. Certain reclassifications have been made to recognize onprior period amounts to conform to the current period presentation for assets that qualify for presentation as discontinued operations. See Note 17 for further details.

Mortgage Notes and Other Notes Receivable
Mortgage notes and other notes receivable, including related accrued interest receivable, consist of loans originated by the Company and the related accrued and unpaid interest income as of the balance sheet date. Mortgage notes and other notes receivable are initially recorded at the assetsamount advanced to the borrower less allowance for credit loss. Interest income is recognized using the effective interest method based on the stated interest rate over the estimated life of the note. Premiums and liabilities fordiscounts are amortized or accreted into income over the rights and obligations created by those leases. Lessor accounting will remain largely unchanged from current U.S. GAAP. estimated life of the note using the effective interest method.

The standard eliminates current real estate-specific provisions and changes the guidanceCompany adopted Accounting Standards Update (ASU) No. 2016-13, Measurement of Credit Losses on sale-leaseback transactions and will require new disclosures within the notes accompanying the consolidated financial statements.
The new standard was Financial Instruments (Topic 326) effective for the Company on January 1, 20192020, which requires allowance for credit losses to be recorded to reflect that all mortgage notes and required the usenotes receivable have some inherent risk of the modified retrospective approach under either the effective date methodloss regardless of credit quality, collateral, or the comparative method.other mitigating factors. The Company adopted the standard on the effective date and used the effective date as the date of initial application. Accordingly, financialcomparative periods have not been recast, and required disclosures will not be provided for dates and periods prior to January 1, 2020. On the effective date, the Company recognized credit loss expense through retained earnings and the corresponding allowance for credit losses of approximately $2.2 million, which was comprised of $2.1 million related to mortgage notes receivable and $0.1 million related to notes receivable (which are presented within other assets in the accompanying consolidated balance sheet). While Topic 326 does not require any particular method for determining the reserves, it does specify that it should be based on relevant information will notabout past events, including historical loss experience, current portfolio and market conditions, as well as reasonable and supportable forecasts for the term of each mortgage note or note receivable. The Company uses a forward-looking commercial real estate forecasting tool to estimate its current expected credit losses (CECL) for each of its mortgage notes and notes receivable on a loan-by-loan basis.

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Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018

The CECL allowance required by Topic 326 is a valuation account that is deducted from the related mortgage note or note receivable.

Certain of the Company’s mortgage notes and notes receivable include commitments to fund incremental amounts to its borrowers. These future funding commitments are also subject to the CECL model. The allowance related to future funding is recorded as a liability and is included in Accounts payable and accrued liabilities in the accompanying consolidated balance sheet.

As permitted under Topic 326, the Company made an accounting policy election to not measure an allowance for credit losses for accrued interest receivables related to its mortgage notes and notes receivable. Accordingly, if accrued interest receivable is deemed to be updated,uncollectible, the Company will record any necessary write-offs as a reversal of interest income. During the year ended December 31, 2020, the Company wrote off approximately $0.3 million of accrued interest income against interest income related to 1 note receivable. As of December 31, 2020, the Company believes that all outstanding accrued interest is collectible.

In the event the Company has a past due mortgage note or note receivable and disclosures requiredthe Company determines it is collateral dependent, the Company measures expected credit losses based on the fair value of the collateral. The Company evaluates the collectability of both interest and principal for each of its mortgage notes and notes receivable on a quarterly basis to determine if foreclosure is probable. As of December 31, 2020, the Company does not have any mortgage notes or notes receivable with past due principal balances.

Mortgage and Other Financing Income
Certain of the Company's borrowers are subject to additional interest based on certain thresholds defined in the mortgage agreements (participating interest). Participating interest income is recognized at the time when specific triggering events occur as provided by the mortgage agreement. Mortgage and other financing income included participating interest income of $0.6 million for the year ended December 31, 2019. NaN participating interest income was recognized for the years ended December 31, 2020 and 2018. In addition, for the years ended December 31, 2019 and 2018, mortgage and other financing income included $2.7 million (of which $1.8 million has been classified in discontinued operations) and $74.7 million, respectively, in prepayment fees related to mortgage notes that were paid fully in advance of their maturity date. NaN prepayment fees were recognized for the year ended December 31, 2020.

Income Taxes
The Company qualifies as a REIT under the new standard willInternal Revenue Code (the Code). A REIT that distributes at least 90% of its taxable income to its shareholders each year and which meets certain other conditions is not be provided for datestaxed on that portion of its taxable income which is distributed to its shareholders. The Company intends to continue to qualify as a REIT and periods before January 1, 2019.distribute substantially all of its taxable income to its shareholders.


The standard offers several practical expedients for transitionCompany is subject to income tax in certain instances in both the US and in certain expedients specific to lesseesforeign jurisdictions, as more fully described herein. The Company’s income tax expense includes deferred income tax expense or lessors. Both lesseesbenefit, which represents the change in net deferred tax assets and lessorsliabilities. Deferred tax assets and liabilities are permitted to make an election to apply a packagedetermined based on the difference between the financial statement and tax bases of practical expedients available for implementation underassets and liabilities as measured by the standard.enacted tax rates that will be in effect when these differences reverse. The Company has concluded it will applyevaluates the packagerealizability of practical expedients, which permitsits deferred income tax assets and assesses the Company to not reassess its prior conclusions about lease identification, lease classification and initial direct costs. In addition, the Company elected the expedient to not evaluate existing or expired land easements and elected the practical expedient to not separate lease and non-lease componentsneed for all its leases where it is the lessor. The Company did not elect the use-of-hindsight expedient.

Although the Company is primarily a lessor, the standard will impact the Company’s consolidated financial statements and disclosures as it has certain operating land leases and other arrangementsvaluation allowance for each jurisdiction for which it is subject to income tax. The realization of the lesseedeferred tax assets depends upon all positive and negative evidence to estimate whether sufficient future taxable income will be requiredgenerated to recognize these arrangements onpermit the consolidated financial statements. For the land lease arrangements, the Company is also, in substantially all cases, in a sub-lessor position and passes the obligation to pay the monthly land lease payments on to its sublessees. use of existing deferred tax assets.

The Company is nearly complete with its evaluationowns certain real estate assets which are subject to income tax in Canada. At December 31, 2020, the net deferred tax assets related to the Company's Canadian operations totaled $17.0 million resulting from the temporary differences between income for financial reporting purposes and taxable income relating primarily to depreciation, capital improvements and straight-line rents. Due to the impacts of the land leases and other arrangements. The land lease and other arrangements will impact the Company’s financial statements asCOVID-19 pandemic, it is more likely than not the Company will recognize right of use (ROU)not generate sufficient taxable income to realize the net deferred tax assets and lease liabilities forrelated to the present value of the minimum lease payments as well as the sub-lessor straight-line receivables. In addition, as a result of applying Topic 842, the Company will be providing significant new disclosures about these arrangements. The Company is finalizing its transition adjustment and currently expects to record ROU assets in a range of $210.0 million to $220.0 million and operating lease liabilities in a range of approximately $235.0 million to $245.0 million with respect to leases existingCompany's Canadian operations as of December 31, 2018. These amounts are based on the present value of the remaining minimum rental payments on the Company’s existing operating leases existing as of December 31, 2018 where it is lessee (primarily land leases and the Company’s corporate office lease). In addition, the Company currently expects that it will record straight-line rent receivables of approximately $25.0 million, which represents the impact of the Company’s position as sub-lessor in the land leases.

As lessor accounting remained largely unchanged, the Company expects substantially all its leases to continue to be classified as operating leases. Due to the new standard’s narrowed definition of initial direct costs, the Company expects to expense as incurred lease origination costs that are not contingent and that were previously capitalized.

A substantial portion of the Company’s lease contracts (under which it is lessor) are triple-net leases, which require the tenants to make payments to third parties for operating expenses such as property taxes, insurance and common area maintenance costs associated with the properties. The Company currently does not include these payments made by the lessee to third parties in rental revenue or property operating expenses and the Company will continue to report these items this way as a result of applying the guidance in Topic 842. In certain situations, the Company pays these operating expenses directly to third-parties and the tenant reimburses the Company. These payments will be presented on a gross basis as a result of applying the guidance in Topic 842. Although no impact to net income or cash flows is expected as a result of a gross presentation, it may have the impact of increasing both reported revenues and property operating expenses.

The Company will continue its implementation work in 2019 including enhancements to the Company’s internal control framework, accounting systems and related documentation surrounding its lease accounting processes and the preparation of any additional disclosures that will be required.

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, which amends ASC Topic 326, Financial Instruments - Credit Losses. The ASU changes the methodology for measuring credit losses on financial instruments and timing of when such losses are recorded. The amendments in ASU No. 2016-13 require the Company to measure all expected credit losses based upon historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of financial assets and eliminates the incurred losses methodology under current U.S. GAAP. In addition, in November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, which also amends ASC Topic 326, Financial Instruments - Credit Losses. The ASU states that operating lease receivables are not in the scope of Subtopic2020 totaling $17.0 million.

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EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018


326-20. ASU No. 2016-13 and ASU No. 2018-19 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company is currently evaluatinghas certain taxable REIT subsidiaries (TRSs), as permitted under the impact that these ASUs will haveCode, through which it conducts certain business activities and are subject to federal and state income taxes on its consolidated financial statements and related disclosures.

In July 2018,their net taxable income. The Company uses two such TRS entities exclusively to hold the FASB issued ASU No. 2018-16, Derivatives and Hedging (Topic 815)Inclusionoperational aspect of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Ratetraditional REIT lodging structure for three Experiential lodging properties that are facilitated by management agreements with eligible independent contractors. The real estate for these investments are held by the REIT either directly or through an investment in a joint venture and leased to the respective operations entity under a triple-net lease. Management has determined the real estate meets the requirements to be classified as qualified lodging facilities as required in a Benchmark Interest Ratetraditional REIT lodging structure.

At December 31, 2020, the net deferred tax assets related to the Company's TRSs totaled $7.9 million resulting from the temporary differences between income for Hedge Accounting Purposes. The amendments in this update permit usefinancial reporting purposes and taxable income relate primarily to net operating loss carryovers and pre-opening cost amortization. Due to the impacts of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes. The guidanceCOVID-19 pandemic, it is effective for fiscal years beginning after December 15, 2018. The Company doesmore likely than not expect a material impact on the Company’s consolidated financial statements when the new standard is implemented, however, the Company will considernot generate sufficient taxable income to realize the implicationsnet deferred tax assets related to the Company's TRSs as of this standardDecember 31, 2020 totaling $7.9 million.

As of December 31, 2020 and 2019, respectively, the Canadian operations and the Company's TRSs had deferred tax assets included in other assets in the future.

3. Rental Properties
The following table summarizesaccompanying consolidated balance sheet totaling approximately $28.5 million and $19.3 million and deferred tax liabilities included in accounts payable and accrued liabilities in the carrying amounts of rental properties as of accompanying consolidated balance sheet totaling approximately $3.6 million and $3.9 million. At December 31, 2018 and 20172020, the Company had a valuation allowance offsetting the net deferred tax assets included in the accompanying consolidated balance sheet totaling $24.9 million. The Company’s consolidated deferred tax position is summarized as follows (in thousands):
20202019
Fixed assets$18,077 $14,462 
Net operating losses6,546 1,656 
Start-up costs2,495 2,768 
Other1,392 367 
Total deferred tax assets$28,510 $19,253 
Capital improvements$(2,888)$(2,765)
Straight-line receivable(706)(1,097)
Other(9)(1)
Total deferred tax liabilities$(3,603)$(3,863)
Valuation allowance(24,907)0 
Net deferred tax asset$0 $15,390 
 2018 2017
Buildings and improvements$4,593,159
 $4,123,356
Furniture, fixtures & equipment97,463
 87,630
Land1,190,568
 1,108,805
Leasehold interests26,041
 25,774
 5,907,231
 5,345,565
Accumulated depreciation(883,174) (741,334)
Total$5,024,057
 $4,604,231

DepreciationAdditionally, during the years ended December 31, 2020, 2019 and 2018, the Company recognized current income and withholding tax expense on rental properties was $148.7of $1.5 million, $129.1$1.1 million and $103.9$1.7 million, respectively, primarily related to certain state income taxes and foreign withholding tax. The table below details the current and deferred income tax benefit (expense) for the years ended December 31, 2020, 2019 and 2018 2017 and 2016, respectively.(in thousands):

202020192018
Current TRS income tax$7 $376 $(221)
Current state income tax expense(503)(405)(422)
Current foreign income tax3 0 0 
Current foreign withholding tax(1,018)(1,051)(1,069)
Deferred TRS income tax (expense) benefit(4,448)3,719 319 
Deferred foreign withholding tax0 0 0 
Deferred income tax (expense) benefit(10,797)396 (892)
Income tax benefit (expense)$(16,756)$3,035 $(2,285)
Acquisitions
During the year ended December 31, 2018, the Company completed the acquisitions of two megaplex theatres for approximately $22.4 million, a recreation facility for $7.8 million, an attraction property for $50.3 million, one other recreation property for $36.4 million and four early education centers for $17.7 million.

During the year ended December 31, 2017, the Company completed a transaction with CNL Lifestyle Properties Inc. (CNL Lifestyle) and funds affiliated with Och-Ziff Real Estate (OZRE). The Company acquired the Northstar California Resort, 15 attraction properties (waterparks and amusement parks), five small family entertainment centers and certain related working capital for aggregate consideration valued at $479.8 million, including final purchase price adjustments. Additionally, the Company provided $251.0 million of secured debt financing to OZRE for its purchase of 14 CNL Lifestyle ski properties valued at $374.5 million. Subsequent to the transaction, the Company sold the five family entertainment centers for approximately $6.8 million and one waterpark for approximately $2.5 million. No gain or loss was recognized on these sales.

The Company’s aggregate investment in this transaction was $730.8 million and was funded with $657.5 million of the Company’s common shares, consisting of 8,851,264 newly issued registered common shares valued at $74.28 per share, $61.2 million of cash and assumed working capital liabilities (net of assumed accounts receivable) of $12.1 million.



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EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018

The aggregate investmentCompany's effective tax rate for the years ended December 31, 2020, 2019 and 2018 was 13.5%, 1.5% and 0.8%, respectively. The differences between the income tax expense calculated at the statutory U.S. federal income tax rates and the actual income tax expense recorded for continuing operations is mostly attributable to the dividends paid deduction available for REITs.

Furthermore, the Company qualified as a REIT and distributed the necessary amount of $730.8 million in this transactiontaxable income such that 0 current U.S. federal income taxes were due for the years ended December 31, 2020, 2019 and 2018. Accordingly, 0 provision for current U.S. federal income taxes was recorded for any of those years. If the Company fails to qualify as followsa REIT in any taxable year, without the benefit of certain provisions, it will be subject to federal and state income taxes at regular corporate rates (including any applicable alternative minimum tax for years prior to January 1, 2019) and may not be able to qualify as a REIT for four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company is subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed taxable income. Tax years 2017 through 2019 remain generally open to examination for U.S. federal income tax and state tax purposes and from 2015 through 2019 for Canadian income tax purposes. 

The Company’s policy is to recognize interest and penalties as general and administrative expense. The Company did not recognize any interest and penalties in 2020, 2019 or 2018. The Company did not have any accrued interest and penalties at December 31, 2020, 2019 and 2018. Additionally, the Company did not have any unrecorded tax benefits as of December 31, 2020, 2019 and 2018.

Concentrations of Risk
Topgolf USA (Topgolf), Cinemark, AMC and Regal represented a significant portion of the Company's total revenue for the years ended December 31, 2020, 2019 and 2018. The Company began recognizing revenue on a cash basis for AMC at the end of the first quarter of 2020 and for Regal at the end of the third quarter of 2020 and cash payments have been reduced due to the impact of the COVID-19 pandemic. The following is a summary of the Company's total revenue (including revenue from discontinued operations) from Topgolf, Cinemark, AMC and Regal (dollars in thousands):
Year ended December 31,
202020192018
Total Revenue% of Company's Total RevenueTotal Revenue% of Company's Total RevenueTotal Revenue% of Company's Total Revenue
Topgolf$80,714 19.5 %$78,962 11.2 %$64,459 9.2 %
Cinemark42,065 10.1 %38,927 5.5 %37,303 5.3 %
AMC29,964 7.2 %123,792 17.6 %115,805 16.5 %
Regal13,056 3.1 %75,784 10.8 %57,614 8.2 %

Cash Equivalents
Cash equivalents include bank demand deposits.

Restricted Cash
Restricted cash represents cash held for tenants' off-season rent reserves and escrow deposits required in connection with property management agreements or held for potential acquisitions and redevelopments.
Share-Based Compensation
Share-based compensation to employees of the Company is granted pursuant to the Company's Annual Incentive Program and Long-Term Incentive Plan and share-based compensation to non-employee Trustees of the Company is granted pursuant to the Company's Trustee compensation program.

Share based compensation expense consists of share option expense and amortization of nonvested share grants issued to employees, and amortization of share units issued to non-employee Trustees for payment of their annual retainers. Share based compensation is included in general and administrative expense in the accompanying consolidated statements of (loss) income and comprehensive (loss) income.
87

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018

Share Options
Share options are granted to employees pursuant to the Long-Term Incentive Plan. The fair value of share options granted is estimated at the date of grant using the Black-Scholes option pricing model. Share options granted to employees vest over a period of four years and share option expense for these options is recognized on a straight-line basis over the vesting period. Expense recognized related to share options and included in general and administrative expense in the accompanying consolidated statements of (loss) income and comprehensive (loss) income was $12 thousand, $10 thousand and $0.3 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Nonvested Shares Issued to Employees
The Company grants nonvested shares to employees pursuant to both the Annual Incentive Program and the Long-Term Incentive Plan. The Company amortizes the expense related to the nonvested shares awarded to employees under the Long-Term Incentive Plan and the premium awarded under the nonvested share alternative of the Annual Incentive Program on a straight-line basis over the future vesting period (three years to four years). Expense recognized related to nonvested shares and included in general and administrative expense in the accompanying consolidated statements of (loss) income and comprehensive (loss) income was $10.6 million, $11.3 million and $13.5 million for the years ended December 31, 2020, 2019 and 2018, respectively. Expense related to nonvested shares and included in severance expense in the accompanying consolidated statements of (loss) income and comprehensive (loss) income was $1.0 million, $0.6 million and $3.2 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Nonvested Performance Shares Issued to Employees
During the year ended December 31, 2020, the Compensation and Human Capital Committee of the Company's Board of Trustees (Board) approved the 2020 Long Term Incentive Plan (the 2020 LTIP) as a sub-plan under the Company's 2016 Equity Incentive Plan. Under the 2020 LTIP, the Company awards performance shares and restricted shares to the Company's executive officers. The performance shares contain both a market condition and a performance condition. The Company amortizes the expense related to the performance shares over the future vesting period of three years. Expense recognized related to performance shares and included in general and administrative expense in the accompanying consolidated statements of (loss) income and comprehensive (loss) income was $1.0 million for the year ended December 31, 2020. Expense related to nonvested performance shares and included in severance expense in the accompanying consolidated statements of (loss) income and comprehensive (loss) income was $261 thousand for the year ended December 31, 2020.

Restricted Share Units Issued to Non-Employee Trustees
The Company issues restricted share units to non-employee Trustees for payment of their annual retainers under the Company's Trustee compensation program. The fair value of the share units granted was based on the share price at the date of grant. The share units vest upon the earlier of the day preceding the next annual meeting of shareholders or a change of control. The settlement date for the shares is selected by the non-employee Trustee, and ranges from one year from the grant date to upon termination of service. This expense is amortized by the Company on a straight-line basis over the year of service by the non-employee Trustees. Total expense recognized related to shares issued to non-employee Trustees and included in general and administrative expense in the accompanying consolidated statements of (loss) income and comprehensive (loss) income was $2.2 million, $1.9 million and $1.3 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Foreign Currency Translation
The Company accounts for the operations of its Canadian properties in Canadian dollars. The assets and liabilities related to the Company’s Canadian properties and mortgage note are translated into U.S. dollars using the spot rates at the respective balance sheet dates; revenues and expenses are translated at average exchange rates. Resulting translation adjustments are recorded as a separate component of comprehensive income.

Derivative Instruments
The Company uses derivative instruments to reduce exposure to fluctuations in foreign currency exchange rates and variable interest rates.
88

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018

The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as foreign currency risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. For its net investment hedges that hedge the foreign currency exposure of its Canadian investments, the Company has elected to assess hedge effectiveness using a method based on changes in spot exchange rates and record the changes in the fair value amounts excluded from the assessment of effectiveness into earnings on a systematic and rational basis. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. If hedge accounting is not applied, realized and unrealized gains or losses are reported in earnings.

The Company's policy is to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Impact of Recently Issued Accounting Standards
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848). The ASU contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the year ended December 31, 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. The Company intends to amend agreements referencing the LIBOR-index to a replacement index and will apply the optional expedients offered in Topic 848.

3. Real Estate Investments

The following table summarizes the carrying amounts of real estate investments as of December 31, 2020 and 2019 (in thousands):
20202019
Buildings and improvements$4,526,342 $4,747,101 
Furniture, fixtures & equipment118,334 123,239 
Land1,242,663 1,290,181 
Leasehold interests26,050 26,041 
5,913,389 6,186,562 
Accumulated depreciation(1,062,087)(989,254)
Total$4,851,302 $5,197,308 
Depreciation expense on real estate investments from continuing operations was $162.6 million, $153.2 million and $133.7 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Acquisitions and Development
During the year ended December 31, 2020, the Company completed the acquisition of real estate investments and lease related intangibles, as further discussed in Note 2, for Experiential properties totaling $22.1 million, that consisted of 2 theatre properties.

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EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
  April 6, 2017
Rental properties, net $481,006
Mortgage notes and related accrued interest receivable 251,038
Tradenames (included in other assets) 6,355
Below-market leases (included in accounts payable and accrued liabilities) (7,611)
Total investment $730,788

In addition,Additionally, during the year ended December 31, 2017,2020, the Company had investment spending on build-to-suit development and redevelopment for Experiential properties totaling $46.9 million.

During the year ended December 31, 2019, the Company completed the acquisition of six megaplex theatresreal estate investments and lease related intangibles, for Experiential properties totaling $451.9 million, that consisted of 26 theatre properties for approximately $154.1$426.5 million, six other recreation facilities1 eat & play property for approximately $62.7$1.4 million and seven2 cultural properties for $24.0 million. The Company completed the acquisition of real estate investments and lease related intangibles for Education properties totaling $5.9 million that consisted of the acquisition of 2 early childhood education centerscenters.

Additionally, during the year ended December 31, 2019, the Company had investment spending on build-to-suit development and two public charter schoolsredevelopment for approximately $38.5Experiential properties totaling $146.2 million and Education properties totaling $38.6 million.

Dispositions
During the year ended December 31, 2019, the Company completed the construction of the Kartrite Resort and Indoor Waterpark in Sullivan County, New York. The indoor waterpark resort is being operated under a traditional REIT lodging structure and facilitated by a management agreement with an eligible independent contractor. The related operating revenue and expense are included in other income and other expense in the accompanying consolidated statements of (loss) income and comprehensive (loss) income for the year ended December 31, 2019. Additionally, during the year ended December 31, 2018, the Company completed the saleconstruction of four entertainment parcels located in West Virginia, Illinoisthe Resorts World Catskills common infrastructure. In June 2016, the Sullivan County Infrastructure Local Development Corporation issued $110.0 million of Series 2016 Revenue Bonds which funded a substantial portion of such construction costs. For the years ended December 31, 2018, 2017 and Kansas for net proceeds totaling $7.3 million. In connection with these sales,2016, the Company recognized a gain on salereceived total reimbursements of $1.2$74.2 million of construction costs. During the year ended December 31, 2019, the Company received an additional reimbursement of $11.5 million.


PursuantDispositions
On December 29, 2020, pursuant to a tenant purchase option, the Company completed the sale of one public charter school located in California6 private schools and 4 early childhood education centers for net proceeds totaling $12.0of approximately $201.2 million and recognized a gain on sale of $1.9 millionapproximately $39.7 million. Additionally, during the year ended December 31, 2018. Additionally,2020, the Company also completed the sale of two3 early education centersproperties, 4 experiential properties and 2 land parcels for net proceeds totaling $26.6 million and recognized a combined gain on sale of $2.5$10.4 million. No gain or loss was recognized on these sales.


During the year ended December 31, 2017,2019, the Company completed the sale of four entertainment propertiesall of its public charter school portfolio through the following transactions:

•On November 22, 2019, the Company sold 47 public charter school related assets, classified as real estate investments, mortgage notes receivable and investment in direct financing leases, for net proceeds of approximately $449.6 million. The Company recognized an impairment on this public charter school portfolio sale of $21.4 million that included the write-off of non-cash straight-line rent and effective interest receivables totaling $24.8 million. See Note 4 for additional information related to the impairment.
•The Company sold 10 public charter schools pursuant to tenant purchase options for net proceeds totaling $72.4 million. In connection with these sales, the Company$138.5 million and recognized a combined gain on sale of $19.4$30.0 million.

•The Company sold 7 public charter schools (not as result of exercise of tenant purchase options) for net proceeds totaling $44.4 million and recognized a combined gain on sale of $1.9 million.
•See Note 6 for details on repayments of mortgage notes receivable secured by public charter school properties during 2019.

Due to the Company's disposition of its remaining public charter school portfolio in 2019, the operating results of all public charter schools sold during 2019 have been classified within discontinued operations in the accompanying consolidated statements of (loss) income and comprehensive (loss) income for all periods presented. See Note 17 for further details on discontinued operations.

Additionally, during the year ended December 31, 2019, the Company sold 1 attraction property, 1 early childhood education center property and 4 land parcels for net proceeds totaling $21.9 million and sold 1
90

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
attraction property and received an $11.0 million cash payment and provided seller mortgage financing of $27.4 million. The Company recognized a combined gain on these sales of $4.2 million. See Note 6 for additional information on the seller mortgage note receivable.

4. Impairment Charges

The Company reviews its properties for changes in circumstances that indicate that the carrying value of a property may not be recoverable based on an estimate of undiscounted future cash flows. As a result of the COVID-19 pandemic, the Company experienced vacancies at some of its properties and at others the Company has negotiated lease modifications that included rent reductions. As part of this process, the Company reassessed the expected holding periods and expected future cash flows of such properties, and determined that the estimated cash flows were not sufficient to recover the carrying values of 9 properties. NaN of these 9 properties have operating ground lease arrangements with right-of-use assets. During the year ended December 31, 2020, the Company determined the estimated fair value of the real estate investments and right-of-use assets of these properties using independent appraisals and various purchase offers. The Company reduced the carrying value of the real estate investments, net to $39.5 million and the operating lease right-of-use assets to $13.0 million. The Company recognized impairment charges of $70.7 million on the real estate investments and $15.0 million on the right-of-use assets, which are the amounts that the carrying value of the assets exceeded the estimated fair value.

During the year ended December 31, 2017, pursuant2020, the Company also recognized $3.2 million in other-than-temporary impairments related to tenant purchase options,its equity investments in joint ventures in 3 theatre projects located in China. See Note 7 for further details on these impairments.

On November 22, 2019, the Company completed the sale of eightsubstantially all of its public charter schools located in Colorado, Arizona and Utah for net proceeds totaling $97.3 million. In connection with these sales, the Company recognized a gain on saleschool portfolio, consisting of $20.7 million. Additionally, the Company completed the sale of three other education facilities47 public charter school related assets, for net proceeds of $10.5approximately $449.6 million. In connection with these sales,Prior to the sale, the Company revised its estimated undiscounted cash flows associated with this portfolio, considering a shorter expected hold period and determined that the estimated cash flows were not sufficient to recover the carrying value of this portfolio. The Company estimated the fair value of this portfolio by taking into account the purchase price in the executed sale agreement. The Company recognized a gainan impairment on public charter school portfolio sale of $1.8$21.4 million that included the write-off of non-cash straight-line rent and effective interest receivables totaling $24.8 million. This impairment and the operating results of all of the public charter schools sold in 2019 have been classified within discontinued operations in the accompanying consolidated statements of (loss) income and comprehensive (loss) income. See Note 17 for further details on discontinued operations.


As further discussed in Note 7, duringDuring the yearsyear ended December 31, 2018 and 2017,2019, the Company also completedentered into an agreement to sell a theatre property for approximately $6.2 million. As a result, the salesCompany revised its estimated undiscounted cash flow associated with this property, considering a shorter expected hold period and determined that the estimated cash flow was not sufficient to recover the carrying value of 13 public charter school properties leased to Imagine Schools, Inc. (Imagine).this property. The Company estimated the fair value of this property by taking into account the purchase price in the executed sale agreement. The Company recorded an impairment charge of approximately $2.2 million, which is the amount that the carrying value of the asset exceeds the estimated fair value.


4. Impairment Charges

In JulyDuring the year ended December 31, 2018, the Company entered into a new leasean agreement with Children’s Learning Adventure USA (CLA) related to 21 open schoolsin which replaced the prior lease arrangements and continued on a month-to-month basis. The lease agreement provided for monthly rent of $1.0 million along with the monthly reimbursement for property taxes of approximately $170 thousand. In February 2019, CLA and the Company entered into agreements (collectively, the PSA) providing for the purchase and sale of certain assets associated with the businesses located at the 21 operating CLA properties whereby the Company can nominate a third party operator to take an assignment and transfer of such assets from CLA and to receive certain beneficial rights under various related ancillary agreements. Additionally, in February 2019, the Company entered into leases of those properties with another early childhood education operator, which are contingent upon the transfer or surrender of each property pursuant to the PSA. The Company had $246.2 million classified in rental properties, net, in the accompanying consolidated balance sheets at December 31, 2018 for these 21 schools and determined that the estimated undiscounted future cash flow exceed the carrying values of these properties. See Note 19 for further discussion regarding CLA.

In addition, during the year ended December 31, 2018, CLA also relinquished control of four4 of the Company’s properties that were still under development as the Company no longer intendsintended to develop these properties for CLA. As

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 2017 and 2016

a result, the Company revised its estimated undiscounted cash flows for these four4 properties, considering shorter expected holding periods, and determined that those estimated cash flows were not sufficient to recover the carrying values of these four4 properties. During the year ended December 31, 2018, the Company determined the estimated fair value of these properties using Level 3 inputs, including independent appraisals of these properties, and reduced the carrying value of these assets to $9.8 million, recording an impairment charge of $16.5 million. The charge was primarily related to the cost of improvements specific to the development of CLA’s prototype.


During the year ended December 31, 2018, the Company recognized a $10.7 million impairment charge related to the Company’s guarantees of the payment of two2 economic development revenue bonds secured by leasehold
91

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
interests and improvements at two2 theatres in Louisiana. In accordance with Topic 460, Guarantees, the Company recorded an asset and liability at the inception of the guarantees at fair value, which represented the Company's obligation to stand ready to perform under the terms of the guarantees. During the year ended December 31, 2018, the Company determined that a portion of its asset was no longer recoverable and recorded an impairment charge of $7.8 million.


A contingent future obligation is recognized in accordance with the provisions of Topic 450, Accounting for Contingencies. In the case of the Company’s guarantees, the contingent future obligation is the future payment of the bonds by the Company. At the inception of the guarantees, the Company determined that its future payment of the bonds was not probable, therefore no contingent future obligation was recorded. For the year ended December 31, 2018, the Company determined that its future payment on a portion of the bond obligations was probable due to inadequate performance of the theatre properties and failure of the debtor under the bonds to perform. Accordingly, for the year ended December 31, 2018, the Company recorded an incremental contingent liability of $2.9 million, which in addition to the $7.8 million discussed above, resulted in a total impairment charge recognized relating to the guarantees of $10.7 million.


For a discussion of impairment charges recorded during the year ended December 31, 2017, totaling $10.2 million, see Note 7. There were no impairment charges recorded for the year ended December 31, 2016.

5. Accounts Receivable Net

The following table summarizes the carrying amounts of accounts receivable net as of December 31, 2018 and 2017 (in thousands):
 2018 2017
Receivable from tenants$15,057
 $19,923
Receivable from non-tenants1,379
 3,932
Receivable from Sullivan County Infrastructure Revenue Bonds11,500
 14,718
Straight-line rent receivable73,332
 62,605
Allowance for doubtful accounts(2,899) (7,485)
Total$98,369
 $93,693

As of December 31, 2017, receivable from tenants above included $6.0 million in receivables from CLA, which were fully reserved in the allowance for doubtful accounts. 2020 and 2019 (in thousands):
20202019
Receivable from tenants$81,120 $11,373 
Receivable from non-tenants505 2,103 
Straight-line rent receivable34,568 73,382 
Total$116,193 $86,858 

During the year ended December 31, 2018,2020, the Company wrote-off the remaining fully reserved receivables of $7.2from tenants totaling $27.1 million related to CLA. Additionally, during the year ended December 31, 2017, the Company wrote-off the full amount ofand straight-line rent receivables of approximately $9.0totaling $38.0 million relateddirectly to CLA to straight-line rental revenue classified in rental revenue in the accompanying consolidated statements of income. (loss) income and comprehensive (loss) income upon determination that the collectibility of these receivables or future lease payments from these tenants was no longer probable. Additionally, the Company determined that future rental revenue related to these tenants will be recognized on a cash basis. The $38.0 million in write-offs of straight-line rent receivables were comprised of $26.5 million of straight-line rent receivable and $11.5 million of sub-lessor ground lease straight-line rent receivable.

As further discussed in Note 4, during the year endedof December 31, 2018,2020, receivable from tenants includes fixed rent payments of approximately $76.0 million that were deferred due to the COVID-19 pandemic and determined to be collectible. Additionally, the Company recordedhas amounts due from tenants that were not booked as receivables as the full amounts were not deemed probable of collection as a result of the COVID-19 pandemic. While deferments for this and future periods delay rent payments, these deferments do not release tenants from the obligation to pay the deferred amounts in the future. The repayment terms for these deferments vary by tenant and agreements.

6. Investment in Mortgage Notes and Notes Receivable

Effective January 1, 2020, the Company adopted Topic 326, which requires the Company to estimate and record credit losses for each of its mortgage notes and note receivable. The Company measures expected credit losses on its mortgage notes and notes receivable on an impairment chargeindividual basis over the related contractual term as its financial instruments do not have similar risk characteristics. The Company has not experienced historical losses on its mortgage note portfolio; therefore, the Company uses a forward-looking commercial real estate loss forecasting tool to estimate its expected credit losses. The loss forecasting tool is comprised of $16.5 milliona probability of default model and a loss given default model that utilizes the Company’s loan specific inputs as well as selected forward-looking macroeconomic variables and mean loss rates. Based on four properties related to CLA classified in land held for development. See Note 19 for further discussion related to CLA.certain inputs, such as origination year, balance, interest rate as well as collateral value and borrower operating income, the model produces life of loan expected losses on a

92

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018

6. Investment in Mortgage Notes
Investment inloan-by-loan basis. As of December 31, 2020, the Company did not anticipate any prepayments therefore the contractual term of its mortgage notes including related accrued interest receivable,was used for the calculation of the expected credit losses. The Company updates the model inputs at each reporting period to reflect, if applicable, any newly originated loans, changes to loan specific information on existing loans and current macroeconomic conditions.

During the year ended December 31, 20182020, the Company increased its expected credit losses by $30.7 million from its implementation estimate of $2.2 million. This increase was primarily due to credit loss expense related to notes receivable from one borrower as described below as well as adjustments to current macroeconomic conditions resulting from the economic uncertainty and 2017 consists of the following (in thousands):rapidly changing environment surrounding the COVID-19 pandemic.

In response to the COVID-19 pandemic, the Company deferred interest payments for 7 borrowers. The deferrals require the borrower to pay the deferred interest in future periods. The Company assessed the deferrals and determined that the modifications did not result in troubled debt restructurings at December 31, 2020.


93
DescriptionInterest RatePayoff Date/Maturity DatePeriodic Payment TermsOutstanding principal amount of mortgageCarrying amount as of
December 31,
     20182017
One public charter school property located in Bridgeton, New Jersey10.14%N/A(1)$—
$—
$2,500
One public charter school property located in Evans, Georgia8.50%N/A(1)—
—
9,631
28 education facilities located in California, Florida, Georgia, Minnesota, Nevada, North Carolina, Ohio and Texas (2)7.25%N/A(2)—
—
142,900
Land located in Lincoln, California (3)7.00%3/11/2018Prepaid in full—
—
1,474
Land and building in Bellevue, Washington (4)7.50%3/26/2018Prepaid in full—
—
9,056
14 ski properties located in New Hampshire, Washington, Utah, Tennessee, Maine, Colorado, Vermont, Massachusetts, California and British Columbia, Canada (5)8.50%9/27/2018Prepaid in full—
—
249,213
Observation deck of the John Hancock building in Chicago, Illinois (6)9.25%11/30/2018Prepaid in full—
—
31,105
One public charter school property located in Queen Creek, Arizona (7)9.00%12/11/2018Prepaid in full—
—
5,173
Three charter school properties located in Gilbert and Queen Creek, Arizona (7)10.00%12/11/2018Prepaid in full—
—
33,269
Land located in Queen Creek, Arizona (8)9.00%12/21/2018Prepaid in full—
—
1,454
Three attractions located in Kansas City, Kansas, New Braunfels, Texas and South Padre Island, Texas7.00% and 10.00%
5/1/2019Interest only179,846
179,846
174,265
Eight charter school properties located in Indiana, Ohio, South Carolina and Pennsylvania7.00%12/20/2021Principal & Interest54,535
54,535
57,890
One health club located in Omaha, Nebraska7.85%12/28/2026Interest only5,766
5,803
5,803
One health club located in Omaha, Nebraska7.85%1/3/2027Interest only10,905
10,977
10,880
One golf entertainment complex located in Austin, Texas11.31%7/1/2033Principal & Interest-fully amortizing11,934
11,934
12,249
One public charter school property located in St. Paul, Minnesota8.71% to 9.38%
6/30/2034Interest only8,595
8,835
8,711
One public charter school property located in Jersey City, New Jersey10.00%8/31/2034Interest only15,239
15,652
12,564
One ski property located in West Dover and Wilmington, Vermont11.43%12/1/2034Interest only51,050
51,050
51,050
Four ski properties located in Ohio and Pennsylvania10.59%12/1/2034Interest only37,562
37,562
37,562
One ski property located in Chesterland, Ohio11.04%12/1/2034Interest only4,550
4,550
4,550
One ski property located in Hunter, New York8.28%1/5/2036Interest only21,000
21,000
21,000
One golf entertainment complex located in Midvale, Utah10.25%5/31/2036Interest only17,505
17,505
17,505
One public charter school property located in Millville, New Jersey10.14%7/31/2036Interest only6,224
6,383
6,304
One golf entertainment complex located in West Chester, Ohio9.75%8/1/2036Interest only18,068
18,068
18,068
One public charter school property located in Vineland, New Jersey9.95%12/31/2036Interest only9,765
9,839
9,838
One private school property located in Mableton, Georgia8.67%4/30/2037Interest only4,674
4,952
4,717
One public charter school property located in Roswell, Georgia8.93%6/30/2037Interest only4,121
4,165
4,111
One public charter school property located in Atlanta, Georgia8.67%7/31/2037Interest only4,206
4,236
4,235
One public charter school property located in Bronx, New York8.75%8/31/2037Interest only23,718
23,718
11,330
One public charter school property located in Colorado Springs, Colorado9.02%9/30/2037Interest only14,084
14,325
11,684
One health club located in Fort Collins, Colorado7.85%1/31/2038Interest only10,292
10,360
—
One early education center located in Lithia, Florida7.50%8/30/2038Interest only2,172
2,172
658
    $515,811
$517,467
$970,749


EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018

Investment in mortgage notes, including related accrued interest receivable, at December 31, 2020 and 2019 consists of the following (in thousands):

Year of OriginationInterest RateMaturity DatePeriodic Payment TermsOutstanding principal amount of mortgageCarrying amount as of December 31,Unfunded commitments
Description20202019 (1)December 31, 2020
Attraction property Powells Point, North Carolina20197.75 %6/30/2025Interest only$28,007 $27,045 $27,423 $0 
Fitness & wellness property Omaha, Nebraska20177.85 %1/3/2027Interest only10,905 11,225 10,977 0 
Fitness & wellness property Merriam, Kansas20197.55 %7/31/2029Interest only9,095 9,355 5,985 248 
Ski property Girdwood, Alaska20198.24 %12/31/2029Interest only40,869 40,680 37,000 16,131 
Fitness & wellness property Omaha, Nebraska20167.85 %6/30/2030Interest only8,410 8,630 5,803 2,508 
Experiential lodging property Nashville, Tennessee20197.01 %9/30/2031Interest only71,223 67,235 70,396 0 
Eat & play property Austin, Texas201211.31 %6/1/2033Principal & Interest-fully amortizing11,361 11,929 11,582 0 
Ski property West Dover and Wilmington, Vermont200711.78 %12/1/2034Interest only51,050 51,031 51,050 0 
Four ski properties Ohio and Pennsylvania200710.91 %12/1/2034Interest only37,562 37,413 37,562 0 
Ski property Chesterland, Ohio201211.38 %12/1/2034Interest only4,550 4,396 4,550 0 
Ski property Hunter, New York20168.57 %1/5/2036Interest only21,000 21,000 21,000 0 
Eat & play property Midvale, Utah201510.25 %5/31/2036Interest only17,505 18,289 17,505 0 
Eat & play property West Chester, Ohio20159.75 %8/1/2036Interest only18,068 18,830 18,068 0 
Private school property Mableton, Georgia20179.02 %4/30/2037Interest only5,088 5,278 5,048 0 
Fitness & wellness property Fort Collins, Colorado20187.85 %1/31/2038Interest only10,292 10,408 10,360 0 
Early childhood education center Lake Mary, Florida20197.87 %5/9/2039Interest only4,200 4,348 4,258 0 
Eat & play property Eugene, Oregon20198.13 %6/17/2039Interest only14,700 14,799 14,800 0 
Early childhood education center Lithia, Florida20178.25 %10/31/2039Interest only3,959 3,737 4,024 0 
$367,844 $365,628 $357,391 $18,887 
(1) Mortgage note was reclassifiedBalances as of December 31, 2019 are prior to rental properties on January 1, 2018, due to implementationthe adoption of ASC 610-20.Topic 326.


(2) On February 16, 2018, the borrower exercised its put option to convert its mortgage note agreement, totaling $142.9Investment in notes receivable, including related accrued interest receivable, was $7.3 million and secured by 28 education facilities, including both early education$14.0 million at December 31, 2020 and private school properties, to a lease agreement. As a result,2019, respectively, and is included in Other assets in the Company recorded the rental property at the carrying value, which approximated fair value of the mortgage note on the conversion date, and allocated this cost on a relative fair value basis.accompanying consolidated balance sheets.


(3) On March 11, 2018, the Company received payment in full on one mortgage note receivable of $1.5 million that was secured by land located in California. There was no prepayment fee received in connection with this note payoff.

(4) On March 26, 2018, the Company received payment in full on one mortgage note receivable of $9.0 million that was secured by real estate in Washington. There was no prepayment fee received in connection with this note payoff.

(5) During the year ended December 31, 2018,2020, the Company received paymententered into an amended and restated loan and security agreement with 1 of its notes receivable borrowers in full response to the impacts of the COVID-19 pandemic on the mortgageborrower. The restated note receivable consists of $250.3the previous note balance of $6.5 million from OZRE that was secured by 14 ski properties. In connectionand provides the borrower with a term loan for up to $13.0 million and a $6.0 million revolving line of credit. The restated note receivable has a maturity date of June 30, 2032 and the prepaymentline of this note,credit matures on December 31, 2022. Interest is deferred through June 30, 2022, at which time monthly principal and interest payments will be due over 10 years. Although the borrower is not in default, nor has the borrower declared bankruptcy, the Company recognized prepayment fees totaling $65.9 million that are includeddetermined these modifications resulted in mortgage and other financing income in the accompanying consolidated statements of income for the year endeda troubled debt restructuring (TDR) at December 31, 2018.

(6) During2020 due to the year ended December 31, 2018, the Company received payment in full on the mortgage note receivable of $32.0 million that was secured by the observation deckimpacts of the John Hancock Tower in Chicago, Illinois. In connection with the prepayment of this note, the Company recognized prepayment fees of $5.4 million that are included in mortgage and other financing income in the accompanying consolidated statements of income for the year ended December 31, 2018.

(7) On December 11, 2018, the Company received payment in full on the mortgage notes receivable totaling $36.7 million from LBE Investments, Ltd. that were secured by four charter school properties located in Gilbert and Queen Creek, Arizona. In connection with the prepayment of these notes, the Company recognized prepayment fees totaling $3.4 million that are included in mortgage and other financing income in the accompanying consolidated statements of income for the year ended December 31, 2018.

(8) On December 21, 2018, the Company received payment in full on a mortgage note receivable of $1.4 million from LBE Investments, Ltd. that was secured by land located in Queen Creek, Arizona. No prepayment fee was received in connection with the prepayment of this note.

7. Investment in Direct Financing Leases

The Company’s investment in direct financing leases relates to the Company’s lease of two public charter school properties as of December 31, 2018 and six public charter school properties as of December 31, 2017, with affiliates of Imagine Schools, Inc. (Imagine). Investment in direct financing leases, net represents estimated unguaranteed residual values of leased assets and net unpaid rentals, less related deferred income. The following table summarizes the carrying amounts of investment in direct financing leases, net as of December 31, 2018 and 2017 (in thousands):

94
 2018 2017
Total minimum lease payments receivable$36,352
 $112,411
Estimated unguaranteed residual value of leased assets16,509
 47,000
Less deferred income (1)
(32,303) (101,508)
Investment in direct financing leases, net$20,558
 $57,903
    
(1) Deferred income is net of $0.3 million and $0.8 million of initial direct costs at December 31, 2018 and 2017, respectively.



EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018

During 2016, the Company completed the sale of nine public charter school properties previously leased to Imagine as part of a master lease. Seven of these schools were sold to Imagine and two were sold to third parties. These properties are located in Georgia, Indiana, Ohio, Missouri and South Carolina and had a total net carrying value of $91.3 million when sold. The Company received net cash proceeds totaling $21.0 million (a portion of which was funded through the liquidation of the letter of credit and escrow reserve previously provided by Imagine pursuant to the master lease) and a mortgage note receivable from Imagine for $70.3 million. The note is secured by eight public charter schools and the carrying amount was $54.5 million at December 31, 2018. See Note 6 for more detail on this mortgage note receivable. There were no gains or losses recognized on these sales. The Company determined that no allowance for lossesCOVID-19 pandemic on the investment in direct financing leases was necessary at December 31, 2016.

During 2017,borrower's financial condition. These note receivables are considered collateral dependent and expected credit losses are based on the Company entered into revised lease terms with Imagine which reduced the rental payments and term on six properties. As a result of the revised lease terms, these six properties were classified as operating leases. Due to lease negotiations during the three months ended June 30, 2017, management evaluated whether it could recover its investment in these leases taking into account the revised lease terms and independent appraisals prepared as of June 30, 2017, and determined the carryingfair value of the investment inunderlying collateral at the direct financing leases exceededreporting date. The notes are secured by the expected lease payments to be receivedworking capital and residual valuesnon-real estate assets of the borrower. The Company assessed the fair value of the collateral as of December 31, 2020 and recognized credit loss expense for these six leases. Accordingly, the Company recorded an impairment charge of $9.6 million during the year ended December 31, 2017,2020 consisting of the outstanding principal balance of $12.6 million and the $12.9 million unfunded commitment on the term loan and line of credit as of December 31, 2020. Income for this borrower will be recognized on a cash basis.

At December 31, 2020, the Company's investment in this note receivable was a variable interest and the underlying entity is a VIE. The Company is not the primary beneficiary of this VIE, as the Company does not individually have the power to direct the activities that are most significant to the entity and accordingly, this investment is not consolidated. The Company's maximum exposure to loss associated with this VIE is limited to the Company's outstanding note receivable of $12.6 million and the unfunded commitment of $12.9 million, both of which included anwere fully reserved in the allowance for lease loss of $7.3 million and a charge of $2.3 millioncredit losses at December 31, 2020.

The following summarizes the activity within the allowance for credit losses related to estimated unguaranteed residual value.

Additionally, during 2017, the Company performed its annual review of the estimated unguaranteed residual value on its other properties leased to Imaginemortgage notes, unfunded commitments and determined that the residual value on one of these properties was impaired. As such, the Company recorded an impairment charge of the unguaranteed residual value of $0.6 million duringnotes receivable for the year ended December 31, 2017.

During the year ended December 31, 2018, the Company completed the sale of four public charter school properties leased to Imagine, located in Arizona, Ohio and Washington D.C. for net proceeds of $43.4 million. Accordingly, the Company reduced its investment in direct financing leases, net, by $37.9 million, which included $31.6 million in original acquisition costs. A gain of $5.5 million was recognized during the year ended December 31, 2018.

The Company’s direct financing leases have expiration dates ranging from approximately 13 to 14 years. Future minimum rentals receivable on this direct financing lease at December 31, 2018 are as follows2020 (in thousands):
Mortgage notes receivableUnfunded commitments - mortgage notesNotes receivableUnfunded commitments - notes receivableTotal
Allowance for credit losses at January 1, 2020$2,000 $114 $49 $0 $2,163 
Credit loss expense5,000 24 12,805 12,866 30,695 
Charge-offs0 0 0 0 0 
Recoveries0 0 0 0 0 
Allowance for credit losses$7,000 $138 $12,854 $12,866 $32,858 

 Amount
Year: 
2019$2,265
20202,333
20212,403
20222,475
20232,550
Thereafter24,326
Total$36,352


EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 2017 and 2016

8.7. Unconsolidated Real Estate Joint Ventures


OnAs of December 21, 2018,31, 2020 and 2019, the Company entered into twohad a 65% investment interest in 2 unconsolidated real estate joint venture agreementsventures related to acquire two recreation anchored2 experiential lodging properties located in St. Petersburg Beach, Florida with an initial investment of $29.5 million. The Company has a 65% interest in these joint ventures and accounts for its investment under the equity method of accounting.Florida. The Company's partner, Gencom Acquisition, LLC and its affiliates, own the remaining 35% interest in the joint ventures. There are two2 separate joint ventures, one that holds the investment in the real estate of the recreation anchoredexperiential lodging properties and the other that holds lodging operations, which are facilitated by a management agreement with an eligible independent contractor. The Company's investment in the operating entity is held in a TRS.

taxable REIT subsidiary (TRS). The Company accounts for its investment in these joint ventures under the equity method of accounting. As of December 31, 2020 and 2019, the Company had invested $27.4 million and $29.7 million, respectively, in these joint ventures.

The joint venture that holds the real property has a secured mortgage loan of $85.0 million at December 31, 2020, that is due April 1, 2022. The note can be extended for 2 additional 1 year periods upon the satisfaction of certain conditions. Additionally, the Company has guaranteed the completion of the renovations in the amount of approximately $32.7 million, with $23.9 million remaining to fund at December 31, 2020. The mortgage loan bears interest at an annual rate equal to the greater of 6.00% or LIBOR plus 3.75%. Interest is payable monthly beginning on May 1, 2019 until the stated maturity date of April 1, 2022, which can be extended to April 1, 2023. The joint venture has an interest rate cap agreement to limit the variable portion of the interest rate (LIBOR) on this note to 3.0% from March 28, 2019 to April 1, 2023. In response to the COVID-19 pandemic, on May 28, 2020, the joint venture was granted a three-month interest deferral, which is required to be paid on the maturity date of the loan and is not considered a troubled debt restructuring.

The Company recognized losses of $4.0 million and $140 thousand and income of $52 thousand during the years ended December 31, 2020, 2019 and 2018, management determinedrespectively, and received 0 distributions during the years ended December 31, 2020, 2019 and 2018 related to the equity investment in these joint ventures.
95

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018

As of December 31, 2020 and 2019, the Company's investments in these joint ventures were considered to be variable interests and the underlying entities are variable interest entities (VIE).VIEs. The Company is not the primary beneficiary of the VIEs as the Company does not individually have the power to direct the activities that are most importantsignificant to the joint ventures. The power to direct these activities is shared equally among the Company and its partner,ventures and accordingly these investments are not consolidated. See Note 10 for further discussion on these VIEs.

The joint venture that holds the real property obtained a short-term secured mortgage loan of $60.0 million upon closing. The maturity date of this mortgage loanCompany's maximum exposure to loss at December 31, 2020, is June 21, 2019. The loan bears interest of LIBOR + 3.75% with monthly interest payments required.

The Company recognized income of $52 thousand and received no distributions during 2018 related to the equityits investment in thesethe joint ventures.ventures of $27.4 million as well as the Company's guarantee of the estimated costs to complete renovations of approximately $23.9 million.


In addition, as of December 31, 20182020 and 2017,2019, the Company hadhad invested $4.9$0.8 million and $5.6 $4.6 million, respectively, in unconsolidated joint ventures for three3 theatre projects located in China. During the year ended December 31, 2020, the Company recognized $3.2 million in other-than-temporary impairment charges on these equity investments. The Company determined the estimated fair value of these investments based primarily on discounted cash flow projections. The Company recognized a losslosses of $559 thousand, $241 thousand and $74 thousand, during the years ended December 31, 2020, 2019 and income of $72 thousand and $619 thousand2018, respectively, and received distributions of $567 thousand, $442$112 thousand and $816$567 thousand, from its investment in these joint ventures for the years ended December 31, 2019 and 2018, 2017 and 2016, respectively.


EPR PROPERTIES
Notes to Consolidated Financial Statements
NaN distributions were received during the year ended December 31, 2018, 2017 and 2016
2020.


9.
8. Debt


Debt at December 31, 20182020 and 20172019 consists of the following (in thousands):
 2018 2017
Mortgage note payable, 6.19%, prepaid in full on January 2, 2018 (1)$—
 $11,684
Senior unsecured notes payable, 7.75%, prepaid in full on February 28, 2018 (2)—
 250,000
Unsecured revolving variable rate credit facility, LIBOR + 1.00%, due February 27, 2022 (3)30,000
 210,000
Senior unsecured notes payable, 5.75%, due August 15, 2022 (4)350,000
 350,000
Unsecured term loan payable, LIBOR + 1.10%, $350,000 fixed at 2.71% through April 5, 2019 and 3.15% from April 6, 2019 to February 7, 2022, due February 27, 2023 (5)400,000
 400,000
Senior unsecured notes payable, 5.25%, due July 15, 2023 (4)275,000
 275,000
Senior unsecured notes payable, 4.35%, due August 22, 2024 (6)148,000
 148,000
Senior unsecured notes payable, 4.50%, due April 1, 2025 (4)300,000
 300,000
Senior unsecured notes payable, 4.56%, due August 22, 2026 (6)192,000
 192,000
Senior unsecured notes payable, 4.75%, due December 15, 2026 (4)450,000
 450,000
Senior unsecured notes payable, 4.50%, due June 1, 2027 (7) (4)450,000
 450,000
Senior unsecured notes payable, 4.95%, due April 15, 2028 (8) (4)400,000
 —
Bonds payable, variable rate, due August 1, 2047 (9)24,995
 24,995
Less: deferred financing costs, net(33,941) (32,852)
Total$2,986,054
 $3,028,827
20202019
Unsecured revolving variable rate credit facility, LIBOR + 1.625% at December 31, 2020, due February 27, 2022 (1)$590,000 $0 
Unsecured term loan payable, LIBOR + 2.00% at December 31, 2020 with $350,000 fixed at 4.40% and $50,000 fixed at 4.60%, due February 27, 2023 (1)400,000 400,000 
Senior unsecured notes payable, 5.25%, due July 15, 2023 (2)275,000 275,000 
Senior unsecured notes payable, 5.60% at December 31, 2020, due August 22, 2024 (3)148,000 148,000 
Senior unsecured notes payable, 4.50%, due April 1, 2025 (2)300,000 300,000 
Senior unsecured notes payable, 5.81% at December 31, 2020, due August 22, 2026 (3)192,000 192,000 
Senior unsecured notes payable, 4.75%, due December 15, 2026 (2)450,000 450,000 
Senior unsecured notes payable, 4.50%, due June 1, 2027 (2)450,000 450,000 
Senior unsecured notes payable, 4.95%, due April 15, 2028 (2)400,000 400,000 
Senior unsecured notes payable, 3.75%, due August 15, 2029 (2)500,000 500,000 
Bonds payable, variable rate, fixed at 1.39% through September 30, 2024, due August 1, 204724,995 24,995 
Less: deferred financing costs, net(35,552)(37,165)
Total$3,694,443 $3,102,830 
 
(1) On January 2, 2018,At December 31, 2020, the Company prepaid in full this mortgage note payable totaling $11.7had $590.0 million with an annual interest rate of 6.19%, which was secured by one theatre property.

(2) On February 28, 2018, the Company redeemed all ofoutstanding under its outstanding 7.75% Senior Notes due July 15, 2020. The notes were redeemed at a price equal to the principal amount of $250.0 million plus a premium calculated pursuant to the terms of the indenture of $28.6 million, together with accrued and unpaid interest up to, but not including the redemption date of $2.3 million. In connection with the redemption, the Company recorded a non-cash write off of $3.3 million in deferred financing costs. The premium and non-cash write off were recognized as costs associated with loan refinancing or payoff in the accompanying consolidated statements of income for the year ended December 31, 2018.

(3) The Company's$1.0 billion unsecured revolving credit facility (the facility) bearswith interest at a floating rate of LIBOR plus 1.00%1.625% (with a LIBOR floor of 0.50%), which was 3.50% on December 31, 2018.2.125% with a facility fee of 0.375%. Interest is payable monthly. On September 27, 2017,Subsequent to December 31, 2020, the Company amended its facility and itspaid down $500.0 million on this credit facility.

The Company's unsecured term loan facility. The amendments to the unsecured revolving portionfacility had a balance of the credit facility, among other things, (i) increase the initial maximum available amount from $650.0$400.0 million to $1.0 billion, (ii) extend the maturity date from April 24, 2019, to February 27, 2022 (with the Company having the right to extend the loan for an additional seven months) and (iii) lower thewith interest at a floating rate and facility fee pricing based on a grid related to the Company's senior unsecured credit ratings which at closing wasof LIBOR plus 1.00% and 0.20%2.00% (with a LIBOR floor of 0.50%), versus LIBOR plus 1.25% and 0.25%, respectively, under the previous terms. In connection with the amendment, $19 thousand of deferred financing costs (net of accumulated amortization) were written off during the year endedwhich was 2.5% on December 31, 2017 and are included in costs associated with loan refinancing. As of December 31, 2018, the Company had $30.0 million outstanding under the facility and total availability under the facility was $970.0 million.2020. Interest is payable monthly. In addition, there is a $1.0 billion accordion feature on the combined unsecured revolving credit and term loan facility (the combined facility) that increases the maximum borrowing amount available under the combined facility, subject to lender approval, from $1.4 billion to $2.4 billion. If the Company exercises all or any portion of the accordion feature, the resulting increase in the combined facility may have a shorter or longer maturity date and different pricing terms. The combined facility contains financial covenants or restrictions that limit the Company's levels of consolidated debt, secured debt, investment levels outside

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 2017 and 2016

certain categories and dividend distributions, and require the Company to maintain a minimum consolidated tangible net worth and meet certain coverage levels for
96

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
fixed charges and debt service.services. As discussed further below, certain of these covenants were modified or waived during 2020.


In light of the continuing financial and operational impacts of the COVID-19 pandemic on the Company and its tenants and borrowers, on June 29, 2020 and November 3, 2020, the Company amended its Consolidated Credit Agreement, which governs its unsecured revolving credit facility and its unsecured term loan facility. As described below, the amendments modified certain provisions and waived the Company's obligation to comply with certain covenants under this debt agreement through December 31, 2021. The Company can elect to terminate the Covenant Relief Period early, subject to certain conditions.

As described below, the loans subject to the modifications bear interest at higher rates during the Covenant Relief Period and will return to the original pre-waiver levels at the end of such period, subject to certain conditions. The rates during and after the Covenant Relief Period continue to be subject to change based on unsecured debt ratings, as defined in the agreement. The amendments also imposed the additional restrictions on the Company discussed below during the Covenant Relief Period. In addition, during the Covenant Relief Period, the amendments require the Company to cause certain of its key subsidiaries to guarantee the Company's obligations based on its unsecured debt ratings, and the Company will be required to pledge the equity interests of certain of those subsidiary guarantors upon the occurrence of certain events, however both of these requirements end when the Covenant Relief Period is over.

During the Covenant Relief Period, the initial interest rates for the revolving credit facility and term loan facility were set at LIBOR plus 1.375% and LIBOR plus 1.75%, respectively, (with a LIBOR floor of 0.50%) and the facility fee on the revolving credit facility was increased to 0.375%. On August 20, 2020, as a result of a downgrade of the Company's unsecured debt rating by Moody's to Baa3, the spreads on the revolving credit and term loan facilities each increased by 0.25%. During the fourth quarter of 2020, the Company's unsecured debt rating was downgraded to BB+ by both Fitch and Standard & Poor's. As a result of these downgrades, certain of the Company's key subsidiaries guarantee the Company's obligations under its bank credit facilities, private placement notes and other outstanding senior unsecured notes in accordance with existing agreements with the holders of such indebtedness. See Note 20 for the Company's supplemental guarantor financial information. If the Company's unsecured debt rating is further downgraded by Moody's, the interest rates on the revolving credit and term loan facilities would both increase by 0.35% during the Covenant Relief Period. After the Covenant Relief Period, the interest rates for the revolving credit and term loan facilities, based on the Company's current unsecured debt ratings, are scheduled to return to LIBOR plus 1.20% and LIBOR plus 1.35%, respectively, (with a LIBOR floor of 0) and the facility fee will be 0.25%, however these rates are subject to change based on the Company's unsecured debt ratings.

The amendments to the Company's revolving credit and term loan facilities permanently modified certain financial covenants and provided relief from compliance with certain financial covenants during the Covenant Relief Period, as follows: (i) a new minimum liquidity financial covenant of $500.0 million during the Covenant Relief Period was added; (ii) compliance with the total-debt-to-total-asset-value, the maximum-unsecured-debt-to-unencumbered-asset-value, the minimum unsecured interest coverage ratio and the minimum fixed charge ratio financial covenants was suspended for the period beginning June 29, 2020 and ending on the earlier to occur of December 31, 2021 or the earlier termination of the Covenant Relief Period; (iii) permanent amendments to the unsecured-debt-to-unencumbered-asset-value financial covenant were made to allow short-term indebtedness to be offset by unrestricted cash in the calculation and to allow unrestricted cash not otherwise offset against short-term indebtedness to be counted as an unencumbered asset; and (iv) permanent amendments to financial covenants were made to allow accrued deferred payments to be included as recurring property revenue in these calculations. The amendments also imposed additional restrictions on the Company and its subsidiaries during the Covenant Relief Period, including limitations on certain investments, incurrences of indebtedness, capital expenditures and payment of dividends or other distributions and stock repurchases, in each case subject to certain exceptions.

97

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
In connection with the amendmentamendments, $0.1 million of fees paid to third parties were expensed and included in costs associated with loan refinancing in the accompanying consolidated statements of (loss) income and comprehensive (loss) income for the year ended December 31, 2020. In addition, the Company paid $5.1 million in fees to existing lenders that were capitalized in deferred financing costs and amortized as part of the effective yield. These fees consisted of $3.6 million related to the unsecured consolidated credit agreement, the obligations of the Company’s subsidiaries that were co-borrowers under the Company’s prior senior unsecured revolving credit facility and included in other assets and $1.5 million related to the term loan facility were released. and shown as a reduction of debt.

As a result, simultaneously withdescribed under (3) below, on June 29, 2020 and December 24, 2020, the amendment,Company also amended its Note Purchase Agreement which governs its private placement notes. Under the guarantees bymost favored nations clause included in the Company’s subsidiaries that were guarantors with respect toConsolidated Credit Agreement, the Company’s outstanding 4.50% Senior Notes due 2027, 4.75% Senior Notes due 2026, 4.50% Senior Notes due 2025, 5.25% Senior Notes due 2023, 5.75% Senior Notes due 2022, and 7.75% Senior Notes due 2020 were releasedadditional or more restrictive covenants included in accordance with the terms ofprivate placement amendments are incorporated into the applicable indentures governing such notes.Consolidated Credit Agreement.


(4)(2) These notes contain various covenants, including: (i) a limitation on incurrence of any debt whichthat would cause the ratio of the Company’s debt to adjusted total assets to exceed 60%; (ii) a limitation on incurrence of any secured debt whichthat would cause the ratio of the Company’s secured debt to adjusted total assets to exceed 40%; (iii) a limitation on incurrence of any debt whichthat would cause the Company’s debt service coverage ratio to be less than 1.5 times; and (iv) the maintenance at all times of the Company's total unencumbered assets such that they are not less than 150% of the Company’s outstanding unsecured debt.


(5) The Company's unsecured term loan payable bears interest at LIBOR plus 1.10%, which was 3.48%(3) In light of the continuing financial and operational impacts of the COVID-19 pandemic on the Company and its tenants and borrowers, on June 29, 2020 and December 31, 2018. Interest is payable monthly. On September 27, 2017,24, 2020, the Company amended its facility and its unsecured term loan facility. The amendments to the unsecured term loan portion of the combined facility, among other things, (i) increase the initial amount from $350.0 million to $400.0 million, (ii) extend the maturity date from April 24, 2020 to February 27, 2023 and (iii) lower the interest rate on a grid related to the Company's senior unsecured credit ratings which at closing was LIBOR plus 1.10% versus LIBOR plus 1.40% under previous terms. In connection with the amendment, $1.5 million of deferred financing costs (net of accumulated depreciation) were written off during the year ended December 31, 2017 and are included in costs associated with loan refinancing. At closing, the Company borrowed the remaining $50.0 million available on the $400.0 million term loan portion of the combined facility, which was used to pay down a portion of the facility. In addition, there is a $1.0 billion accordion feature on the combined facility that increases the maximum borrowing amount available, subject to lender approval, from $1.4 billion to $2.4 billion. If the Company exercises all or any portion of the accordion feature, the resulting increase in the combined facility may have a shorter or longer maturity date and different pricing terms. The combined facility contains financial covenants or restrictions that limit the Company's levels of consolidated debt, secured debt, investment levels outside certain categories and dividend distributions, and require the Company to maintain a minimum consolidated tangible net worth and meet certain coverage levels for fixed charges and debt service.

(6) In connection with the amendment to the unsecured consolidated credit agreement on September 27, 2017, the guarantees by the Company’s subsidiaries that were guarantors of the Company’s outstanding 4.35% Series A Guaranteed Senior Notes due August 22, 2024 and 4.56% Series B Guaranteed Senior Notes due August 22, 2026 (referred to herein as the "private placement notes") were also released. The foregoing release was affected by the Company entering into an amendment to the Note Purchase Agreement, dated as of September 27, 2017. The amendment to thewhich governs its private placement notes releasesnotes. The amendments modified certain provisions and waived the Company’s subsidiary guarantors as described aboveCompany's obligation to comply with certain covenants under these debt agreements through October 1, 2021. The Company can elect to extend such period through January 1, 2022 and among other things:may elect to terminate the Covenant Relief Period early, subject to certain conditions. These notes: (i) amendscontain certain financial and other covenants and provisions in the Note Purchase Agreement tothat generally conform generally to the corresponding covenants and provisions contained in the amended unsecured consolidatedcombined credit agreement;facility described above; (ii) provides theprovide investors thereunder certain additional guaranty and lien rights, in the event that certain subsequent events occur; (iii) expands the scope of the “mostcontain certain "most favored lender” covenant contained in the Note Purchase Agreement;lender" provisions; and (iv) imposesimpose restrictions on debt that can be incurred by certain subsidiaries of the Company. As discussed further below, certain of these covenants were modified or waived during 2020.


(7) On May 23, 2017,The amendments provided for an immediate 0.65% waiver premium to be paid on the private placement notes during the Covenant Relief Period. In addition, during the fourth quarter of 2020, as a result of downgrades of the Company's unsecured debt rating to BB+ by both Fitch and Standard and Poor's, the spreads on the private placement notes each increased by an additional 0.60%. As a result, the interest rates for the private placement notes were increased to 5.60% and 5.81% for the Series A notes due 2024 and the Series B notes due 2026, respectively. After the Covenant Relief Period, the interest rates for the private placement notes are scheduled to return to 4.35% and 4.56% for the Series A notes due 2024 and the Series B notes due 2026, respectively.

If the Company issued $450.0 millionelects to extend the Covenant Relief Period until January 1, 2022, the Company must, or must cause certain of its subsidiaries to, grant mortgages on certain unencumbered properties to a collateral agent, on behalf of the holders of the private placement notes and the lenders under the Company's Consolidated Credit Agreement. If the Company provides such mortgages, they must remain in aggregate principal amounteffect until the later of senior notes duetwo consecutive fiscal quarters of demonstrated covenant compliance or June 30, 2022, however the additional 0.60% interest rate premium as a result of the downgrades in the Company's unsecured debt rating is removed while mortgages are outstanding. If the Company elects to extend the Covenant Relief Period until January 1, 2022 as described above, the Covenant Relief Period will automatically end on June 1, 2027 pursuantOctober 29, 2021 if the Company fails to an underwritten public offering. provide such mortgages.

The notes bearamendments provide relief from compliance with the following financial covenants during the Covenant Relief Period: the total-debt-to-total-asset-value covenant; the maximum-unsecured-debt-to-unencumbered-asset-value covenant; the minimum unsecured interest at an annual ratecoverage ratio; and the minimum fixed charge ratio. The amended Note Purchase Agreement modifies the maximum secured debt to total asset value covenant as follows: (i) neither the Company nor any of 4.50%. Interest is payable on June 1 and December 1 of each yearits subsidiaries may incur any secured debt during the period beginning on December 1, 2017 until24, 2020 and ending on the stated maturity datelast day of June 1, 2027. The notes were issued at 99.393% of their face value.

(8) On April 16, 2018, the Company issued $400.0 million in aggregate principal amount of senior notes due April 15, 2028, pursuantCovenant Relief Period, subject to an underwritten public offering. The notes bear interest at an annual rate of 4.95%. Interest is payable on April 15certain exceptions; and October 15 of each year beginning on October 15, 2018 until(ii) after the stated maturity date of April 15, 2028.Covenant

98

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018

Relief Period the ratio of secured debt to total asset value is reduced from 0.35 to 1.00 to 0.25 to 1.00 until the Company can demonstrate covenant compliance for at least two fiscal quarters.

The notes were issued at 98.883% of their face value and are unsecured. Net proceeds from the note offering of $391.8 million were used to pay down the facility.

(9) On August 30, 2017,amendments impose certain restrictions on the Company refinanced its variable-rate bonds payable.during the Covenant Relief Period, including limitations on certain investments, incurrences of indebtedness, capital expenditures, payment of dividends or other distributions and stock repurchases, and maintenance of a minimum liquidity amount of $500.0 million, in each case subject to certain exceptions. The maturity date was extendedamendments include the following restrictions: (i) the limitation on investments and guarantees of certain indebtedness from October 1, 20372020 to Augustthe end of the Covenant Relief Period was set at $175.0 million; and (ii) the limitation on capital expenditures from October 1, 20472020 to the end of the Covenant Relief Period was set at $175.0 million. In addition, the amount of proceeds from assets sales that are exempt from the requirement to apply such proceeds to the prepayment of outstanding indebtedness under the Company's existing bank credit agreement and the outstandingprivate placement notes is $150.0 million, subject to certain exceptions relating to the sale of specified assets. In addition, the Company is prohibited from voluntarily prepaying its existing public senior notes during the Covenant Relief Period or its term loan debt under its bank facility during the Covenant Relief Period.

In connection with the amendments, $1.5 million of fees paid to third parties were expensed and included in costs associated with loan refinancing in the accompanying consolidated statements of (loss) income and comprehensive (loss) income for the year ended December 31, 2020. In addition, the Company paid $0.9 million in fees to existing lenders that were capitalized in deferred financing costs and amortized as part of the effective yield and shown as a reduction of debt.

Subsequent to year-end, the Company paid down principal balance and interest rate were not changed. These bonds are secured by three theatres, which had a net book value of approximately $20.5$23.8 million at December 31, 2018, and bear interest at a variable rate which resets on a weekly basis and was 2.50% at December 31, 2018. The bonds require monthly interest only paymentsits private placement notes resulting from the sale of assets in accordance with principal due at maturity.the amendments.


Certain of the Company’s debt agreements contain customary restrictive covenants related to financial and operating performance as well as certain cross-default provisions. The Company was in compliance with all financial covenants under the Company's debt instruments at December 31, 2018.2020.


Principal payments due on long-term debt obligations subsequent to December 31, 20182020 (without consideration of any extensions) are as follows (in thousands):
 Amount
Year:
2021$0 
2022590,000 
2023675,000 
2024148,000 
2025300,000 
Thereafter2,016,995 
Less: deferred financing costs, net(35,552)
Total$3,694,443 
 Amount
Year:
2019$—
2020—
2021—
2022380,000
2023675,000
Thereafter1,964,995
Less: deferred financing costs, net(33,941)
Total$2,986,054


The Company capitalizes a portion of interest costs as a component of property under development. The following is a summary of interest expense, net from continuing operations for the years ended December 31, 2018, 20172020, 2019 and 20162018 (in thousands):
202020192018
Interest on loans$152,058 $140,697 $137,570 
Amortization of deferred financing costs6,606 6,192 5,797 
Credit facility and letter of credit fees3,064 2,265 2,411 
Interest cost capitalized(1,233)(4,975)(9,541)
Interest income(2,820)(2,177)(367)
Interest expense, net$157,675 $142,002 $135,870 
99
 2018 2017 2016
Interest on loans$137,570
 $135,023
 $101,181
Amortization of deferred financing costs5,797
 6,167
 4,787
Credit facility and letter of credit fees2,411
 2,005
 1,873
Interest cost capitalized(9,904) (9,879) (10,697)
Interest income(367) (192) —
Interest expense, net$135,507
 $133,124
 $97,144

10. Variable Interest Entities

The Company’s variable interest in VIEs currently are in the form of equity ownership and loans provided by the Company to a VIE or other partner. The Company examines specific criteria and uses its judgment when determining if the Company is the primary beneficiary of a VIE. The primary beneficiary generally is defined as the party with the controlling financial interest. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE.

Consolidated VIE
As of December 31, 2018, the Company does not have any investments in consolidated VIEs.



EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018


Unconsolidated VIE
At December 31, 2018, the Company’s recorded investment in two mortgage notes which are unconsolidated VIEs totaled $184.1 million. The Company’s maximum exposure to loss associated with these VIEs is limited to the Company’s outstanding mortgage notes and related accrued interest receivable of $184.1 million. These mortgage notes are secured by three recreation properties and one public charter school.

In addition, at December 31, 2018, the Company had $29.5 million recorded investments in unconsolidated VIEs through joint ventures that own two recreation anchored lodging properties. The Company accounts for these investments in joint ventures under the equity method of accounting. The Company's maximum exposure to loss at December 31, 2018, is its investment in the joint ventures of $29.5 million. See Note 8 for further discussion related to the Company's unconsolidated real estate joint ventures.

While these entities are VIEs, the Company has determined that the power to direct the activities of these VIEs that most significantly impact the VIE’s economic performance is not held by the Company.

11.9. Derivative Instruments


All derivatives are recognized at fair value in the consolidated balance sheets within the line items "Other assets" and "Accounts payable and accrued liabilities" as applicable. The Company's derivatives are subject to a master netting arrangement and the Company has elected not to offset its derivative position for purposes of balance sheet presentation and disclosure. The Company had no derivative liabilities in the consolidated balance sheetassets of $1.1 million at December 31, 2018.2019 and had 0 derivative assets at December 31, 2020. The Company had derivative liabilities of $0.1$14.0 million recorded in “Accounts payable and accrued liabilities” in the consolidated balance sheet$4.5 million at December 31, 2017. The Company had derivative assets of $10.6 million2020 and $25.7 million recorded in “Other assets” in the consolidated balance sheet at December 31, 2018 and 2017,2019, respectively. The Company has not posted or received collateral with its derivative counterparties as of December 31, 20182020 and 2017.2019. See Note 1210 for disclosures relating to the fair value of the derivative instruments as of December 31, 2018 and 2017.instruments.


Risk Management Objective of Using Derivatives
The Company is exposed to certain risk arising from both its business operations and economic conditions including the effect of changes in foreign currency exchange rates on foreign currency transactions and interest rates on its LIBOR based borrowings. The Company manages this risk by following established risk management policies and procedures including the use of derivatives. The Company’s objective in using derivatives is to add stability to reported earnings and to manage its exposure to foreign exchange and interest rate movements or other identified risks. To accomplish this objective, the Company primarily uses interest rate swaps, cross currencycross-currency swaps and foreign currency forwards.


Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements on its LIBOR based borrowings. To accomplish this objective, the Company currently uses interest rate swaps as its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt or payment of variable-rate amounts from a counterparty which results in the Company recording net interest expense that is fixed over the life of the agreements without exchange of the underlying notional amount.


As of December 31, 2018,2020, the Company had two4 interest rate swap agreements to fix thedesignated as cash flow hedges of interest rate at 2.64% on $300.0 million of borrowings under therisk related to its variable rate unsecured term loan facility from July 6, 2017 to April 5, 2019.totaling $400.0 million. Additionally, as ofat December 31, 2018,2020, the Company had three additionalan interest rate swap agreements to fix theagreement designated as a cash flow hedge of interest rate risk related to its variable rate secured bonds totaling $25.0 million. Interest rate swap agreements outstanding at 3.15%December 31, 2020 are summarized below:
Fixed rateNotional Amount (in millions)IndexMaturity
4.3950%(1)$116.7 USD LIBORFebruary 7, 2022
4.4075%(1)116.7 USD LIBORFebruary 7, 2022
4.4080%(1)116.6 USD LIBORFebruary 7, 2022
4.5950%(1)50.0 USD LIBORFebruary 7, 2022
Total$400.0 
1.3925%25.0 USD LIBORSeptember 30, 2024
Total$25.0 
(1) As discussed in Note 8, on an additional $50.0 millionJune 29, 2020 and November 3, 2020, the Company amended its Consolidated Credit Agreement. The above fixed rates increased by 0.90% during the Covenant Relief Period, and as a result of borrowings under itsthe Company's unsecured term loan facility from November 6, 2017debt ratings being downgraded and a LIBOR floor of 0.50% being established. The rates are scheduled to April 5, 2019 and on $350.0 millionreturn to previous levels as defined in the agreement at the end of borrowings underthis period, subject to the Company's unsecured term loan facility from April 6, 2019 to February 7, 2022.debt ratings.


The change in the fair value of interest rate derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (AOCI) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction.


100

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018

hedged transaction. During the years ended December 31, 2018, 2017 and 2016, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of December 31, 2018,2020, the Company estimates that during the twelve months ending December 31, 2019, $2.12020, $8.2 million will be reclassified from AOCI to a reduction of interest expense.


Cash Flow Hedges of Foreign Exchange Risk
The Company is exposed to foreign currency exchange risk against its functional currency, USD, on CAD denominated cash flow from its four4 Canadian properties. The Company uses cross currencycross-currency swaps and foreign currency forwards to mitigate its exposure to fluctuations in the USD-CAD exchange rate on its Canadian properties. These foreign currency derivativescash inflows associated with these properties which should hedge a significant portion of the Company's expected CAD denominated cash flow offlows.

During the Canadian properties as their impact on the Company's cash flow when settled should move in the opposite direction of the exchange rates utilized to translate revenues and expenses of these properties.

As ofyear ended December 31, 2018,2020, the Company had aentered into USD-CAD cross-currency swapswaps that were effective July 1, 2020 with a fixed original notional value of $100.0 million CAD and $79.5$76.6 million USD. The net effect of this swap is to lock in an exchange rate of $1.26$1.31 CAD per USD on approximately $13.5$7.2 million of annual CAD denominated cash flows through June 2020.2022.


On June 29, 2018, the Company entered into two cross-currency swap agreements designated as net investment hedges that are described below.

The change in the fair value of foreign currency derivatives designated and that qualify as cash flow hedges of foreign exchange risk is recorded in AOCI and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction. As of December 31, 2018,2020, the Company estimates that during the twelve months ending December 31, 2019, $0.82020, $0.2 million of gainslosses will be reclassified from AOCI to other income.expense.


Net Investment Hedges
As discussed above, theThe Company is exposed to fluctuations in foreignthe USD-CAD exchange ratesrate on its four Canadian properties.net investments in Canada. As such, the Company uses either currency forward agreements or cross-currency swaps to hedgemanage its exposure to changes in foreign exchange rates. Currency forward agreements involve fixing the USD-CAD exchange rate for deliveryrates on certain of a specified amountits foreign net investments. As of foreign currency on a specified date. The currency forward agreements are typically cash settled in USD for their fair value at or close to their settlement date.

In order to hedge the net investment on its four Canadian properties, on June 29, 2018,December 31, 2020, the Company entered into twohad the following cross-currency swaps designated as net investment hedges that became effective July 1, 2018 withhedges:
Fixed rateNotional Amount (in millions, CAD)Maturity
$1.32 CAD per USD$100.0 July 1, 2023
$1.32 CAD per USD100.0 July 1, 2023
Total$200.0 

The cross-currency swaps also have a total fixed notional value of $200.0 million CAD and $151.6 million USD with a maturity date of July 1, 2023. Includedmonthly settlement feature locked in this net investment hedge, the Company locked inat an exchange rate of $1.32 CAD per USD on approximately $4.5 million of additionalCAD annual CAD denominated cash flows, on the properties through July 1, 2023.net effect of which is an excluded component from the effectiveness testing of this hedge.

On June 29, 2018, the Company de-designated two CAD to USD currency forward agreements in conjunction with entering into new agreements, described above, effectively terminating the currency forward agreements. These contracts were previously designated as net investment hedges. During the year ended December 31, 2018, the Company received $30.8 million of cash in connection with the settlement of the CAD to USD currency forward agreements. The corresponding change in value of the forward contracts for the period from inception through dedesignation of $30.8 million is reported in AOCI and will be reclassified into earnings upon a sale or complete or substantially complete liquidation of the Company's investment in its four Canadian properties.


For qualifying foreign currency derivatives designated as net investment hedges, the change in the fair value of the derivatives are reported in AOCI as part of the cumulative translation adjustment. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with the Company's accounting policy election. The earnings recognition of excluded components are presented in other income.


101

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018

Below is a summary of the effect of derivative instruments on the consolidated statements of changes in equity and income for the years ended December 31, 2018, 20172020, 2019 and 2016:2018:

Effect of Derivative Instruments on the Consolidated Statements of Changes in Equity and Comprehensive (Loss) Income for the Years Ended December 31, 2020, 2019 and 2018
Effect of Derivative Instruments on the Consolidated Statements of Changes in Equity and Income for the Years Ended December 31, 2018, 2017 and 2016
(Dollars in thousands)
 Year Ended December 31,
Description2018 2017 2016
Cash Flow Hedges     
Interest Rate Swaps     
Amount of Gain (Loss) Recognized in AOCI on Derivative$3,172
 $2,479
 $(2,044)
Amount of Income (Expense) Reclassified from AOCI into Earnings (1)1,324
 (2,498) (5,235)
Cross Currency Swaps     
Amount of Gain (Loss) Recognized in AOCI on Derivative1,689
 (793) (754)
Amount of Income Reclassified from AOCI into Earnings (2)1,426
 2,457
 2,663
Net Investment Hedges     
Cross Currency Swaps     
Amount of Gain Recognized in AOCI on Derivative5,108
 —
 —
Amount of Income Recognized in Earnings (2)271
 —
 —
Currency Forward Agreements     
Amount of Gain (Loss) Recognized in AOCI on Derivative8,560
 (9,547) (2,804)
Amount of Expense Reclassified from AOCI into Earnings (2)—
 —
 —
Total     
Amount of Gain (Loss) Recognized in AOCI on Derivative$18,529
 $(7,861) $(5,602)
Amount of Income (Expense) Reclassified from AOCI into Earnings2,750
 (41) (2,572)
Amount of Income Recognized in Earnings271
 —
 —
      
Interest expense, net in accompanying consolidated statements of income135,507
 133,124
 97,144
Other income in accompanying consolidated statements of income2,076
 3,095
 9,039
(Dollars in thousands)
(1)Included in “Interest expense, net” in accompanying consolidated statements of income.
(2)Included in "Other income" in the accompanying consolidated statements of income.

 Year Ended December 31,
Description202020192018
Cash Flow Hedges
Interest Rate Swaps
Amount of (Loss) Gain Recognized in AOCI on Derivative$(11,612)$(7,476)$3,172 
Amount of (Expense) Income Reclassified from AOCI into Earnings (1)(6,159)1,138 1,324 
Cross Currency Swaps
Amount of Gain (Loss) Recognized in AOCI on Derivative5 (450)1,689 
Amount of Income Reclassified from AOCI into Earnings (2)441 545 1,426 
Net Investment Hedges
Cross Currency Swaps
Amount of (Loss) Gain Recognized in AOCI on Derivative(4,664)(4,454)5,108 
Amount of Income Recognized in Earnings (2) (3)599 556 271 
Currency Forward Agreements
Amount of Gain Recognized in AOCI on Derivative0 0 8,560 
Total
Amount of (Loss) Gain Recognized in AOCI on Derivative$(16,271)$(12,380)$18,529 
Amount of (Expense) Income Reclassified from AOCI into Earnings(5,718)1,683 2,750 
Amount of Income Recognized in Earnings599 556 271 
Interest expense, net in accompanying consolidated statements of (loss) income and comprehensive (loss) income$157,675 $142,002 $135,870 
Other income in accompanying consolidated statements of (loss) income and comprehensive (loss) income$9,139 $25,920 $2,076 
(1)    Included in “Interest expense, net” in accompanying consolidated statements of (loss) income and comprehensive (loss) income.
(2)    Included in "Other income" in the accompanying consolidated statements of (loss) income and comprehensive (loss) income.
(3)    Amounts represent derivative gains excluded from the effectiveness testing.

Credit-risk-related Contingent Features
The Company has agreements with each of its interest rate derivative counterparties that contain a provision where if the Company defaults on any of its obligations for borrowed money or credit in an amount exceeding $25.0 million for two of the agreements and $50.0 million for three of the agreements and such default is not waived or cured within a specified period of time, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its interest rate derivative obligations.


As of December 31, 2018,2020, the Company had no derivatives with a fair value of the Company's derivatives in a liability position related to these agreements.agreements was $14.0 million. If the Company breached any of the contractual provisions of these derivative contracts, it would be required to settle its obligations under the agreements at their termination value after considering the right to offset.of $14.8 million. As of December 31, 2018,2020, the Company had not posted any collateral related to these agreements and was not in breach of any provisions in these agreements.



102

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018

12.10. Fair Value Disclosures


The Company has certain financial instruments that are required to be measured under the FASB’s Fair Value Measurement guidance. The Company currently does not have any non-financial assets and non-financial liabilities that are required to be measured at fair value on a recurring basis.


As a basis for considering market participant assumptions in fair value measurements, the FASB’s Fair Value Measurement guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs use quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.


Derivative Financial Instruments
The Company uses interest rate swaps, foreign currency forwards and cross currency swaps to manage its interest rate and foreign currency risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, foreign exchange rates, and implied volatilities. The fair value of interest rate swaps areis determined using the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected variable cash payments. The variable cash payments are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. In conjunction with the FASB's fair value measurement guidance, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.


Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives also use Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. As of December 31, 2018,2020, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives and therefore, has classified its derivatives as Level 2 within the fair value reporting hierarchy.



103

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018

The table below presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 20182020 and 2017,2019, aggregated by the level in the fair value hierarchy within which those measurements are classified and by derivative type.

Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2018 and 2017
(Dollars in thousands)
DescriptionQuoted Prices in
Active Markets
for Identical
Assets (Level I)		 Significant
Other
Observable
Inputs (Level 2)		 Significant
Unobservable
Inputs (Level 3)		 Balance at
end of period
2018:       
Cross Currency Swaps*$—
 $6,278
 $—
 $6,278
Interest Rate Swap Agreements*$—
 $4,344
 $—
 $4,344
2017:       
Cross Currency Swaps*$—
 $1,041
 $—
 $1,041
Cross Currency Swaps**$—
 $(134) $—
 $(134)
Currency Forward Agreements*$—
 $22,235
 $—
 $22,235
Interest Rate Swap Agreements*$—
 $2,496
 $—
 $2,496
Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2020 and 2019
(Dollars in thousands)
DescriptionQuoted Prices in
Active Markets
for Identical
Assets (Level I)		Significant
Other
Observable
Inputs (Level 2)		Significant
Unobservable
Inputs (Level 3)		Balance at
end of period
2020:
Cross Currency Swaps**$0 $(4,271)$0 $(4,271)
Interest Rate Swap Agreements**$0 $(9,723)$0 $(9,723)
2019:
Cross Currency Swaps*$0 $828 $0 $828 
Interest Rate Swap Agreements*$0 $225 $0 $225 
Interest Rate Swap Agreements**$0 $(4,495)$0 $(4,495)
*Included in "Other assets" in the accompanying consolidated balance sheet.
**Included in "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheet.sheets.


Non-recurring fair value measurements
The table below presents the Company's assets measured at fair value on a non-recurring basis during the year ended December 31, 20182020 and 2019, aggregated by the level in the fair value hierarchy within which those measurements fall.


Assets Measured at Fair Value on a Non-Recurring Basis During the Year Ended
December 31, 20182020 and 20172019
(Dollars in thousands)
DescriptionQuoted Prices in
Active Markets
for Identical
Assets (Level I)		Significant
Other
Observable
Inputs (Level 2)		Significant
Unobservable
Inputs (Level 3)		Balance at
measurement date
2020:
Real estate investments, net$— $29,684 $9,860 $39,544 
Operating lease right-of-use assets— — 12,953 12,953 
Investment in joint ventures— — 771 771 
Other assets (1)— 0 0 0 
2019:
Real estate investments, net$— $6,160 $0 $6,160 
DescriptionQuoted Prices in
Active Markets
for Identical
Assets (Level I)		 Significant
Other
Observable
Inputs (Level 2)		 Significant
Unobservable
Inputs (Level 3)		 Balance at
end of period
2018:       
Land held for development$—
 $—
 $9,805
 $9,805
2017:       
Investment in direct financing leases, net$—
 $—
 $35,807
 $35,807


(1) Includes collateral dependent notes receivable, which are presented within other assets in the accompanying consolidated balance sheet.

As discussed further in Note 4, during the year ended December 31, 2018,2020, the Company recorded impairment charges totaling $16.5charges of $85.7 million, of which $70.7 million related to land held for developmentreal estate investments, net and property under development.$15.0 million related to operating lease right-of-use assets. Management estimated the fair value of these investments taking into account various factors including thepurchase offers, independent appraisals, the shortened hold periodperiods and current market conditions. The Company determined, based on the inputs, that its valuation of 6 of its properties with purchase offers were classified as Level 2 of the fair value hierarchy and were measured at fair value. NaN properties, 2 of which included operating lease right-of-use assets, were measured at fair value using independent appraisals which used discounted cash flow models. The significant inputs and assumptions used in the real estate appraisals included market rents which ranged from $9 per square foot to $28 per square foot, discount rates which ranged from 9.0% to 12.3% and a terminal capitalization rate of 8.75% for the property not under ground lease. Significant inputs and assumptions used in the right-of-use asset appraisals included market rates which ranged from $10 per square foot to
104

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
$16 per square foot and discount rates which ranged from 8.0% to 8.5%. These measurements were classified within Level 3 of the fair value hierarchy as many of the assumptions were not observable.

Additionally, as discussed further in Note 7, during the year ended December 31, 2020, the Company recorded impairment charges of $3.2 million related to its investment in joint ventures. Management estimated the fair value of these investments, taking into account various factors including implied asset value changes based on discounted cash flow projections and current market conditions. The Company determined, based on the inputs, that its valuation of land held for development and property under developmentinvestment in joint ventures was classified within Level 3 of the fair value hierarchy as many of the assumptions are not observable.


As discussed further in Note 6, during the year ended December 31, 2020, the Company recorded expected credit loss expense totaling $25.5 million related to notes receivable from one borrower to fully reserve the outstanding principal balance of $12.6 million and unfunded commitment to fund $12.9 million, as a result of recent changes in the borrower's financial status due to the impact of the COVID-19 pandemic. Management valued the loan based on the fair value of the underlying collateral which was based on review of the financial statements of the borrower, and was classified within Level 2 of the fair value hierarchy.

As discussed further in Note 7,4, during the year ended December 31, 2017,2019, the Company recorded an impairment charges totaling $10.2charge of $2.2 million related to its investment in direct financing leases,real estate investments, net. Management estimated the fair value of this investmentsproperty taking into account various factors including various purchase offers, pending purchase agreements, the independent appraisals, input from an outside brokershortened holding period and current market conditions. The Company determined, based on the inputs, that its valuation of the investmentreal estate investments, net was classified within Level 32 of the fair value hierarchy as many of the assumptions are not observable. During 2017, the Company entered into revised lease terms on these properties and as a result, these properties were classified as operating leases and moved to rental properties.hierarchy.


EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 2017 and 2016

Fair Value of Financial Instruments
The following methods and assumptions were used by the Company to estimate the fair value of each class of financial instruments at December 31, 20182020 and 2017:2019:


Mortgage notes receivable and related accrued interest receivable:
The fair value of the Company’s mortgage notes and related accrued interest receivable is estimated by discounting the future cash flows of each instrument using current market rates. At December 31, 2018,2020, the Company had a carryingcarrying value of $517.5$365.6 million in fixed raterate mortgage notes receivable outstanding, including related accrued interest, with a weighted average interest rate of approximately 8.67%approximately 9.03%. The fixed rate mortgagemortgage notes bear interest at rates of 7.00%7.01% to 11.43%11.78%. Discounting the future cash flows for fixed rate mortgage notes receivable using rates of 7.50% to 10.00%, management estimates the fair value of the fixed rate mortgage notes receivable to be $544.6$394.0 million with an estimated weighted average market rate of 8.68%8.11% at December 31, 2018.2020.


At December 31, 2017,2019, the Company had a carrying value of $970.7$357.4 million in fixed rate mortgage notes receivable outstanding, including related accrued interest, with a weighted average interest rate of approximately 8.42%8.98%. The fixed rate mortgage notes bear interest at rates of 7.00%6.99% to 11.31%11.61%. Discounting the future cash flows for fixed rate mortgage notes receivable using rates of 7.00%6.99% to 11.50%9.25%, management estimates the fair value of the fixed rate mortgage notes receivable to be $992.6$395.6 million with an estimated weighted average market rate of 8.79%7.76% at December 31, 2017.2019.

Investment in direct financing leases, net:
At December 31, 2018, the Company had investments in direct financing leases with a carrying value of $20.6 million, and with a weighted average effective interest rate of 12.04%. At December 31, 2018, the investment in direct financing leases bears interest at effective rates of 11.93% to 12.38%. The carrying value of the $20.6 million investment in direct financing leases approximated the fair value at December 31, 2018.

At December 31, 2017, the Company had investments in direct financing leases with a carrying value of $57.9 million, and a weighted average effective interest rate of 11.98%. At December 31, 2017, the investment in direct financing leases bears interest at effective interest rates of 11.90% to 12.38%. The carrying value of the investment in direct financing leases approximated the fair value at December 31, 2017.


Derivative instruments:
Derivative instruments are carried at their fair value.


Debt instruments:
The fair value of the Company's debt as of December 31, 20182020 and 20172019 is estimated by discounting the future cash flows of each instrument using current market rates. At December 31, 2020, the Company had a carrying value of $1.0 billion in variable rate debt outstanding with an average weighted interest rate of approximately 2.23%. The carrying value of the variable rate debt outstanding approximates the fair value at December 31, 2020.

105

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018,
At December 31, 2019, the Company had a carrying value of $455.0$425.0 million in variable rate debt outstanding with an average weighted interest rate of approximately 2.84%. The carrying value of the variable rate debt outstanding approximates the fair value at December 31, 2018.

At December 31, 2017, the Company had a carrying value of $635.0 million in variable rate debt outstanding with an average weighted interest rate of approximately 2.58%2.75%. The carrying value of the variable rate debt outstanding approximates the fair value at December 31, 2017.2019.


As described in Note 11, atAt December 31, 20182020 and 2017, $350.02019, $425.0 million, of the Company's variable rate debt, outstanding under the Company's unsecured term loan facilitydiscussed above, had been effectively converted to a fixed rate through February 7, 2022 by interest rate swap agreements. See Note 9 for additional information related to the Company's interest rate swap agreements.


At December 31, 2018,2020, the Company had a carrying value of $2.57 $2.72 billion in fixed rate long-term debt outstanding with an average weighted interest rate of approximately 4.86%4.70%. Discounting the future cash flows for fixed rate debt using December 31, 20182020 market rates of 3.48%4.09% to 4.99%5.81%, management estimates the fair value of the fixed rate debt to be approximately $2.57$2.69 billion with an estimated weighted average market rate of 4.69%4.70% at December 31, 2018.2020.


EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 2017 and 2016


At December 31, 2017,2019, the Company had a carrying value of $2.43$2.72 billion in fixed rate long-term debt outstanding with an average weighted interest rate of approximately 5.15%4.54%. Discounting the future cash flows for fixed rate debt using December 31, 20172019 market rates of 2.49%2.87% to 4.56%, management estimates the fair value of the fixed rate debt to be approximately $2.53$2.87 billion with an estimated weighted average market rate of 4.04%3.51% at December 31, 2017.2019.


13.11. Common and Preferred Shares


On June 3, 2019, the Company filed a shelf registration statement with the SEC, which is effective for a term of 3 years. The securities covered by this registration statement include common shares, preferred shares, debt securities, depositary shares, warrants, and units. The Company may periodically offer one of more of these securities in amounts, prices and on terms to be announced when and if these securities are offered. The specifics of any future offerings along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering.

Additionally, on June 3, 2019, the Company filed a shelf registration statement with the SEC, which is effective for a term of 3 years, for its Dividend Reinvestment and Direct Share Purchase Plan (DSP Plan) which permits the issuance of up to 15,000,000 common shares.

Common Shares
The Company's Board of Trustees declared cash dividends totaling $4.32$1.515 and $4.08$4.500 per common share for the years ended December 31, 20182020 and 2017,2019, respectively. The monthly cash dividend to common shareholders was suspended following the common share dividend paid on May 15, 2020 to shareholders of record as of April 30, 2020.
 
Of the total distributions calculated for tax purposes, the amounts characterized as ordinary income, return of capital and long-term capital gain for cash distributions paid per common share for the years ended December 31, 20182020 and 20172019 are as follows:
Cash Distributions Per Share
20202019
Taxable ordinary income (1)$0.8888 $2.7411 
Return of capital0.5634 1.3966 
Long-term capital gain (2)0.4378 0.3473 
Totals$1.8900 $4.4850 
 Cash Distributions Per Share
 2018 2017
Taxable ordinary income (1)$4.1253
 $3.5434
Return of capital—
 0.2762
Long-term capital gain (2)0.1747
 0.2404
Totals$4.3000
 $4.0600


(1) Of the taxable ordinary income, $4.1253 qualifiedAmounts qualify in their entirety as 199A distributions for the year ended December 31, 2018 and none qualified as 199A distributions for the year ended December 31, 2017.distributions.
(2) Of the long-term capital gain, $0.0102gain, $0.1439 and $0.0972 $0.3473 were unrecaptured section 1250 gains for the years ended December 31, 20182020 and 2017,2019, respectively.


106

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
During the year ended December 31, 2017,2020, the Company issued an aggregate of 1,382,73036,176 common shares under the direct share purchase component of its Dividend Reinvestment and Direct Share PurchaseDSP Plan (DSPP) for net proceeds of $98.2$1.1 million.


During the year ended December 31, 2017,2020, the Company's Board approved a share repurchase program pursuant to which the Company issued 8,851,264may repurchase up to $150.0 million of the Company's common shares in connection with its transaction with CNL Lifestyle and OZRE. See Note 3 for further information.

Subsequentshares. The share repurchase program was scheduled to expire on December 31, 2018,2020; however, the Company issued an aggregatesuspended the program on the effective date of 490,310the covenant modification agreements, June 29, 2020, as discussed in Note 8. During the year ended December 31, 2020, the Company repurchased 4,066,716 common shares under its DSPPthe share repurchase program for net proceeds of $35.6approximately $106.0 million. The repurchases were made under a Rule 10b5-1 trading plan.


Series C Convertible Preferred SharesShare Options
Share options are granted to employees pursuant to the Long-Term Incentive Plan. The Company has outstanding 5.4 million 5.75% Series C cumulative convertible preferred shares (Series C preferred shares). The Company will pay cumulative dividends on the Series C preferred shares fromfair value of share options granted is estimated at the date of original issuancegrant using the Black-Scholes option pricing model. Share options granted to employees vest over a period of four years and share option expense for these options is recognized on a straight-line basis over the vesting period. Expense recognized related to share options and included in general and administrative expense in the amountaccompanying consolidated statements of $1.4375 per(loss) income and comprehensive (loss) income was $12 thousand, $10 thousand and $0.3 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Nonvested Shares Issued to Employees
The Company grants nonvested shares to employees pursuant to both the Annual Incentive Program and the Long-Term Incentive Plan. The Company amortizes the expense related to the nonvested shares awarded to employees under the Long-Term Incentive Plan and the premium awarded under the nonvested share each year, which is equivalent to 5.75%alternative of the $25 liquidation preference per share. DividendsAnnual Incentive Program on a straight-line basis over the future vesting period (three years to four years). Expense recognized related to nonvested shares and included in general and administrative expense in the accompanying consolidated statements of (loss) income and comprehensive (loss) income was $10.6 million, $11.3 million and $13.5 million for the years ended December 31, 2020, 2019 and 2018, respectively. Expense related to nonvested shares and included in severance expense in the accompanying consolidated statements of (loss) income and comprehensive (loss) income was $1.0 million, $0.6 million and $3.2 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Nonvested Performance Shares Issued to Employees
During the year ended December 31, 2020, the Compensation and Human Capital Committee of the Company's Board of Trustees (Board) approved the 2020 Long Term Incentive Plan (the 2020 LTIP) as a sub-plan under the Company's 2016 Equity Incentive Plan. Under the 2020 LTIP, the Company awards performance shares and restricted shares to the Company's executive officers. The performance shares contain both a market condition and a performance condition. The Company amortizes the expense related to the performance shares over the future vesting period of three years. Expense recognized related to performance shares and included in general and administrative expense in the accompanying consolidated statements of (loss) income and comprehensive (loss) income was $1.0 million for the year ended December 31, 2020. Expense related to nonvested performance shares and included in severance expense in the accompanying consolidated statements of (loss) income and comprehensive (loss) income was $261 thousand for the year ended December 31, 2020.

Restricted Share Units Issued to Non-Employee Trustees
The Company issues restricted share units to non-employee Trustees for payment of their annual retainers under the Company's Trustee compensation program. The fair value of the share units granted was based on the Series C preferredshare price at the date of grant. The share units vest upon the earlier of the day preceding the next annual meeting of shareholders or a change of control. The settlement date for the shares are payable quarterlyis selected by the non-employee Trustee, and ranges from one year from the grant date to upon termination of service. This expense is amortized by the Company on a straight-line basis over the year of service by the non-employee Trustees. Total expense recognized related to shares issued to non-employee Trustees and included in arrears. general and administrative expense in the accompanying consolidated statements of (loss) income and comprehensive (loss) income was $2.2 million, $1.9 million and $1.3 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Foreign Currency Translation
The Company does not haveaccounts for the rightoperations of its Canadian properties in Canadian dollars. The assets and liabilities related to redeem the Series C preferred shares except in limited circumstances to preserve the Company’s REIT status. The Series C preferred shares have no stated maturityCanadian properties and will not be subject to any sinking fund or mandatory redemption. As of December 31, 2018,mortgage note are translated into U.S. dollars using the Series C preferred shares are convertible,spot rates at the holder’s option, into the Company’s common sharesrespective balance sheet dates; revenues and expenses are translated at average exchange rates. Resulting translation adjustments are recorded as a conversion rateseparate component of 0.3954 common shares per Series C preferred share, which is equivalentcomprehensive income.

Derivative Instruments
The Company uses derivative instruments to a conversion price of $63.23 per common share. This conversion ratio may increase over time upon certain specified triggering events including if the Company’s common dividends per share exceeds a quarterly threshold of $0.6875.
Upon the occurrence of certain fundamental changes, the Company will under certain circumstances increase the conversion rate by a number of additional common shares or,reduce exposure to fluctuations in lieu thereof, may in certain circumstances elect toforeign currency exchange rates and variable interest rates.

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EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018


adjustThe Company records all derivatives on the conversion rate uponbalance sheet at fair value. The accounting for changes in the Series C preferred shares becoming convertible into sharesfair value of derivatives depends on the intended use of the public acquiringderivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or surviving company.

firm commitment attributable to a particular risk, such as foreign currency risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. For its net investment hedges that hedge the foreign currency exposure of its Canadian investments, the Company has elected to assess hedge effectiveness using a method based on changes in spot exchange rates and record the changes in the fair value amounts excluded from the assessment of effectiveness into earnings on a systematic and rational basis. The Company may at its option, cause the Series C preferred shares to be automatically convertedenter into that number of common sharesderivative contracts that are issuable atintended to economically hedge certain of its risk, even though hedge accounting does not apply or the then prevailing conversion rate.Company elects not to apply hedge accounting. If hedge accounting is not applied, realized and unrealized gains or losses are reported in earnings.

The Company's policy is to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Impact of Recently Issued Accounting Standards
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848). The ASU contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the year ended December 31, 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company may exercise its conversion right only if, at certain times,continues to evaluate the closing priceimpact of the Company’s common shares equals or exceeds 135%guidance and may apply other elections as applicable as additional changes in the market occur. The Company intends to amend agreements referencing the LIBOR-index to a replacement index and will apply the optional expedients offered in Topic 848.

3. Real Estate Investments

The following table summarizes the carrying amounts of the then prevailing conversion pricereal estate investments as of the Series C preferred shares.

Owners of the Series C preferred shares generally have no voting rights, except under certain dividend defaults. Upon conversion, the Company may choose to deliver the conversion value to the owners in cash, common shares, or a combination of cash and common shares.

The Board of Trustees declared cash dividends totaling $1.4375 per Series C preferred share for each of the years ended December 31, 20182020 and 2017, respectively. There were non-cash distributions associated with conversion adjustments of $0.6205 and $0.4918 per Series C preferred share2019 (in thousands):
20202019
Buildings and improvements$4,526,342 $4,747,101 
Furniture, fixtures & equipment118,334 123,239 
Land1,242,663 1,290,181 
Leasehold interests26,050 26,041 
5,913,389 6,186,562 
Accumulated depreciation(1,062,087)(989,254)
Total$4,851,302 $5,197,308 
Depreciation expense on real estate investments from continuing operations was $162.6 million, $153.2 million and $133.7 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Acquisitions and 2017, respectively. The conversion adjustment provision entitles the shareholders of the Series C preferred shares, upon certain quarterly common share dividend thresholds being met, to receive additional common shares of the Company upon a conversion of the preferred shares into common shares. The increase in common shares to be received upon a conversion is a deemed distribution for federal income tax purposes.Development

For tax purposes, the amounts characterized as ordinary income, return of capital and long-term capital gain for cash distributions paid and non-cash deemed distributions per Series C preferred share for the years ended December 31, 2018 and 2017 are as follows:
 Cash Distributions per Share
 2018 2017
Taxable ordinary income (1)$1.3791
 $1.3462
Return of capital—
 —
Long-term capital gain (2)0.0584
 0.0913
Totals$1.4375
 $1.4375

(1) Of the taxable ordinary income, $1.3791 qualified as 199A distributions forDuring the year ended December 31, 20182020, the Company completed the acquisition of real estate investments and none qualifiedlease related intangibles, as 199A distributionsfurther discussed in Note 2, for the year ended December 31, 2017.Experiential properties totaling $22.1 million, that consisted of 2 theatre properties.
(2) Of the long-term capital gain, $0.0034 and $0.0352 were unrecaptured section 1250 gains for the years ended December 31, 2018 and 2017, respectively.
89
 Non-cash Distributions per Share
 2018 2017
Taxable ordinary income (3)$0.5953
 $0.3527
Return of capital—
 0.1152
Long-term capital gain (4)0.0252
 0.0239
Totals$0.6205
 $0.4918

(3) Of the taxable ordinary income, $0.5953 qualified as 199A distributions for the year ended December 31, 2018 and none qualified as 199A distributions for the year ended December 31, 2017.
(4) Of the long-term capital gain, $0.0015 and $0.0092 were unrecaptured section 1250 gains for the years ended December 31, 2018 and 2017, respectively.

Series E Convertible Preferred Shares
The Company has outstanding 3.4 million 9.00% Series E cumulative convertible preferred shares (Series E preferred shares). The Company will pay cumulative dividends on the Series E preferred shares from the date of original issuance in the amount of $2.25 per share each year, which is equivalent to 9.00% of the $25 liquidation preference per share.


EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018

Additionally, during the year ended December 31, 2020, the Company had investment spending on build-to-suit development and redevelopment for Experiential properties totaling $46.9 million.
Dividends on
During the Series E preferred shares are payable quarterly in arrears.year ended December 31, 2019, the Company completed the acquisition of real estate investments and lease related intangibles, for Experiential properties totaling $451.9 million, that consisted of 26 theatre properties for approximately $426.5 million, 1 eat & play property for $1.4 million and 2 cultural properties for $24.0 million. The Company does not havecompleted the right to redeemacquisition of real estate investments and lease related intangibles for Education properties totaling $5.9 million that consisted of the Series E preferred shares exceptacquisition of 2 early childhood education centers.

Additionally, during the year ended December 31, 2019, the Company had investment spending on build-to-suit development and redevelopment for Experiential properties totaling $146.2 million and Education properties totaling $38.6 million.

During the year ended December 31, 2019, the Company completed the construction of the Kartrite Resort and Indoor Waterpark in limited circumstances to preserveSullivan County, New York. The indoor waterpark resort is being operated under a traditional REIT lodging structure and facilitated by a management agreement with an eligible independent contractor. The related operating revenue and expense are included in other income and other expense in the Company’s REIT status. The Series E preferred shares have no stated maturityaccompanying consolidated statements of (loss) income and will not be subject to any sinking fund or mandatory redemption. As ofcomprehensive (loss) income for the year ended December 31, 2019. Additionally, during the year ended December 31, 2018, the Series E preferred shares are convertible, atCompany completed the holder’s option, into the Company’s common shares at a conversion rate of 0.4686 common shares per Series E preferred share, which is equivalent to a conversion price of $53.35 per common share. This conversion ratio may increase over time upon certain specified triggering events including if the Company’s common dividends per share exceeds a quarterly threshold of $0.84.

Upon the occurrence of certain fundamental changes, the Company will under certain circumstances increase the conversion rate by a number of additional common shares or, in lieu thereof, may in certain circumstances elect to adjust the conversion rate upon the Series E preferred shares becoming convertible into sharesconstruction of the public acquiring or surviving company.

The Company may, at its option, causeResorts World Catskills common infrastructure. In June 2016, the Sullivan County Infrastructure Local Development Corporation issued $110.0 million of Series E preferred shares to be automatically converted into that number2016 Revenue Bonds which funded a substantial portion of common shares that are issuable at the then prevailing conversion rate. The Company may exercise its conversion right only if, at certain times, the closing price of the Company’s common shares equals or exceeds 150% of the then prevailing conversion price of the Series E preferred shares.

Owners of the Series E preferred shares generally have no voting rights, except under certain dividend defaults. Upon conversion, the Company may choose to deliver the conversion value to the owners in cash, common shares, or a combination of cash and common shares.

The Board of Trustees declared cash dividends totaling $2.25 per Series E preferred share forsuch construction costs. For the years ended December 31, 2018, 2017 and 2017. There were non-cash distributions associated with conversion adjustments of $0.5308 and $0.2619 per Series E preferred share for the years ended December 31, 2018 and 2017, respectively. The conversion adjustment provision entitles the shareholders of the Series E preferred shares, upon certain quarterly common share dividend thresholds being met, to receive additional common shares of2016, the Company upon a conversionreceived total reimbursements of the preferred shares into common shares. The increase in common shares to be received upon a conversion is a deemed distribution for federal income tax purposes.

For tax purposes, the amounts characterized as ordinary income, return$74.2 million of capital and long-term capital gain for cash distributions paid and non-cash deemed distributions per Series E preferred share for the years ended December 31, 2018 and 2017 are as follows:
 Cash Distributions per Share
 2018 2017
Taxable ordinary income (1)$2.1586
 $2.1070
Return of capital—
 —
Long-term capital gain (2)0.0914
 0.1430
Totals$2.2500
 $2.2500

(1) Of the taxable ordinary income, $2.1586 qualified as 199A distributions forconstruction costs. During the year ended December 31, 20182019, the Company received an additional reimbursement of $11.5 million.

Dispositions
On December 29, 2020, pursuant to a tenant purchase option, the Company completed the sale of 6 private schools and none qualified as 199A distributions4 early childhood education centers for net proceeds of approximately $201.2 million and recognized a gain on sale of approximately $39.7 million. Additionally, during the year ended December 31, 2017.2020, the Company completed the sale of 3 early education properties, 4 experiential properties and 2 land parcels for net proceeds totaling $26.6 million and recognized a combined gain on sale of $10.4 million.
(2) Of
During the long-term capital gain, $0.0053 and $0.0551 were unrecaptured section 1250 gains for the yearsyear ended December 31, 20182019, the Company completed the sale of all of its public charter school portfolio through the following transactions:

•On November 22, 2019, the Company sold 47 public charter school related assets, classified as real estate investments, mortgage notes receivable and 2017, respectively.investment in direct financing leases, for net proceeds of approximately $449.6 million. The Company recognized an impairment on this public charter school portfolio sale of $21.4 million that included the write-off of non-cash straight-line rent and effective interest receivables totaling $24.8 million. See Note 4 for additional information related to the impairment.
•The Company sold 10 public charter schools pursuant to tenant purchase options for net proceeds totaling $138.5 million and recognized a combined gain on sale of $30.0 million.
•The Company sold 7 public charter schools (not as result of exercise of tenant purchase options) for net proceeds totaling $44.4 million and recognized a combined gain on sale of $1.9 million.
•See Note 6 for details on repayments of mortgage notes receivable secured by public charter school properties during 2019.

Due to the Company's disposition of its remaining public charter school portfolio in 2019, the operating results of all public charter schools sold during 2019 have been classified within discontinued operations in the accompanying consolidated statements of (loss) income and comprehensive (loss) income for all periods presented. See Note 17 for further details on discontinued operations.

Additionally, during the year ended December 31, 2019, the Company sold 1 attraction property, 1 early childhood education center property and 4 land parcels for net proceeds totaling $21.9 million and sold 1
90
 Non-cash Distributions per Share
 2018 2017
Taxable ordinary income (3)$0.5092
 $0.1428
Return of capital—
 0.1094
Long-term capital gain (4)0.0216
 0.0097
Totals$0.5308
 $0.2619


EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018

attraction property and received an $11.0 million cash payment and provided seller mortgage financing of $27.4 million. The Company recognized a combined gain on these sales of $4.2 million. See Note 6 for additional information on the seller mortgage note receivable.


(3) Of
4. Impairment Charges

The Company reviews its properties for changes in circumstances that indicate that the taxable ordinarycarrying value of a property may not be recoverable based on an estimate of undiscounted future cash flows. As a result of the COVID-19 pandemic, the Company experienced vacancies at some of its properties and at others the Company has negotiated lease modifications that included rent reductions. As part of this process, the Company reassessed the expected holding periods and expected future cash flows of such properties, and determined that the estimated cash flows were not sufficient to recover the carrying values of 9 properties. NaN of these 9 properties have operating ground lease arrangements with right-of-use assets. During the year ended December 31, 2020, the Company determined the estimated fair value of the real estate investments and right-of-use assets of these properties using independent appraisals and various purchase offers. The Company reduced the carrying value of the real estate investments, net to $39.5 million and the operating lease right-of-use assets to $13.0 million. The Company recognized impairment charges of $70.7 million on the real estate investments and $15.0 million on the right-of-use assets, which are the amounts that the carrying value of the assets exceeded the estimated fair value.

During the year ended December 31, 2020, the Company also recognized $3.2 million in other-than-temporary impairments related to its equity investments in joint ventures in 3 theatre projects located in China. See Note 7 for further details on these impairments.

On November 22, 2019, the Company completed the sale of substantially all of its public charter school portfolio, consisting of 47 public charter school related assets, for net proceeds of approximately $449.6 million. Prior to the sale, the Company revised its estimated undiscounted cash flows associated with this portfolio, considering a shorter expected hold period and determined that the estimated cash flows were not sufficient to recover the carrying value of this portfolio. The Company estimated the fair value of this portfolio by taking into account the purchase price in the executed sale agreement. The Company recognized an impairment on public charter school portfolio sale of $21.4 million that included the write-off of non-cash straight-line rent and effective interest receivables totaling $24.8 million. This impairment and the operating results of all of the public charter schools sold in 2019 have been classified within discontinued operations in the accompanying consolidated statements of (loss) income $0.5092 qualifiedand comprehensive (loss) income. See Note 17 for further details on discontinued operations.

During the year ended December 31, 2019, the Company entered into an agreement to sell a theatre property for approximately $6.2 million. As a result, the Company revised its estimated undiscounted cash flow associated with this property, considering a shorter expected hold period and determined that the estimated cash flow was not sufficient to recover the carrying value of this property. The Company estimated the fair value of this property by taking into account the purchase price in the executed sale agreement. The Company recorded an impairment charge of approximately $2.2 million, which is the amount that the carrying value of the asset exceeds the estimated fair value.

During the year ended December 31, 2018, the Company entered into an agreement with Children’s Learning Adventure USA (CLA) in which CLA relinquished control of 4 of the Company’s properties that were still under development as 199A distributionsthe Company no longer intended to develop these properties for CLA. As a result, the Company revised its estimated undiscounted cash flows for these 4 properties, considering shorter expected holding periods, and determined that those estimated cash flows were not sufficient to recover the carrying values of these 4 properties. During the year ended December 31, 2018, the Company determined the estimated fair value of these properties using Level 3 inputs, including independent appraisals of these properties, and reduced the carrying value of these assets to $9.8 million, recording an impairment charge of $16.5 million. The charge was primarily related to the cost of improvements specific to the development of CLA’s prototype.

During the year ended December 31, 2018, the Company recognized a $10.7 million impairment charge related to the Company’s guarantees of the payment of 2 economic development revenue bonds secured by leasehold
91

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
interests and improvements at 2 theatres in Louisiana. In accordance with Topic 460, Guarantees, the Company recorded an asset and liability at the inception of the guarantees at fair value, which represented the Company's obligation to stand ready to perform under the terms of the guarantees. During the year ended December 31, 2018, the Company determined that a portion of its asset was no longer recoverable and recorded an impairment charge of $7.8 million.

A contingent future obligation is recognized in accordance with the provisions of Topic 450, Accounting for Contingencies. In the case of the Company’s guarantees, the contingent future obligation is the future payment of the bonds by the Company. At the inception of the guarantees, the Company determined that its future payment of the bonds was not probable, therefore no contingent future obligation was recorded. For the year ended December 31, 2018, the Company determined that its future payment on a portion of the bond obligations was probable due to inadequate performance of the theatre properties and failure of the debtor under the bonds to perform. Accordingly, for the year ended December 31, 2018, the Company recorded an incremental contingent liability of $2.9 million, which in addition to the $7.8 million discussed above, resulted in a total impairment charge recognized relating to the guarantees of $10.7 million.

5. Accounts Receivable

The following table summarizes the carrying amounts of accounts receivable as of December 31, 2020 and none qualified2019 (in thousands):
20202019
Receivable from tenants$81,120 $11,373 
Receivable from non-tenants505 2,103 
Straight-line rent receivable34,568 73,382 
Total$116,193 $86,858 

During the year ended December 31, 2020, the Company wrote-off receivables from tenants totaling $27.1 million and straight-line rent receivables totaling $38.0 million directly to rental revenue in the accompanying consolidated statements of (loss) income and comprehensive (loss) income upon determination that the collectibility of these receivables or future lease payments from these tenants was no longer probable. Additionally, the Company determined that future rental revenue related to these tenants will be recognized on a cash basis. The $38.0 million in write-offs of straight-line rent receivables were comprised of $26.5 million of straight-line rent receivable and $11.5 million of sub-lessor ground lease straight-line rent receivable.

As of December 31, 2020, receivable from tenants includes fixed rent payments of approximately $76.0 million that were deferred due to the COVID-19 pandemic and determined to be collectible. Additionally, the Company has amounts due from tenants that were not booked as 199A distributionsreceivables as the full amounts were not deemed probable of collection as a result of the COVID-19 pandemic. While deferments for this and future periods delay rent payments, these deferments do not release tenants from the obligation to pay the deferred amounts in the future. The repayment terms for these deferments vary by tenant and agreements.

6. Investment in Mortgage Notes and Notes Receivable

Effective January 1, 2020, the Company adopted Topic 326, which requires the Company to estimate and record credit losses for each of its mortgage notes and note receivable. The Company measures expected credit losses on its mortgage notes and notes receivable on an individual basis over the related contractual term as its financial instruments do not have similar risk characteristics. The Company has not experienced historical losses on its mortgage note portfolio; therefore, the Company uses a forward-looking commercial real estate loss forecasting tool to estimate its expected credit losses. The loss forecasting tool is comprised of a probability of default model and a loss given default model that utilizes the Company’s loan specific inputs as well as selected forward-looking macroeconomic variables and mean loss rates. Based on certain inputs, such as origination year, balance, interest rate as well as collateral value and borrower operating income, the model produces life of loan expected losses on a
92

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
loan-by-loan basis. As of December 31, 2020, the Company did not anticipate any prepayments therefore the contractual term of its mortgage notes was used for the calculation of the expected credit losses. The Company updates the model inputs at each reporting period to reflect, if applicable, any newly originated loans, changes to loan specific information on existing loans and current macroeconomic conditions.

During the year ended December 31, 2020, the Company increased its expected credit losses by $30.7 million from its implementation estimate of $2.2 million. This increase was primarily due to credit loss expense related to notes receivable from one borrower as described below as well as adjustments to current macroeconomic conditions resulting from the economic uncertainty and the rapidly changing environment surrounding the COVID-19 pandemic.

In response to the COVID-19 pandemic, the Company deferred interest payments for 7 borrowers. The deferrals require the borrower to pay the deferred interest in future periods. The Company assessed the deferrals and determined that the modifications did not result in troubled debt restructurings at December 31, 2020.


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EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
Investment in mortgage notes, including related accrued interest receivable, at December 31, 2020 and 2019 consists of the following (in thousands):
Year of OriginationInterest RateMaturity DatePeriodic Payment TermsOutstanding principal amount of mortgageCarrying amount as of December 31,Unfunded commitments
Description20202019 (1)December 31, 2020
Attraction property Powells Point, North Carolina20197.75 %6/30/2025Interest only$28,007 $27,045 $27,423 $0 
Fitness & wellness property Omaha, Nebraska20177.85 %1/3/2027Interest only10,905 11,225 10,977 0 
Fitness & wellness property Merriam, Kansas20197.55 %7/31/2029Interest only9,095 9,355 5,985 248 
Ski property Girdwood, Alaska20198.24 %12/31/2029Interest only40,869 40,680 37,000 16,131 
Fitness & wellness property Omaha, Nebraska20167.85 %6/30/2030Interest only8,410 8,630 5,803 2,508 
Experiential lodging property Nashville, Tennessee20197.01 %9/30/2031Interest only71,223 67,235 70,396 0 
Eat & play property Austin, Texas201211.31 %6/1/2033Principal & Interest-fully amortizing11,361 11,929 11,582 0 
Ski property West Dover and Wilmington, Vermont200711.78 %12/1/2034Interest only51,050 51,031 51,050 0 
Four ski properties Ohio and Pennsylvania200710.91 %12/1/2034Interest only37,562 37,413 37,562 0 
Ski property Chesterland, Ohio201211.38 %12/1/2034Interest only4,550 4,396 4,550 0 
Ski property Hunter, New York20168.57 %1/5/2036Interest only21,000 21,000 21,000 0 
Eat & play property Midvale, Utah201510.25 %5/31/2036Interest only17,505 18,289 17,505 0 
Eat & play property West Chester, Ohio20159.75 %8/1/2036Interest only18,068 18,830 18,068 0 
Private school property Mableton, Georgia20179.02 %4/30/2037Interest only5,088 5,278 5,048 0 
Fitness & wellness property Fort Collins, Colorado20187.85 %1/31/2038Interest only10,292 10,408 10,360 0 
Early childhood education center Lake Mary, Florida20197.87 %5/9/2039Interest only4,200 4,348 4,258 0 
Eat & play property Eugene, Oregon20198.13 %6/17/2039Interest only14,700 14,799 14,800 0 
Early childhood education center Lithia, Florida20178.25 %10/31/2039Interest only3,959 3,737 4,024 0 
$367,844 $365,628 $357,391 $18,887 
(1) Balances as of December 31, 2019 are prior to the adoption of ASC Topic 326.

Investment in notes receivable, including related accrued interest receivable, was $7.3 million and $14.0 million at December 31, 2020 and 2019, respectively, and is included in Other assets in the accompanying consolidated balance sheets.

During the year ended December 31, 2020, the Company entered into an amended and restated loan and security agreement with 1 of its notes receivable borrowers in response to the impacts of the COVID-19 pandemic on the borrower. The restated note receivable consists of the previous note balance of $6.5 million and provides the borrower with a term loan for up to $13.0 million and a $6.0 million revolving line of credit. The restated note receivable has a maturity date of June 30, 2032 and the line of credit matures on December 31, 2022. Interest is deferred through June 30, 2022, at which time monthly principal and interest payments will be due over 10 years. Although the borrower is not in default, nor has the borrower declared bankruptcy, the Company determined these modifications resulted in a troubled debt restructuring (TDR) at December 31, 2020 due to the impacts of the
94

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
COVID-19 pandemic on the borrower's financial condition. These note receivables are considered collateral dependent and expected credit losses are based on the fair value of the underlying collateral at the reporting date. The notes are secured by the working capital and non-real estate assets of the borrower. The Company assessed the fair value of the collateral as of December 31, 2020 and recognized credit loss expense for the year ended December 31, 2017.2020 consisting of the outstanding principal balance of $12.6 million and the $12.9 million unfunded commitment on the term loan and line of credit as of December 31, 2020. Income for this borrower will be recognized on a cash basis.
(4) Of
At December 31, 2020, the long-term capital gain, $0.0013Company's investment in this note receivable was a variable interest and $0.0037the underlying entity is a VIE. The Company is not the primary beneficiary of this VIE, as the Company does not individually have the power to direct the activities that are most significant to the entity and accordingly, this investment is not consolidated. The Company's maximum exposure to loss associated with this VIE is limited to the Company's outstanding note receivable of $12.6 million and the unfunded commitment of $12.9 million, both of which were unrecaptured section 1250 gainsfully reserved in the allowance for credit losses at December 31, 2020.

The following summarizes the activity within the allowance for credit losses related to mortgage notes, unfunded commitments and notes receivable for the year ended December 31, 2020 (in thousands):
Mortgage notes receivableUnfunded commitments - mortgage notesNotes receivableUnfunded commitments - notes receivableTotal
Allowance for credit losses at January 1, 2020$2,000 $114 $49 $0 $2,163 
Credit loss expense5,000 24 12,805 12,866 30,695 
Charge-offs0 0 0 0 0 
Recoveries0 0 0 0 0 
Allowance for credit losses$7,000 $138 $12,854 $12,866 $32,858 

7. Unconsolidated Real Estate Joint Ventures

As of December 31, 2020 and 2019, the Company had a 65% investment interest in 2 unconsolidated real estate joint ventures related to 2 experiential lodging properties located in St. Petersburg Beach, Florida. The Company's partner, Gencom Acquisition, LLC and its affiliates, own the remaining 35% interest in the joint ventures. There are 2 separate joint ventures, one that holds the investment in the real estate of the experiential lodging properties and the other that holds lodging operations, which are facilitated by a management agreement with an eligible independent contractor. The Company's investment in the operating entity is held in a taxable REIT subsidiary (TRS). The Company accounts for its investment in these joint ventures under the equity method of accounting. As of December 31, 2020 and 2019, the Company had invested $27.4 million and $29.7 million, respectively, in these joint ventures.

The joint venture that holds the real property has a secured mortgage loan of $85.0 million at December 31, 2020, that is due April 1, 2022. The note can be extended for 2 additional 1 year periods upon the satisfaction of certain conditions. Additionally, the Company has guaranteed the completion of the renovations in the amount of approximately $32.7 million, with $23.9 million remaining to fund at December 31, 2020. The mortgage loan bears interest at an annual rate equal to the greater of 6.00% or LIBOR plus 3.75%. Interest is payable monthly beginning on May 1, 2019 until the stated maturity date of April 1, 2022, which can be extended to April 1, 2023. The joint venture has an interest rate cap agreement to limit the variable portion of the interest rate (LIBOR) on this note to 3.0% from March 28, 2019 to April 1, 2023. In response to the COVID-19 pandemic, on May 28, 2020, the joint venture was granted a three-month interest deferral, which is required to be paid on the maturity date of the loan and is not considered a troubled debt restructuring.

The Company recognized losses of $4.0 million and $140 thousand and income of $52 thousand during the years ended December 31, 2020, 2019 and 2018, respectively, and received 0 distributions during the years ended December 31, 2020, 2019 and 2018 related to the equity investment in these joint ventures.
95

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018

As of December 31, 2020 and 2019, the Company's investments in these joint ventures were considered to be variable interests and the underlying entities are VIEs. The Company is not the primary beneficiary of the VIEs as the Company does not individually have the power to direct the activities that are most significant to the joint ventures and accordingly these investments are not consolidated. The Company's maximum exposure to loss at December 31, 2020, is its investment in the joint ventures of $27.4 million as well as the Company's guarantee of the estimated costs to complete renovations of approximately $23.9 million.

In addition, as of December 31, 2020 and 2019, the Company had invested $0.8 million and $4.6 million, respectively, in unconsolidated joint ventures for 3 theatre projects located in China. During the year ended December 31, 2020, the Company recognized $3.2 million in other-than-temporary impairment charges on these equity investments. The Company determined the estimated fair value of these investments based primarily on discounted cash flow projections. The Company recognized losses of $559 thousand, $241 thousand and $74 thousand, during the years ended December 31, 2020, 2019 and 2018, respectively, and received distributions of $112 thousand and $567 thousand, from its investment in these joint ventures for the years ended December 31, 2019 and 2018, respectively. NaN distributions were received during the year ended December 31, 2020.

8. Debt

Debt at December 31, 2020 and 2017, respectively.2019 consists of the following (in thousands):

20202019
Unsecured revolving variable rate credit facility, LIBOR + 1.625% at December 31, 2020, due February 27, 2022 (1)$590,000 $0 
Unsecured term loan payable, LIBOR + 2.00% at December 31, 2020 with $350,000 fixed at 4.40% and $50,000 fixed at 4.60%, due February 27, 2023 (1)400,000 400,000 
Senior unsecured notes payable, 5.25%, due July 15, 2023 (2)275,000 275,000 
Senior unsecured notes payable, 5.60% at December 31, 2020, due August 22, 2024 (3)148,000 148,000 
Senior unsecured notes payable, 4.50%, due April 1, 2025 (2)300,000 300,000 
Senior unsecured notes payable, 5.81% at December 31, 2020, due August 22, 2026 (3)192,000 192,000 
Senior unsecured notes payable, 4.75%, due December 15, 2026 (2)450,000 450,000 
Senior unsecured notes payable, 4.50%, due June 1, 2027 (2)450,000 450,000 
Senior unsecured notes payable, 4.95%, due April 15, 2028 (2)400,000 400,000 
Senior unsecured notes payable, 3.75%, due August 15, 2029 (2)500,000 500,000 
Bonds payable, variable rate, fixed at 1.39% through September 30, 2024, due August 1, 204724,995 24,995 
Less: deferred financing costs, net(35,552)(37,165)
Total$3,694,443 $3,102,830 
Series F Preferred Shares
On(1) At December 21, 2017,31, 2020, the Company completedhad $590.0 million outstanding under its $1.0 billion unsecured revolving credit facility with interest at a floating rate of LIBOR plus 1.625% (with a LIBOR floor of 0.50%), which was 2.125% with a facility fee of 0.375%. Interest is payable monthly. Subsequent to December 31, 2020, the redemptionCompany paid down $500.0 million on this credit facility.

The Company's unsecured term loan facility had a balance of $400.0 million with interest at a floating rate of LIBOR plus 2.00% (with a LIBOR floor of 0.50%), which was 2.5% on December 31, 2020. Interest is payable monthly. In addition, there is a $1.0 billion accordion feature on the combined unsecured revolving credit and term loan facility (the combined facility) that increases the maximum borrowing amount available under the combined facility, subject to lender approval, from $1.4 billion to $2.4 billion. If the Company exercises all 5.0or any portion of the accordion feature, the resulting increase in the combined facility may have a shorter or longer maturity date and different pricing terms. The combined facility contains financial covenants or restrictions that limit the Company's levels of consolidated debt, secured debt, investment levels outside certain categories and dividend distributions, and require the Company to maintain a minimum consolidated tangible net worth and meet certain coverage levels for
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EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
fixed charges and debt services. As discussed further below, certain of these covenants were modified or waived during 2020.

In light of the continuing financial and operational impacts of the COVID-19 pandemic on the Company and its tenants and borrowers, on June 29, 2020 and November 3, 2020, the Company amended its Consolidated Credit Agreement, which governs its unsecured revolving credit facility and its unsecured term loan facility. As described below, the amendments modified certain provisions and waived the Company's obligation to comply with certain covenants under this debt agreement through December 31, 2021. The Company can elect to terminate the Covenant Relief Period early, subject to certain conditions.

As described below, the loans subject to the modifications bear interest at higher rates during the Covenant Relief Period and will return to the original pre-waiver levels at the end of such period, subject to certain conditions. The rates during and after the Covenant Relief Period continue to be subject to change based on unsecured debt ratings, as defined in the agreement. The amendments also imposed the additional restrictions on the Company discussed below during the Covenant Relief Period. In addition, during the Covenant Relief Period, the amendments require the Company to cause certain of its key subsidiaries to guarantee the Company's obligations based on its unsecured debt ratings, and the Company will be required to pledge the equity interests of certain of those subsidiary guarantors upon the occurrence of certain events, however both of these requirements end when the Covenant Relief Period is over.

During the Covenant Relief Period, the initial interest rates for the revolving credit facility and term loan facility were set at LIBOR plus 1.375% and LIBOR plus 1.75%, respectively, (with a LIBOR floor of 0.50%) and the facility fee on the revolving credit facility was increased to 0.375%. On August 20, 2020, as a result of a downgrade of the Company's unsecured debt rating by Moody's to Baa3, the spreads on the revolving credit and term loan facilities each increased by 0.25%. During the fourth quarter of 2020, the Company's unsecured debt rating was downgraded to BB+ by both Fitch and Standard & Poor's. As a result of these downgrades, certain of the Company's key subsidiaries guarantee the Company's obligations under its bank credit facilities, private placement notes and other outstanding senior unsecured notes in accordance with existing agreements with the holders of such indebtedness. See Note 20 for the Company's supplemental guarantor financial information. If the Company's unsecured debt rating is further downgraded by Moody's, the interest rates on the revolving credit and term loan facilities would both increase by 0.35% during the Covenant Relief Period. After the Covenant Relief Period, the interest rates for the revolving credit and term loan facilities, based on the Company's current unsecured debt ratings, are scheduled to return to LIBOR plus 1.20% and LIBOR plus 1.35%, respectively, (with a LIBOR floor of 0) and the facility fee will be 0.25%, however these rates are subject to change based on the Company's unsecured debt ratings.

The amendments to the Company's revolving credit and term loan facilities permanently modified certain financial covenants and provided relief from compliance with certain financial covenants during the Covenant Relief Period, as follows: (i) a new minimum liquidity financial covenant of $500.0 million during the Covenant Relief Period was added; (ii) compliance with the total-debt-to-total-asset-value, the maximum-unsecured-debt-to-unencumbered-asset-value, the minimum unsecured interest coverage ratio and the minimum fixed charge ratio financial covenants was suspended for the period beginning June 29, 2020 and ending on the earlier to occur of December 31, 2021 or the earlier termination of the Covenant Relief Period; (iii) permanent amendments to the unsecured-debt-to-unencumbered-asset-value financial covenant were made to allow short-term indebtedness to be offset by unrestricted cash in the calculation and to allow unrestricted cash not otherwise offset against short-term indebtedness to be counted as an unencumbered asset; and (iv) permanent amendments to financial covenants were made to allow accrued deferred payments to be included as recurring property revenue in these calculations. The amendments also imposed additional restrictions on the Company and its subsidiaries during the Covenant Relief Period, including limitations on certain investments, incurrences of indebtedness, capital expenditures and payment of dividends or other distributions and stock repurchases, in each case subject to certain exceptions.

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EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
In connection with the amendments, $0.1 million of its outstanding 6.625% Series F cumulative redeemable preferred shares (Series F preferred shares). The sharesfees paid to third parties were redeemed at a redemption priceexpensed and included in costs associated with loan refinancing in the accompanying consolidated statements of $25.299045 per share. The price is the sum of the $25.00 per share liquidation preference(loss) income and a dividend per share of $0.299045 which equals the quarterly dividend prorated up to, but not including the redemption date for a total aggregate redemption price of approximately $126.5 million. In conjunction with the redemption, the Company recognized a charge representing the original issuance costs that were paid in 2012 and other redemption related expenses. The Series F preferred share redemption costs, which reduced netcomprehensive (loss) income available to common shareholders for the year ended December 31, 2017,2020. In addition, the Company paid $5.1 million in fees to existing lenders that were $4.5 million.capitalized in deferred financing costs and amortized as part of the effective yield. These fees consisted of $3.6 million related to the unsecured revolving credit facility and included in other assets and $1.5 million related to the term loan and shown as a reduction of debt.


As described under (3) below, on June 29, 2020 and December 24, 2020, the Company also amended its Note Purchase Agreement which governs its private placement notes. Under the most favored nations clause included in the Consolidated Credit Agreement, the additional or more restrictive covenants included in the private placement amendments are incorporated into the Consolidated Credit Agreement.

(2) These notes contain various covenants, including: (i) a limitation on incurrence of any debt that would cause the ratio of the Company’s debt to adjusted total assets to exceed 60%; (ii) a limitation on incurrence of any secured debt that would cause the ratio of the Company’s secured debt to adjusted total assets to exceed 40%; (iii) a limitation on incurrence of any debt that would cause the Company’s debt service coverage ratio to be less than 1.5 times; and (iv) the maintenance at all times of the Company's total unencumbered assets such that they are not less than 150% of the Company’s outstanding unsecured debt.

(3) In light of the continuing financial and operational impacts of the COVID-19 pandemic on the Company and its tenants and borrowers, on June 29, 2020 and December 24, 2020, the Company amended its Note Purchase Agreement, which governs its private placement notes. The amendments modified certain provisions and waived the Company's obligation to comply with certain covenants under these debt agreements through October 1, 2021. The Company can elect to extend such period through January 1, 2022 and may elect to terminate the Covenant Relief Period early, subject to certain conditions. These notes: (i) contain certain financial and other covenants that generally conform to the combined credit facility described above; (ii) provide investors thereunder certain additional guaranty and lien rights, in the event that certain events occur; (iii) contain certain "most favored lender" provisions; and (iv) impose restrictions on debt that can be incurred by certain subsidiaries of the Company. As discussed further below, certain of these covenants were modified or waived during 2020.

The Boardamendments provided for an immediate 0.65% waiver premium to be paid on the private placement notes during the Covenant Relief Period. In addition, during the fourth quarter of Trustees declared cash2020, as a result of downgrades of the Company's unsecured debt rating to BB+ by both Fitch and Standard and Poor's, the spreads on the private placement notes each increased by an additional 0.60%. As a result, the interest rates for the private placement notes were increased to 5.60% and 5.81% for the Series A notes due 2024 and the Series B notes due 2026, respectively. After the Covenant Relief Period, the interest rates for the private placement notes are scheduled to return to 4.35% and 4.56% for the Series A notes due 2024 and the Series B notes due 2026, respectively.

If the Company elects to extend the Covenant Relief Period until January 1, 2022, the Company must, or must cause certain of its subsidiaries to, grant mortgages on certain unencumbered properties to a collateral agent, on behalf of the holders of the private placement notes and the lenders under the Company's Consolidated Credit Agreement. If the Company provides such mortgages, they must remain in effect until the later of two consecutive fiscal quarters of demonstrated covenant compliance or June 30, 2022, however the additional 0.60% interest rate premium as a result of the downgrades in the Company's unsecured debt rating is removed while mortgages are outstanding. If the Company elects to extend the Covenant Relief Period until January 1, 2022 as described above, the Covenant Relief Period will automatically end on October 29, 2021 if the Company fails to provide such mortgages.

The amendments provide relief from compliance with the following financial covenants during the Covenant Relief Period: the total-debt-to-total-asset-value covenant; the maximum-unsecured-debt-to-unencumbered-asset-value covenant; the minimum unsecured interest coverage ratio; and the minimum fixed charge ratio. The amended Note Purchase Agreement modifies the maximum secured debt to total asset value covenant as follows: (i) neither the Company nor any of its subsidiaries may incur any secured debt during the period beginning on December 24, 2020 and ending on the last day of the Covenant Relief Period, subject to certain exceptions; and (ii) after the Covenant
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EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
Relief Period the ratio of secured debt to total asset value is reduced from 0.35 to 1.00 to 0.25 to 1.00 until the Company can demonstrate covenant compliance for at least two fiscal quarters.

The amendments impose certain restrictions on the Company during the Covenant Relief Period, including limitations on certain investments, incurrences of indebtedness, capital expenditures, payment of dividends totaling $1.54123 per Series F preferred shareor other distributions and stock repurchases, and maintenance of a minimum liquidity amount of $500.0 million, in each case subject to certain exceptions. The amendments include the following restrictions: (i) the limitation on investments and guarantees of certain indebtedness from October 1, 2020 to the end of the Covenant Relief Period was set at $175.0 million; and (ii) the limitation on capital expenditures from October 1, 2020 to the end of the Covenant Relief Period was set at $175.0 million. In addition, the amount of proceeds from assets sales that are exempt from the requirement to apply such proceeds to the prepayment of outstanding indebtedness under the Company's existing bank credit agreement and the private placement notes is $150.0 million, subject to certain exceptions relating to the sale of specified assets. In addition, the Company is prohibited from voluntarily prepaying its existing public senior notes during the Covenant Relief Period or its term loan debt under its bank facility during the Covenant Relief Period.

In connection with the amendments, $1.5 million of fees paid to third parties were expensed and included in costs associated with loan refinancing in the accompanying consolidated statements of (loss) income and comprehensive (loss) income for the year ended December 31, 2017. 2020. In addition, the Company paid $0.9 million in fees to existing lenders that were capitalized in deferred financing costs and amortized as part of the effective yield and shown as a reduction of debt.

Subsequent to year-end, the Company paid down principal of approximately $23.8 million on its private placement notes resulting from the sale of assets in accordance with the amendments.

Certain of the Company’s debt agreements contain customary restrictive covenants related to financial and operating performance as well as certain cross-default provisions. The Company was in compliance with all financial covenants under the Company's debt instruments at December 31, 2020.

Principal payments due on long-term debt obligations subsequent to December 31, 2020 (without consideration of any extensions) are as follows (in thousands):
 Amount
Year:
2021$0 
2022590,000 
2023675,000 
2024148,000 
2025300,000 
Thereafter2,016,995 
Less: deferred financing costs, net(35,552)
Total$3,694,443 

The Company capitalizes a portion of interest costs as a component of property under development. The following is a summary of interest expense, net from continuing operations for the years ended December 31, 2020, 2019 and 2018 (in thousands):
202020192018
Interest on loans$152,058 $140,697 $137,570 
Amortization of deferred financing costs6,606 6,192 5,797 
Credit facility and letter of credit fees3,064 2,265 2,411 
Interest cost capitalized(1,233)(4,975)(9,541)
Interest income(2,820)(2,177)(367)
Interest expense, net$157,675 $142,002 $135,870 
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EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018

9. Derivative Instruments

All derivatives are recognized at fair value in the consolidated balance sheets within the line items "Other assets" and "Accounts payable and accrued liabilities" as applicable. The Company has elected not to offset its derivative position for purposes of balance sheet presentation and disclosure. The Company had derivative assets of $1.1 million at December 31, 2019 and had 0 derivative assets at December 31, 2020. The Company had derivative liabilities of $14.0 million and $4.5 million at December 31, 2020 and 2019, respectively. The Company has not posted or received collateral with its derivative counterparties as of December 31, 2020 and 2019. See Note 10 for disclosures relating to the fair value of the derivative instruments.

Risk Management Objective of Using Derivatives
The Company is exposed to certain risk arising from both its business operations and economic conditions including the effect of changes in foreign currency exchange rates on foreign currency transactions and interest rates on its LIBOR based borrowings. The Company manages this risk by following established risk management policies and procedures including the use of derivatives. The Company’s objective in using derivatives is to add stability to reported earnings and to manage its exposure to foreign exchange and interest rate movements or other identified risks. To accomplish this objective, the Company primarily uses interest rate swaps, cross-currency swaps and foreign currency forwards.

Cash Flow Hedges of Interest Rate Risk
The Company uses interest rate swaps as its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt or payment of variable-rate amounts from a counterparty which results in the Company recording net interest expense that is fixed over the life of the agreements without exchange of the underlying notional amount.

As of December 31, 2020, the Company had 4 interest rate swap agreements designated as cash flow hedges of interest rate risk related to its variable rate unsecured term loan facility totaling $400.0 million. Additionally, at December 31, 2020, the Company had an interest rate swap agreement designated as a cash flow hedge of interest rate risk related to its variable rate secured bonds totaling $25.0 million. Interest rate swap agreements outstanding at December 31, 2020 are summarized below:
Fixed rateNotional Amount (in millions)IndexMaturity
4.3950%(1)$116.7 USD LIBORFebruary 7, 2022
4.4075%(1)116.7 USD LIBORFebruary 7, 2022
4.4080%(1)116.6 USD LIBORFebruary 7, 2022
4.5950%(1)50.0 USD LIBORFebruary 7, 2022
Total$400.0 
1.3925%25.0 USD LIBORSeptember 30, 2024
Total$25.0 
(1) As discussed in Note 8, on June 29, 2020 and November 3, 2020, the Company amended its Consolidated Credit Agreement. The above fixed rates increased by 0.90% during the Covenant Relief Period, and as a result of the Company's unsecured debt ratings being downgraded and a LIBOR floor of 0.50% being established. The rates are scheduled to return to previous levels as defined in the agreement at the end of this period, subject to the Company's unsecured debt ratings.

The change in the fair value of interest rate derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (AOCI) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction.

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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of December 31, 2020, the Company estimates that during the twelve months ending December 31, 2020, $8.2 million will be reclassified from AOCI to interest expense.

Cash Flow Hedges of Foreign Exchange Risk
The Company is exposed to foreign currency exchange risk against its functional currency, USD, on CAD denominated cash flow from its 4 Canadian properties. The Company uses cross-currency swaps to mitigate its exposure to fluctuations in the USD-CAD exchange rate on cash inflows associated with these properties which should hedge a significant portion of the Company's expected CAD denominated cash flows.

During the year ended December 31, 2020, the Company entered into USD-CAD cross-currency swaps that were effective July 1, 2020 with a fixed original notional value of $100.0 million CAD and $76.6 million USD. The net effect of this swap is to lock in an exchange rate of $1.31 CAD per USD on approximately $7.2 million annual CAD denominated cash flows through June 2022.

The change in the fair value of foreign currency derivatives designated and that qualify as cash flow hedges of foreign exchange risk is recorded in AOCI and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction. As of December 31, 2020, the Company estimates that during the twelve months ending December 31, 2020, $0.2 million of losses will be reclassified from AOCI to other expense.

Net Investment Hedges
The Company is exposed to fluctuations in the USD-CAD exchange rate on its net investments in Canada. As such, the Company uses either currency forward agreements or cross-currency swaps to manage its exposure to changes in foreign exchange rates on certain of its foreign net investments. As of December 31, 2020, the Company had the following cross-currency swaps designated as net investment hedges:
Fixed rateNotional Amount (in millions, CAD)Maturity
$1.32 CAD per USD$100.0 July 1, 2023
$1.32 CAD per USD100.0 July 1, 2023
Total$200.0 

The cross-currency swaps also have a monthly settlement feature locked in at an exchange rate of $1.32 CAD per USD on $4.5 million of CAD annual cash flows, the net effect of which is an excluded component from the effectiveness testing of this hedge.

For qualifying foreign currency derivatives designated as net investment hedges, the change in the fair value of the derivatives are reported in AOCI as part of the cumulative translation adjustment. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with the Company's accounting policy election. The earnings recognition of excluded components are presented in other income.

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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
Below is a summary of the effect of derivative instruments on the consolidated statements of changes in equity and income for the years ended December 31, 2020, 2019 and 2018:

Effect of Derivative Instruments on the Consolidated Statements of Changes in Equity and Comprehensive (Loss) Income for the Years Ended December 31, 2020, 2019 and 2018
(Dollars in thousands)
 Year Ended December 31,
Description202020192018
Cash Flow Hedges
Interest Rate Swaps
Amount of (Loss) Gain Recognized in AOCI on Derivative$(11,612)$(7,476)$3,172 
Amount of (Expense) Income Reclassified from AOCI into Earnings (1)(6,159)1,138 1,324 
Cross Currency Swaps
Amount of Gain (Loss) Recognized in AOCI on Derivative5 (450)1,689 
Amount of Income Reclassified from AOCI into Earnings (2)441 545 1,426 
Net Investment Hedges
Cross Currency Swaps
Amount of (Loss) Gain Recognized in AOCI on Derivative(4,664)(4,454)5,108 
Amount of Income Recognized in Earnings (2) (3)599 556 271 
Currency Forward Agreements
Amount of Gain Recognized in AOCI on Derivative0 0 8,560 
Total
Amount of (Loss) Gain Recognized in AOCI on Derivative$(16,271)$(12,380)$18,529 
Amount of (Expense) Income Reclassified from AOCI into Earnings(5,718)1,683 2,750 
Amount of Income Recognized in Earnings599 556 271 
Interest expense, net in accompanying consolidated statements of (loss) income and comprehensive (loss) income$157,675 $142,002 $135,870 
Other income in accompanying consolidated statements of (loss) income and comprehensive (loss) income$9,139 $25,920 $2,076 
(1)    Included in “Interest expense, net” in accompanying consolidated statements of (loss) income and comprehensive (loss) income.
(2)    Included in "Other income" in the accompanying consolidated statements of (loss) income and comprehensive (loss) income.
(3)    Amounts represent derivative gains excluded from the effectiveness testing.

Credit-risk-related Contingent Features
The Company has agreements with each of its interest rate derivative counterparties that contain a provision where if the Company defaults on any of its obligations for borrowed money or credit in an amount exceeding $50.0 million and such default is not waived or cured within a specified period of time, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its interest rate derivative obligations.

As of December 31, 2020, the fair value of the Company's derivatives in a liability position related to these agreements was $14.0 million. If the Company breached any of the contractual provisions of these derivative contracts, it would be required to settle its obligations under the agreements at their termination value of $14.8 million. As of December 31, 2020, the Company had not posted any collateral related to these agreements and was not in breach of any provisions in these agreements.

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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
10. Fair Value Disclosures

The Company has certain financial instruments that are required to be measured under the FASB’s Fair Value Measurement guidance. The Company currently does not have any non-financial assets and non-financial liabilities that are required to be measured at fair value on a recurring basis.

As a basis for considering market participant assumptions in fair value measurements, the FASB’s Fair Value Measurement guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs use quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Derivative Financial Instruments
The Company uses interest rate swaps, foreign currency forwards and cross currency swaps to manage its interest rate and foreign currency risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, foreign exchange rates, and implied volatilities. The fair value of interest rate swaps is determined using the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected variable cash payments. The variable cash payments are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. In conjunction with the FASB's fair value measurement guidance, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives also use Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. As of December 31, 2020, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives and therefore, has classified its derivatives as Level 2 within the fair value reporting hierarchy.

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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
The table below presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2020 and 2019, aggregated by the level in the fair value hierarchy within which those measurements are classified and by derivative type.

Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2020 and 2019
(Dollars in thousands)
DescriptionQuoted Prices in
Active Markets
for Identical
Assets (Level I)		Significant
Other
Observable
Inputs (Level 2)		Significant
Unobservable
Inputs (Level 3)		Balance at
end of period
2020:
Cross Currency Swaps**$0 $(4,271)$0 $(4,271)
Interest Rate Swap Agreements**$0 $(9,723)$0 $(9,723)
2019:
Cross Currency Swaps*$0 $828 $0 $828 
Interest Rate Swap Agreements*$0 $225 $0 $225 
Interest Rate Swap Agreements**$0 $(4,495)$0 $(4,495)
*Included in "Other assets" in the accompanying consolidated balance sheet.
** Included in "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheets.

Non-recurring fair value measurements
The table below presents the Company's assets measured at fair value on a non-recurring basis during the year ended December 31, 2020 and 2019, aggregated by the level in the fair value hierarchy within which those measurements fall.

Assets Measured at Fair Value on a Non-Recurring Basis During the Year Ended
December 31, 2020 and 2019
(Dollars in thousands)
DescriptionQuoted Prices in
Active Markets
for Identical
Assets (Level I)		Significant
Other
Observable
Inputs (Level 2)		Significant
Unobservable
Inputs (Level 3)		Balance at
measurement date
2020:
Real estate investments, net$— $29,684 $9,860 $39,544 
Operating lease right-of-use assets— — 12,953 12,953 
Investment in joint ventures— — 771 771 
Other assets (1)— 0 0 0 
2019:
Real estate investments, net$— $6,160 $0 $6,160 

(1) Includes collateral dependent notes receivable, which are presented within other assets in the accompanying consolidated balance sheet.

As discussed further in Note 4, during the year ended December 31, 2020, the Company recorded impairment charges of $85.7 million, of which $70.7 million related to real estate investments, net and $15.0 million related to operating lease right-of-use assets. Management estimated the fair value of these investments taking into account various factors including purchase offers, independent appraisals, shortened hold periods and current market conditions. The Company determined, based on the inputs, that its valuation of 6 of its properties with purchase offers were classified as Level 2 of the fair value hierarchy and were measured at fair value. NaN properties, 2 of which included operating lease right-of-use assets, were measured at fair value using independent appraisals which used discounted cash flow models. The significant inputs and assumptions used in the real estate appraisals included market rents which ranged from $9 per square foot to $28 per square foot, discount rates which ranged from 9.0% to 12.3% and a terminal capitalization rate of 8.75% for the property not under ground lease. Significant inputs and assumptions used in the right-of-use asset appraisals included market rates which ranged from $10 per square foot to
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EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
$16 per square foot and discount rates which ranged from 8.0% to 8.5%. These measurements were classified within Level 3 of the fair value hierarchy as many of the assumptions were not observable.

Additionally, as discussed further in Note 7, during the year ended December 31, 2020, the Company recorded impairment charges of $3.2 million related to its investment in joint ventures. Management estimated the fair value of these investments, taking into account various factors including implied asset value changes based on discounted cash flow projections and current market conditions. The Company determined, based on the inputs, that its valuation of investment in joint ventures was classified within Level 3 of the fair value hierarchy as many of the assumptions are not observable.

As discussed further in Note 6, during the year ended December 31, 2020, the Company recorded expected credit loss expense totaling $25.5 million related to notes receivable from one borrower to fully reserve the outstanding principal balance of $12.6 million and unfunded commitment to fund $12.9 million, as a result of recent changes in the borrower's financial status due to the impact of the COVID-19 pandemic. Management valued the loan based on the fair value of the underlying collateral which was based on review of the financial statements of the borrower, and was classified within Level 2 of the fair value hierarchy.

As discussed further in Note 4, during the year ended December 31, 2019, the Company recorded an impairment charge of $2.2 million related to real estate investments, net. Management estimated the fair value of this property taking into account various factors including various purchase offers, pending purchase agreements, the shortened holding period and current market conditions. The Company determined, based on the inputs, that its valuation of real estate investments, net was classified within Level 2 of the fair value hierarchy.

Fair Value of Financial Instruments
The following methods and assumptions were used by the Company to estimate the fair value of each class of financial instruments at December 31, 2020 and 2019:

Mortgage notes receivable and related accrued interest receivable:
The fair value of the Company’s mortgage notes and related accrued interest receivable is estimated by discounting the future cash flows of each instrument using current market rates. At December 31, 2020, the Company had a carrying value of $365.6 million in fixed rate mortgage notes receivable outstanding, including related accrued interest, with a weighted average interest rate of approximately 9.03%. The fixed rate mortgage notes bear interest at rates of 7.01% to 11.78%. Discounting the future cash flows for fixed rate mortgage notes receivable using rates of 7.50% to 10.00%, management estimates the fair value of the fixed rate mortgage notes receivable to be $394.0 million with an estimated weighted average market rate of 8.11% at December 31, 2020.

At December 31, 2019, the Company had a carrying value of $357.4 million in fixed rate mortgage notes receivable outstanding, including related accrued interest, with a weighted average interest rate of approximately 8.98%. The fixed rate mortgage notes bear interest at rates of 6.99% to 11.61%. Discounting the future cash flows for fixed rate mortgage notes receivable using rates of 6.99% to 9.25%, management estimates the fair value of the fixed rate mortgage notes receivable to be $395.6 million with an estimated weighted average market rate of 7.76% at December 31, 2019.

Derivative instruments:
Derivative instruments are carried at their fair value.

Debt instruments:
The fair value of the Company's debt as of December 31, 2020 and 2019 is estimated by discounting the future cash flows of each instrument using current market rates. At December 31, 2020, the Company had a carrying value of $1.0 billion in variable rate debt outstanding with an average weighted interest rate of approximately 2.23%. The carrying value of the variable rate debt outstanding approximates the fair value at December 31, 2020.

105

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
At December 31, 2019, the Company had a carrying value of $425.0 million in variable rate debt outstanding with an average weighted interest rate of approximately 2.75%. The carrying value of the variable rate debt outstanding approximates the fair value at December 31, 2019.

At December 31, 2020 and 2019, $425.0 million, of the Company's variable rate debt, discussed above, had been effectively converted to a fixed rate by interest rate swap agreements. See Note 9 for additional information related to the Company's interest rate swap agreements.

At December 31, 2020, the Company had a carrying value of $2.72 billion in fixed rate long-term debt outstanding with an average weighted interest rate of approximately 4.70%. Discounting the future cash flows for fixed rate debt using December 31, 2020 market rates of 4.09% to 5.81%, management estimates the fair value of the fixed rate debt to be approximately $2.69 billion with an estimated weighted average market rate of 4.70% at December 31, 2020.

At December 31, 2019, the Company had a carrying value of $2.72 billion in fixed rate long-term debt outstanding with an average weighted interest rate of approximately 4.54%. Discounting the future cash flows for fixed rate debt using December 31, 2019 market rates of 2.87% to 4.56%, management estimates the fair value of the fixed rate debt to be approximately $2.87 billion with an estimated weighted average market rate of 3.51% at December 31, 2019.

11. Common and Preferred Shares

On June 3, 2019, the Company filed a shelf registration statement with the SEC, which is effective for a term of 3 years. The securities covered by this registration statement include common shares, preferred shares, debt securities, depositary shares, warrants, and units. The Company may periodically offer one of more of these securities in amounts, prices and on terms to be announced when and if these securities are offered. The specifics of any future offerings along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering.

Additionally, on June 3, 2019, the Company filed a shelf registration statement with the SEC, which is effective for a term of 3 years, for its Dividend Reinvestment and Direct Share Purchase Plan (DSP Plan) which permits the issuance of up to 15,000,000 common shares.

Common Shares
The Company's Board declared cash dividends totaling $1.515 and $4.500 per common share for the years ended December 31, 2020 and 2019, respectively. The monthly cash dividend to common shareholders was suspended following the common share dividend paid on May 15, 2020 to shareholders of record as of April 30, 2020.
Of the total distributions calculated for tax purposes, the amounts characterized as ordinary income, return of capital and long-term capital gain for cash distributions paid per Series F preferredcommon share for the yearyears ended December 31, 20172020 and 2019 are as follows:

Cash Distributions Per Share
20202019
Taxable ordinary income (1)$0.8888 $2.7411 
Return of capital0.5634 1.3966 
Long-term capital gain (2)0.4378 0.3473 
Totals$1.8900 $4.4850 
 Cash Distributions per Share
 2017 
Taxable ordinary income (1)$1.8310
 
Return of capital—
 
Long-term capital gain (2)0.1243
 
Totals$1.9553
 


(1) Of the taxable ordinary income, none qualifiedAmounts qualify in their entirety as 199A distributions for the year ended December 31, 2017.distributions.
(2) Of the long-term capital gain, $0.04792 wasgain, $0.1439 and $0.3473 were unrecaptured section 1250 gains for the years ended December 31, 2017.2020 and 2019, respectively.

Series G Preferred Shares
On November 30, 2017, the Company issued 6.0 million 5.75% Series G cumulative redeemable preferred shares (Series G preferred shares) in a registered public offering for net proceeds of approximately $144.5 million, after underwriting discounts and expenses. The Company will pay cumulative dividends on the Series G preferred shares from the date of original issuance in the amount of $1.4375 per share each year, which is equivalent to 5.75% of the $25.00 liquidation preference per share. Dividends on the Series G preferred shares are payable quarterly in arrears. The Company may not redeem the Series G preferred shares before November 30, 2022, except in limited circumstances to preserve the Company's REIT status. On or after November 30, 2022, the Company may, at its option, redeem the Series G preferred shares in whole at any time or in part from time to time by paying $25.00 per share, plus any accrued and unpaid dividends up to, but not including the date of redemption. The Series G preferred shares have no stated maturity and will not be subject to any sinking fund or mandatory redemption. The Series G preferred shares are not convertible into any of the Company's securities, except under certain circumstances in connection with a change of control. Owners of the Series G preferred shares generally have no voting rights except under certain dividend defaults.



106

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018

The Board of Trustees declared cash dividends totaling $1.4375 and $0.183681 per Series G preferred share for the years ended December 31, 2018 and 2017, respectively. For tax purposes, the amounts characterized as ordinary income, return of capital and long-term capital gain for cash distributions paid per Series G preferred share forDuring the year ended December 31, 2018 are as follows:2020, the Company issued an aggregate of 36,176 common shares under its DSP Plan for net proceeds of $1.1 million.

 Cash Distributions per Share
 2018 
Taxable ordinary income (1)$1.2105
 
Return of capital—
 
Long-term capital gain (2)0.0513
 
Totals$1.2618
 

(1) Of the taxable ordinary income, $1.2105 qualified as 199A distributions forDuring the year ended December 31, 2018 and none qualified2020, the Company's Board approved a share repurchase program pursuant to which the Company may repurchase up to $150.0 million of the Company's common shares. The share repurchase program was scheduled to expire on December 31, 2020; however, the Company suspended the program on the effective date of the covenant modification agreements, June 29, 2020, as 199A distributions fordiscussed in Note 8. During the year ended December 31, 2017.
(2) Of2020, the long-term capital gain, $0.00298 was unrecaptured section 1250 gains for the year ended December 31, 2018.

14. Earnings Per Share

The following table summarizes the Company’s computation of basic and diluted earnings per share (EPS) for the years ended December 31, 2018, 2017 and 2016 (amounts in thousands except per share information):
 Year Ended December 31, 2018
 
Income
(numerator)
 
Shares
(denominator)
 
Per Share
Amount
Basic EPS:     
Income from continuing operations$266,983
    
Less: preferred dividend requirements(24,142)    
Net income available to common shareholders$242,841
 74,292
 $3.27
Diluted EPS:     
Net income available to common shareholders$242,841
 74,292
  
Effect of dilutive securities:     
Share options—
 45
  
Net income available to common shareholders$242,841
 74,337
 $3.27

 Year Ended December 31, 2017
 
Income
(numerator)
 
Shares
(denominator)
 
Per Share
Amount
Basic EPS:     
Income from continuing operations$262,968
    
Less: preferred dividend requirements and redemption costs(28,750)    
Net income available to common shareholders$234,218
 71,191
 $3.29
Diluted EPS:     
Net income available to common shareholders$234,218
 71,191
  
Effect of dilutive securities:     
Share options—
 63
  
Net income available to common shareholders$234,218
 71,254
 $3.29

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 2017 and 2016

 Year Ended December 31, 2016
 
Income
(numerator)
 
Shares
(denominator)
 
Per Share
Amount
Basic EPS:     
Income from continuing operations$224,982
    
Less: preferred dividend requirements(23,806)    
Net income available to common shareholders$201,176
 63,381
 $3.17
Diluted EPS:     
Net income available to common shareholders$201,176
 63,381
  
Effect of dilutive securities:     
Share options—
 93
  
Net income available to common shareholders$201,176
 63,474
 $3.17

The additional 2.1 millionCompany repurchased 4,066,716 common shares under the share repurchase program for both years ended December 31, 2018 and 2017 and 2.0 million common shares for the year ended December 31, 2016, that would result from the conversion of the Company’s 5.75% Series C cumulative convertible preferred shares and the corresponding add-back of the preferred dividends declared on those shares are not included in the calculation of diluted earnings per share for the years ended December 31, 2018, 2017 and 2016, respectively, because the effect is anti-dilutive.approximately $106.0 million. The additional 1.6 million common shares that would result from the conversion of the Company’s 9.0% Series E cumulative convertible preferred shares and the corresponding add-back of the preferred dividends declared on those shares are not included in the calculation of diluted earnings per share for the years ended December 31, 2018, 2017 and 2016, because the effect is anti-dilutive.

The dilutive effect of potential common shares from the exercise of share options is included in diluted earnings per share for the years ended December 31, 2018, 2017 and 2016. However, options to purchase 26 thousand, 7 thousand and 72 thousand of common sharesrepurchases were outstanding at the end of 2018, 2017 and 2016, respectively, at per share prices ranging from $61.79 to $76.63 for both 2018 and 2017 and at a per share price of $61.79 for 2016, but were not included in the computation of diluted earnings per share because they were anti-dilutive.

15. Severance Expense

On April 5, 2018, the Company and Mr. Earnest, its then Senior Vice President and Chief Investment Officer, entered into an Amended and Restated Employment Agreement, effective March 31, 2018, to reflect the changes in connection with Mr. Earnest's transition to Executive Advisor of the Company. As the Company determined that such services were no longer needed, on December 27, 2018, the Company gave notice that the agreement was going to be terminated pursuant to the provisions of the Amended and Restated Employment Agreement. As a result, during the year ended December 31, 2018, the Company recorded severance expense related to Mr. Earnest, as well as another employee terminatedmade under a similar such agreement, totaling $5.9 million. Severance expense includes cash payments totaling $2.6 million, accelerated vesting of nonvested shares totaling $3.2 million and $0.1 million of related taxes and other expenses.Rule 10b5-1 trading plan.


16. Equity Incentive Plan

All grants of common shares and options to purchase common shares were issued under the Company's 2007 Equity Incentive Plan prior to May 12, 2016 and under the 2016 Equity Incentive Plan on and after May 12, 2016. Under the 2016 Equity Incentive Plan, an aggregate of 1,950,000 common shares, options to purchase common shares and restricted share units, subject to adjustment in the event of certain capital events, may be granted. At December 31, 2018, there were 1,322,389 shares available for grant under the 2016 Equity Incentive Plan.


EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 2017 and 2016

Share Options
Share options are granted to employees pursuant to the Long-Term Incentive Plan. The fair value of share options granted is estimated at the date of grant using the Black-Scholes option pricing model. Share options granted to employees vest over a period of four years and share option expense for these options is recognized on a straight-line basis over the vesting period. Expense recognized related to share options and included in general and administrative expense in the accompanying consolidated statements of (loss) income and comprehensive (loss) income was $12 thousand, $10 thousand and $0.3 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Nonvested Shares Issued to Employees
The Company grants nonvested shares to employees pursuant to both the Annual Incentive Program and the Long-Term Incentive Plan. The Company amortizes the expense related to the nonvested shares awarded to employees under the 2007 EquityLong-Term Incentive Plan and the 2016 Equity Incentive Plan have exercise prices equal topremium awarded under the fair market value of a commonnonvested share at the date of grant. The options may be granted for any reasonable term, not to exceed 10 years, and for employees typically become exercisable at a rate of 25% per year over a four-year period. The Company generally issues new common shares upon option exercise. A summaryalternative of the Company’s share option activityAnnual Incentive Program on a straight-line basis over the future vesting period (three years to four years). Expense recognized related to nonvested shares and related information is as follows:
 
Number of
shares
 
Option price
per share
 
Weighted avg.
exercise price
Outstanding at December 31, 2015516,305
 $19.02
 —
 $65.50
 $48.42
Exercised(230,319) 19.41
 —
 65.50
 44.05
Outstanding at December 31, 2016285,986
 $19.02
 —
 $61.79
 $51.93
Exercised(29,253) 46.86
 —
 61.79
 54.54
Granted2,215
 76.63
 —
 76.63
 76.63
Forfeited/Expired(1,342) 51.64
 —
 61.79
 59.52
Outstanding at December 31, 2017257,606
 $19.02
 —
 $76.63
 $51.81
Exercised(25,721) 45.20
 —
 61.79
 50.68
Granted3,835
 56.94
 —
 56.94
 56.94
Forfeited/Expired(845) 51.64
 —
 61.79
 61.12
Outstanding at December 31, 2018234,875
 $19.02
 —
 $76.63
 $51.98

The weighted average fair valueincluded in general and administrative expense in the accompanying consolidated statements of options granted(loss) income and comprehensive (loss) income was $3.03$10.6 million, $11.3 million and $7.91 during 2018 and 2017, respectively. There were no options granted during 2016. The intrinsic value of stock options exercised was $0.4$13.5 million $0.5 million, and $5.2 million duringfor the years ended December 31, 2020, 2019 and 2018, 2017respectively. Expense related to nonvested shares and 2016,included in severance expense in the accompanying consolidated statements of (loss) income and comprehensive (loss) income was $1.0 million, $0.6 million and $3.2 million for the years ended December 31, 2020, 2019 and 2018, respectively. Additionally, the Company repurchased 20,258 shares in conjunction with the stock options exercised during

Nonvested Performance Shares Issued to Employees
During the year ended December 31, 2018 with2020, the Compensation and Human Capital Committee of the Company's Board of Trustees (Board) approved the 2020 Long Term Incentive Plan (the 2020 LTIP) as a total value of $1.4 million.

sub-plan under the Company's 2016 Equity Incentive Plan. Under the 2020 LTIP, the Company awards performance shares and restricted shares to the Company's executive officers. The performance shares contain both a market condition and a performance condition. The Company amortizes the expense related to share optionsthe performance shares over the future vesting period of three years. Expense recognized related to performance shares and included in general and administrative expense in the determinationaccompanying consolidated statements of net(loss) income and comprehensive (loss) income was $1.0 million for the year ended December 31, 2020. Expense related to nonvested performance shares and included in severance expense in the accompanying consolidated statements of (loss) income and comprehensive (loss) income was $261 thousand for the yearsyear ended December 31, 2018, 2017 and 2016 was $0.3 million, $0.7 million, and $0.9 million, respectively. The following assumptions were used in applying the Black-Scholes option pricing model at the grant dates: risk-free interest rate of 2.7% and 2.1% in 2018 and 2017, respectively, dividend yield of 7.6% and 5.4% in 2018 and 2017, respectively, volatility factors in the expected market price of the Company’s common shares of 18.9% and 22.0% in 2018 and 2017, respectively, 0.74% expected forfeiture rates for both 2018 and 2017, and an expected life of approximately six years for both 2018 and 2017. 2020.

Restricted Share Units Issued to Non-Employee Trustees
The Company uses historical dataissues restricted share units to estimatenon-employee Trustees for payment of their annual retainers under the expected life of the option and the risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Additionally, expected volatility is computed based on the average historical volatility of the Company’s publicly traded shares.

At December 31, 2018, stock-option expense to be recognized in future periods was as follows (in thousands):
 Amount
Year: 
2019$7
20207
20213
Total$17

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 2017 and 2016

The following table summarizes outstanding options at December 31, 2018:
Exercise price range
Options
outstanding
 
Weighted avg.
life remaining
 
Weighted avg.
exercise price
 
Aggregate intrinsic
value (in thousands)
$ 19.02 - 19.9911,097
 0.4
    
20.00 - 29.99—
 —
    
30.00 - 39.991,428
 1.0
    
40.00 - 49.9972,342
 3.1
    
50.00 - 59.9971,868
 5.2
    
60.00 - 69.9975,925
 6.1
    
70.00 - 76.632,215
 8.1
    
 234,875
 4.6
 $51.98
 $2,857
The following table summarizes exercisable options at December 31, 2018:
Exercise price range
Options
outstanding
 
Weighted avg.
life remaining
 
Weighted avg.
exercise price
 
Aggregate intrinsic
value (in thousands)
$ 19.02 - 19.9911,097
 0.4
    
20.00 - 29.99—
 —
    
30.00 - 39.991,428
 1.0
    
40.00 - 49.9972,342
 3.1
    
50.00 - 59.9968,033
 5.0
    
60.00 - 61.7955,387
 6.1
    
70.00 - 76.63554
 8.1
    
 208,841
 4.4
 $50.73
 $2,784

Nonvested Shares
A summary of the Company’s nonvested share activity and related information is as follows:
 
Number of
shares
 
Weighted avg.
grant date
fair value
 
Weighted avg.
life remaining
Outstanding at December 31, 2017620,122
 $68.07
  
Granted295,202
 56.94
  
Vested(244,852) 65.33
  
Forfeited(15,416) 64.39
  
Outstanding at December 31, 2018655,056
 $64.16
 0.78
The holders of nonvested shares have voting rights and receive dividends from the date of grant. These shares vest ratably over a period of three to four years.Company's Trustee compensation program. The fair value of the nonvested shares that vested was $16.0 million, $15.1 million, and $9.2 million for the years ended December 31, 2018, 2017 and 2016, respectively. At December 31, 2018, unamortized share-based compensation expense related to nonvested shares was $16.6 million and will be recognized in future periods as follows (in thousands):
 Amount
Year: 
2019$8,609
20205,570
20212,436
Total$16,615


EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 2017 and 2016

Restricted Share Units
A summary of the Company’s restricted share unit activity and related information is as follows:
 
Number of
Shares
 
Weighted
Average
Grant Date
Fair Value
 
Weighted
Average
Life
Remaining
Outstanding at December 31, 201719,030
 $70.91
  
Granted23,571
 61.25
  
Vested(19,030) 70.91
  
Outstanding at December 31, 201823,571
 $61.25
 0.42
The holders of restricted share units have voting rights and receive dividends fromgranted was based on the share price at the date of grant. The share units vest upon the earlier of the day preceding the next annual meeting of shareholders or a change of control. The settlement date for the shares is selected by the non-employee trustee,Trustee, and ranges from one year from the grant date to upon termination of service. At This expense is amortized by the Company on a straight-line basis over the year of service by the non-employee Trustees. Total expense recognized related to shares issued to non-employee Trustees and included in general and administrative expense in the accompanying consolidated statements of (loss) income and comprehensive (loss) income was $2.2 million, $1.9 million and $1.3 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Foreign Currency Translation
The Company accounts for the operations of its Canadian properties in Canadian dollars. The assets and liabilities related to the Company’s Canadian properties and mortgage note are translated into U.S. dollars using the spot rates at the respective balance sheet dates; revenues and expenses are translated at average exchange rates. Resulting translation adjustments are recorded as a separate component of comprehensive income.

Derivative Instruments
The Company uses derivative instruments to reduce exposure to fluctuations in foreign currency exchange rates and variable interest rates.
88

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018

The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as foreign currency risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. For its net investment hedges that hedge the foreign currency exposure of its Canadian investments, the Company has elected to assess hedge effectiveness using a method based on changes in spot exchange rates and record the changes in the fair value amounts excluded from the assessment of effectiveness into earnings on a systematic and rational basis. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. If hedge accounting is not applied, realized and unrealized gains or losses are reported in earnings.

The Company's policy is to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Impact of Recently Issued Accounting Standards
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848). The ASU contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the year ended December 31, 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. The Company intends to amend agreements referencing the LIBOR-index to a replacement index and will apply the optional expedients offered in Topic 848.

3. Real Estate Investments

The following table summarizes the carrying amounts of real estate investments as of December 31, 2020 and 2019 (in thousands):
20202019
Buildings and improvements$4,526,342 $4,747,101 
Furniture, fixtures & equipment118,334 123,239 
Land1,242,663 1,290,181 
Leasehold interests26,050 26,041 
5,913,389 6,186,562 
Accumulated depreciation(1,062,087)(989,254)
Total$4,851,302 $5,197,308 
Depreciation expense on real estate investments from continuing operations was $162.6 million, $153.2 million and $133.7 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Acquisitions and Development
During the year ended December 31, 2020, the Company completed the acquisition of real estate investments and lease related intangibles, as further discussed in Note 2, for Experiential properties totaling $22.1 million, that consisted of 2 theatre properties.

89

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
Additionally, during the year ended December 31, 2020, the Company had investment spending on build-to-suit development and redevelopment for Experiential properties totaling $46.9 million.

During the year ended December 31, 2019, the Company completed the acquisition of real estate investments and lease related intangibles, for Experiential properties totaling $451.9 million, that consisted of 26 theatre properties for approximately $426.5 million, 1 eat & play property for $1.4 million and 2 cultural properties for $24.0 million. The Company completed the acquisition of real estate investments and lease related intangibles for Education properties totaling $5.9 million that consisted of the acquisition of 2 early childhood education centers.

Additionally, during the year ended December 31, 2019, the Company had investment spending on build-to-suit development and redevelopment for Experiential properties totaling $146.2 million and Education properties totaling $38.6 million.

During the year ended December 31, 2019, the Company completed the construction of the Kartrite Resort and Indoor Waterpark in Sullivan County, New York. The indoor waterpark resort is being operated under a traditional REIT lodging structure and facilitated by a management agreement with an eligible independent contractor. The related operating revenue and expense are included in other income and other expense in the accompanying consolidated statements of (loss) income and comprehensive (loss) income for the year ended December 31, 2019. Additionally, during the year ended December 31, 2018, the Company completed the construction of the Resorts World Catskills common infrastructure. In June 2016, the Sullivan County Infrastructure Local Development Corporation issued $110.0 million of Series 2016 Revenue Bonds which funded a substantial portion of such construction costs. For the years ended December 31, 2018, 2017 and 2016, the Company received total reimbursements of $74.2 million of construction costs. During the year ended December 31, 2019, the Company received an additional reimbursement of $11.5 million.

Dispositions
On December 29, 2020, pursuant to a tenant purchase option, the Company completed the sale of 6 private schools and 4 early childhood education centers for net proceeds of approximately $201.2 million and recognized a gain on sale of approximately $39.7 million. Additionally, during the year ended December 31, 2020, the Company completed the sale of 3 early education properties, 4 experiential properties and 2 land parcels for net proceeds totaling $26.6 million and recognized a combined gain on sale of $10.4 million.

During the year ended December 31, 2019, the Company completed the sale of all of its public charter school portfolio through the following transactions:

•On November 22, 2019, the Company sold 47 public charter school related assets, classified as real estate investments, mortgage notes receivable and investment in direct financing leases, for net proceeds of approximately $449.6 million. The Company recognized an impairment on this public charter school portfolio sale of $21.4 million that included the write-off of non-cash straight-line rent and effective interest receivables totaling $24.8 million. See Note 4 for additional information related to the impairment.
•The Company sold 10 public charter schools pursuant to tenant purchase options for net proceeds totaling $138.5 million and recognized a combined gain on sale of $30.0 million.
•The Company sold 7 public charter schools (not as result of exercise of tenant purchase options) for net proceeds totaling $44.4 million and recognized a combined gain on sale of $1.9 million.
•See Note 6 for details on repayments of mortgage notes receivable secured by public charter school properties during 2019.

Due to the Company's disposition of its remaining public charter school portfolio in 2019, the operating results of all public charter schools sold during 2019 have been classified within discontinued operations in the accompanying consolidated statements of (loss) income and comprehensive (loss) income for all periods presented. See Note 17 for further details on discontinued operations.

Additionally, during the year ended December 31, 2019, the Company sold 1 attraction property, 1 early childhood education center property and 4 land parcels for net proceeds totaling $21.9 million and sold 1
90

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
attraction property and received an $11.0 million cash payment and provided seller mortgage financing of $27.4 million. The Company recognized a combined gain on these sales of $4.2 million. See Note 6 for additional information on the seller mortgage note receivable.

4. Impairment Charges

The Company reviews its properties for changes in circumstances that indicate that the carrying value of a property may not be recoverable based on an estimate of undiscounted future cash flows. As a result of the COVID-19 pandemic, the Company experienced vacancies at some of its properties and at others the Company has negotiated lease modifications that included rent reductions. As part of this process, the Company reassessed the expected holding periods and expected future cash flows of such properties, and determined that the estimated cash flows were not sufficient to recover the carrying values of 9 properties. NaN of these 9 properties have operating ground lease arrangements with right-of-use assets. During the year ended December 31, 2020, the Company determined the estimated fair value of the real estate investments and right-of-use assets of these properties using independent appraisals and various purchase offers. The Company reduced the carrying value of the real estate investments, net to $39.5 million and the operating lease right-of-use assets to $13.0 million. The Company recognized impairment charges of $70.7 million on the real estate investments and $15.0 million on the right-of-use assets, which are the amounts that the carrying value of the assets exceeded the estimated fair value.

During the year ended December 31, 2020, the Company also recognized $3.2 million in other-than-temporary impairments related to its equity investments in joint ventures in 3 theatre projects located in China. See Note 7 for further details on these impairments.

On November 22, 2019, the Company completed the sale of substantially all of its public charter school portfolio, consisting of 47 public charter school related assets, for net proceeds of approximately $449.6 million. Prior to the sale, the Company revised its estimated undiscounted cash flows associated with this portfolio, considering a shorter expected hold period and determined that the estimated cash flows were not sufficient to recover the carrying value of this portfolio. The Company estimated the fair value of this portfolio by taking into account the purchase price in the executed sale agreement. The Company recognized an impairment on public charter school portfolio sale of $21.4 million that included the write-off of non-cash straight-line rent and effective interest receivables totaling $24.8 million. This impairment and the operating results of all of the public charter schools sold in 2019 have been classified within discontinued operations in the accompanying consolidated statements of (loss) income and comprehensive (loss) income. See Note 17 for further details on discontinued operations.

During the year ended December 31, 2019, the Company entered into an agreement to sell a theatre property for approximately $6.2 million. As a result, the Company revised its estimated undiscounted cash flow associated with this property, considering a shorter expected hold period and determined that the estimated cash flow was not sufficient to recover the carrying value of this property. The Company estimated the fair value of this property by taking into account the purchase price in the executed sale agreement. The Company recorded an impairment charge of approximately $2.2 million, which is the amount that the carrying value of the asset exceeds the estimated fair value.

During the year ended December 31, 2018, the Company entered into an agreement with Children’s Learning Adventure USA (CLA) in which CLA relinquished control of 4 of the Company’s properties that were still under development as the Company no longer intended to develop these properties for CLA. As a result, the Company revised its estimated undiscounted cash flows for these 4 properties, considering shorter expected holding periods, and determined that those estimated cash flows were not sufficient to recover the carrying values of these 4 properties. During the year ended December 31, 2018, the Company determined the estimated fair value of these properties using Level 3 inputs, including independent appraisals of these properties, and reduced the carrying value of these assets to $9.8 million, recording an impairment charge of $16.5 million. The charge was primarily related to the cost of improvements specific to the development of CLA’s prototype.

During the year ended December 31, 2018, the Company recognized a $10.7 million impairment charge related to the Company’s guarantees of the payment of 2 economic development revenue bonds secured by leasehold
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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
interests and improvements at 2 theatres in Louisiana. In accordance with Topic 460, Guarantees, the Company recorded an asset and liability at the inception of the guarantees at fair value, which represented the Company's obligation to stand ready to perform under the terms of the guarantees. During the year ended December 31, 2018, the Company determined that a portion of its asset was no longer recoverable and recorded an impairment charge of $7.8 million.

A contingent future obligation is recognized in accordance with the provisions of Topic 450, Accounting for Contingencies. In the case of the Company’s guarantees, the contingent future obligation is the future payment of the bonds by the Company. At the inception of the guarantees, the Company determined that its future payment of the bonds was not probable, therefore no contingent future obligation was recorded. For the year ended December 31, 2018, the Company determined that its future payment on a portion of the bond obligations was probable due to inadequate performance of the theatre properties and failure of the debtor under the bonds to perform. Accordingly, for the year ended December 31, 2018, the Company recorded an incremental contingent liability of $2.9 million, which in addition to the $7.8 million discussed above, resulted in a total impairment charge recognized relating to the guarantees of $10.7 million.

5. Accounts Receivable

The following table summarizes the carrying amounts of accounts receivable as of December 31, 2020 and 2019 (in thousands):
20202019
Receivable from tenants$81,120 $11,373 
Receivable from non-tenants505 2,103 
Straight-line rent receivable34,568 73,382 
Total$116,193 $86,858 

During the year ended December 31, 2020, the Company wrote-off receivables from tenants totaling $27.1 million and straight-line rent receivables totaling $38.0 million directly to rental revenue in the accompanying consolidated statements of (loss) income and comprehensive (loss) income upon determination that the collectibility of these receivables or future lease payments from these tenants was no longer probable. Additionally, the Company determined that future rental revenue related to these tenants will be recognized on a cash basis. The $38.0 million in write-offs of straight-line rent receivables were comprised of $26.5 million of straight-line rent receivable and $11.5 million of sub-lessor ground lease straight-line rent receivable.

As of December 31, 2020, receivable from tenants includes fixed rent payments of approximately $76.0 million that were deferred due to the COVID-19 pandemic and determined to be collectible. Additionally, the Company has amounts due from tenants that were not booked as receivables as the full amounts were not deemed probable of collection as a result of the COVID-19 pandemic. While deferments for this and future periods delay rent payments, these deferments do not release tenants from the obligation to pay the deferred amounts in the future. The repayment terms for these deferments vary by tenant and agreements.

6. Investment in Mortgage Notes and Notes Receivable

Effective January 1, 2020, the Company adopted Topic 326, which requires the Company to estimate and record credit losses for each of its mortgage notes and note receivable. The Company measures expected credit losses on its mortgage notes and notes receivable on an individual basis over the related contractual term as its financial instruments do not have similar risk characteristics. The Company has not experienced historical losses on its mortgage note portfolio; therefore, the Company uses a forward-looking commercial real estate loss forecasting tool to estimate its expected credit losses. The loss forecasting tool is comprised of a probability of default model and a loss given default model that utilizes the Company’s loan specific inputs as well as selected forward-looking macroeconomic variables and mean loss rates. Based on certain inputs, such as origination year, balance, interest rate as well as collateral value and borrower operating income, the model produces life of loan expected losses on a
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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
loan-by-loan basis. As of December 31, 2020, the Company did not anticipate any prepayments therefore the contractual term of its mortgage notes was used for the calculation of the expected credit losses. The Company updates the model inputs at each reporting period to reflect, if applicable, any newly originated loans, changes to loan specific information on existing loans and current macroeconomic conditions.

During the year ended December 31, 2020, the Company increased its expected credit losses by $30.7 million from its implementation estimate of $2.2 million. This increase was primarily due to credit loss expense related to notes receivable from one borrower as described below as well as adjustments to current macroeconomic conditions resulting from the economic uncertainty and the rapidly changing environment surrounding the COVID-19 pandemic.

In response to the COVID-19 pandemic, the Company deferred interest payments for 7 borrowers. The deferrals require the borrower to pay the deferred interest in future periods. The Company assessed the deferrals and determined that the modifications did not result in troubled debt restructurings at December 31, 2020.


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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
Investment in mortgage notes, including related accrued interest receivable, at December 31, 2020 and 2019 consists of the following (in thousands):
Year of OriginationInterest RateMaturity DatePeriodic Payment TermsOutstanding principal amount of mortgageCarrying amount as of December 31,Unfunded commitments
Description20202019 (1)December 31, 2020
Attraction property Powells Point, North Carolina20197.75 %6/30/2025Interest only$28,007 $27,045 $27,423 $0 
Fitness & wellness property Omaha, Nebraska20177.85 %1/3/2027Interest only10,905 11,225 10,977 0 
Fitness & wellness property Merriam, Kansas20197.55 %7/31/2029Interest only9,095 9,355 5,985 248 
Ski property Girdwood, Alaska20198.24 %12/31/2029Interest only40,869 40,680 37,000 16,131 
Fitness & wellness property Omaha, Nebraska20167.85 %6/30/2030Interest only8,410 8,630 5,803 2,508 
Experiential lodging property Nashville, Tennessee20197.01 %9/30/2031Interest only71,223 67,235 70,396 0 
Eat & play property Austin, Texas201211.31 %6/1/2033Principal & Interest-fully amortizing11,361 11,929 11,582 0 
Ski property West Dover and Wilmington, Vermont200711.78 %12/1/2034Interest only51,050 51,031 51,050 0 
Four ski properties Ohio and Pennsylvania200710.91 %12/1/2034Interest only37,562 37,413 37,562 0 
Ski property Chesterland, Ohio201211.38 %12/1/2034Interest only4,550 4,396 4,550 0 
Ski property Hunter, New York20168.57 %1/5/2036Interest only21,000 21,000 21,000 0 
Eat & play property Midvale, Utah201510.25 %5/31/2036Interest only17,505 18,289 17,505 0 
Eat & play property West Chester, Ohio20159.75 %8/1/2036Interest only18,068 18,830 18,068 0 
Private school property Mableton, Georgia20179.02 %4/30/2037Interest only5,088 5,278 5,048 0 
Fitness & wellness property Fort Collins, Colorado20187.85 %1/31/2038Interest only10,292 10,408 10,360 0 
Early childhood education center Lake Mary, Florida20197.87 %5/9/2039Interest only4,200 4,348 4,258 0 
Eat & play property Eugene, Oregon20198.13 %6/17/2039Interest only14,700 14,799 14,800 0 
Early childhood education center Lithia, Florida20178.25 %10/31/2039Interest only3,959 3,737 4,024 0 
$367,844 $365,628 $357,391 $18,887 
(1) Balances as of December 31, 2019 are prior to the adoption of ASC Topic 326.

Investment in notes receivable, including related accrued interest receivable, was $7.3 million and $14.0 million at December 31, 2020 and 2019, respectively, and is included in Other assets in the accompanying consolidated balance sheets.

During the year ended December 31, 2020, the Company entered into an amended and restated loan and security agreement with 1 of its notes receivable borrowers in response to the impacts of the COVID-19 pandemic on the borrower. The restated note receivable consists of the previous note balance of $6.5 million and provides the borrower with a term loan for up to $13.0 million and a $6.0 million revolving line of credit. The restated note receivable has a maturity date of June 30, 2032 and the line of credit matures on December 31, 2022. Interest is deferred through June 30, 2022, at which time monthly principal and interest payments will be due over 10 years. Although the borrower is not in default, nor has the borrower declared bankruptcy, the Company determined these modifications resulted in a troubled debt restructuring (TDR) at December 31, 2020 due to the impacts of the
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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
COVID-19 pandemic on the borrower's financial condition. These note receivables are considered collateral dependent and expected credit losses are based on the fair value of the underlying collateral at the reporting date. The notes are secured by the working capital and non-real estate assets of the borrower. The Company assessed the fair value of the collateral as of December 31, 2020 and recognized credit loss expense for the year ended December 31, 2020 consisting of the outstanding principal balance of $12.6 million and the $12.9 million unfunded commitment on the term loan and line of credit as of December 31, 2020. Income for this borrower will be recognized on a cash basis.

At December 31, 2020, the Company's investment in this note receivable was a variable interest and the underlying entity is a VIE. The Company is not the primary beneficiary of this VIE, as the Company does not individually have the power to direct the activities that are most significant to the entity and accordingly, this investment is not consolidated. The Company's maximum exposure to loss associated with this VIE is limited to the Company's outstanding note receivable of $12.6 million and the unfunded commitment of $12.9 million, both of which were fully reserved in the allowance for credit losses at December 31, 2020.

The following summarizes the activity within the allowance for credit losses related to mortgage notes, unfunded commitments and notes receivable for the year ended December 31, 2020 (in thousands):
Mortgage notes receivableUnfunded commitments - mortgage notesNotes receivableUnfunded commitments - notes receivableTotal
Allowance for credit losses at January 1, 2020$2,000 $114 $49 $0 $2,163 
Credit loss expense5,000 24 12,805 12,866 30,695 
Charge-offs0 0 0 0 0 
Recoveries0 0 0 0 0 
Allowance for credit losses$7,000 $138 $12,854 $12,866 $32,858 

7. Unconsolidated Real Estate Joint Ventures

As of December 31, 2020 and 2019, the Company had a 65% investment interest in 2 unconsolidated real estate joint ventures related to 2 experiential lodging properties located in St. Petersburg Beach, Florida. The Company's partner, Gencom Acquisition, LLC and its affiliates, own the remaining 35% interest in the joint ventures. There are 2 separate joint ventures, one that holds the investment in the real estate of the experiential lodging properties and the other that holds lodging operations, which are facilitated by a management agreement with an eligible independent contractor. The Company's investment in the operating entity is held in a taxable REIT subsidiary (TRS). The Company accounts for its investment in these joint ventures under the equity method of accounting. As of December 31, 2020 and 2019, the Company had invested $27.4 million and $29.7 million, respectively, in these joint ventures.

The joint venture that holds the real property has a secured mortgage loan of $85.0 million at December 31, 2020, that is due April 1, 2022. The note can be extended for 2 additional 1 year periods upon the satisfaction of certain conditions. Additionally, the Company has guaranteed the completion of the renovations in the amount of approximately $32.7 million, with $23.9 million remaining to fund at December 31, 2020. The mortgage loan bears interest at an annual rate equal to the greater of 6.00% or LIBOR plus 3.75%. Interest is payable monthly beginning on May 1, 2019 until the stated maturity date of April 1, 2022, which can be extended to April 1, 2023. The joint venture has an interest rate cap agreement to limit the variable portion of the interest rate (LIBOR) on this note to 3.0% from March 28, 2019 to April 1, 2023. In response to the COVID-19 pandemic, on May 28, 2020, the joint venture was granted a three-month interest deferral, which is required to be paid on the maturity date of the loan and is not considered a troubled debt restructuring.

The Company recognized losses of $4.0 million and $140 thousand and income of $52 thousand during the years ended December 31, 2020, 2019 and 2018, respectively, and received 0 distributions during the years ended December 31, 2020, 2019 and 2018 related to the equity investment in these joint ventures.
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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018

As of December 31, 2020 and 2019, the Company's investments in these joint ventures were considered to be variable interests and the underlying entities are VIEs. The Company is not the primary beneficiary of the VIEs as the Company does not individually have the power to direct the activities that are most significant to the joint ventures and accordingly these investments are not consolidated. The Company's maximum exposure to loss at December 31, 2020, is its investment in the joint ventures of $27.4 million as well as the Company's guarantee of the estimated costs to complete renovations of approximately $23.9 million.

In addition, as of December 31, 2020 and 2019, the Company had invested $0.8 million and $4.6 million, respectively, in unconsolidated joint ventures for 3 theatre projects located in China. During the year ended December 31, 2020, the Company recognized $3.2 million in other-than-temporary impairment charges on these equity investments. The Company determined the estimated fair value of these investments based primarily on discounted cash flow projections. The Company recognized losses of $559 thousand, $241 thousand and $74 thousand, during the years ended December 31, 2020, 2019 and 2018, respectively, and received distributions of $112 thousand and $567 thousand, from its investment in these joint ventures for the years ended December 31, 2019 and 2018, respectively. NaN distributions were received during the year ended December 31, 2020.

8. Debt

Debt at December 31, 2020 and 2019 consists of the following (in thousands):
20202019
Unsecured revolving variable rate credit facility, LIBOR + 1.625% at December 31, 2020, due February 27, 2022 (1)$590,000 $0 
Unsecured term loan payable, LIBOR + 2.00% at December 31, 2020 with $350,000 fixed at 4.40% and $50,000 fixed at 4.60%, due February 27, 2023 (1)400,000 400,000 
Senior unsecured notes payable, 5.25%, due July 15, 2023 (2)275,000 275,000 
Senior unsecured notes payable, 5.60% at December 31, 2020, due August 22, 2024 (3)148,000 148,000 
Senior unsecured notes payable, 4.50%, due April 1, 2025 (2)300,000 300,000 
Senior unsecured notes payable, 5.81% at December 31, 2020, due August 22, 2026 (3)192,000 192,000 
Senior unsecured notes payable, 4.75%, due December 15, 2026 (2)450,000 450,000 
Senior unsecured notes payable, 4.50%, due June 1, 2027 (2)450,000 450,000 
Senior unsecured notes payable, 4.95%, due April 15, 2028 (2)400,000 400,000 
Senior unsecured notes payable, 3.75%, due August 15, 2029 (2)500,000 500,000 
Bonds payable, variable rate, fixed at 1.39% through September 30, 2024, due August 1, 204724,995 24,995 
Less: deferred financing costs, net(35,552)(37,165)
Total$3,694,443 $3,102,830 
(1) At December 31, 2020, the Company had $590.0 million outstanding under its $1.0 billion unsecured revolving credit facility with interest at a floating rate of LIBOR plus 1.625% (with a LIBOR floor of 0.50%), which was 2.125% with a facility fee of 0.375%. Interest is payable monthly. Subsequent to December 31, 2020, the Company paid down $500.0 million on this credit facility.

The Company's unsecured term loan facility had a balance of $400.0 million with interest at a floating rate of LIBOR plus 2.00% (with a LIBOR floor of 0.50%), which was 2.5% on December 31, 2020. Interest is payable monthly. In addition, there is a $1.0 billion accordion feature on the combined unsecured revolving credit and term loan facility (the combined facility) that increases the maximum borrowing amount available under the combined facility, subject to lender approval, from $1.4 billion to $2.4 billion. If the Company exercises all or any portion of the accordion feature, the resulting increase in the combined facility may have a shorter or longer maturity date and different pricing terms. The combined facility contains financial covenants or restrictions that limit the Company's levels of consolidated debt, secured debt, investment levels outside certain categories and dividend distributions, and require the Company to maintain a minimum consolidated tangible net worth and meet certain coverage levels for
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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
fixed charges and debt services. As discussed further below, certain of these covenants were modified or waived during 2020.

In light of the continuing financial and operational impacts of the COVID-19 pandemic on the Company and its tenants and borrowers, on June 29, 2020 and November 3, 2020, the Company amended its Consolidated Credit Agreement, which governs its unsecured revolving credit facility and its unsecured term loan facility. As described below, the amendments modified certain provisions and waived the Company's obligation to comply with certain covenants under this debt agreement through December 31, 2021. The Company can elect to terminate the Covenant Relief Period early, subject to certain conditions.

As described below, the loans subject to the modifications bear interest at higher rates during the Covenant Relief Period and will return to the original pre-waiver levels at the end of such period, subject to certain conditions. The rates during and after the Covenant Relief Period continue to be subject to change based on unsecured debt ratings, as defined in the agreement. The amendments also imposed the additional restrictions on the Company discussed below during the Covenant Relief Period. In addition, during the Covenant Relief Period, the amendments require the Company to cause certain of its key subsidiaries to guarantee the Company's obligations based on its unsecured debt ratings, and the Company will be required to pledge the equity interests of certain of those subsidiary guarantors upon the occurrence of certain events, however both of these requirements end when the Covenant Relief Period is over.

During the Covenant Relief Period, the initial interest rates for the revolving credit facility and term loan facility were set at LIBOR plus 1.375% and LIBOR plus 1.75%, respectively, (with a LIBOR floor of 0.50%) and the facility fee on the revolving credit facility was increased to 0.375%. On August 20, 2020, as a result of a downgrade of the Company's unsecured debt rating by Moody's to Baa3, the spreads on the revolving credit and term loan facilities each increased by 0.25%. During the fourth quarter of 2020, the Company's unsecured debt rating was downgraded to BB+ by both Fitch and Standard & Poor's. As a result of these downgrades, certain of the Company's key subsidiaries guarantee the Company's obligations under its bank credit facilities, private placement notes and other outstanding senior unsecured notes in accordance with existing agreements with the holders of such indebtedness. See Note 20 for the Company's supplemental guarantor financial information. If the Company's unsecured debt rating is further downgraded by Moody's, the interest rates on the revolving credit and term loan facilities would both increase by 0.35% during the Covenant Relief Period. After the Covenant Relief Period, the interest rates for the revolving credit and term loan facilities, based on the Company's current unsecured debt ratings, are scheduled to return to LIBOR plus 1.20% and LIBOR plus 1.35%, respectively, (with a LIBOR floor of 0) and the facility fee will be 0.25%, however these rates are subject to change based on the Company's unsecured debt ratings.

The amendments to the Company's revolving credit and term loan facilities permanently modified certain financial covenants and provided relief from compliance with certain financial covenants during the Covenant Relief Period, as follows: (i) a new minimum liquidity financial covenant of $500.0 million during the Covenant Relief Period was added; (ii) compliance with the total-debt-to-total-asset-value, the maximum-unsecured-debt-to-unencumbered-asset-value, the minimum unsecured interest coverage ratio and the minimum fixed charge ratio financial covenants was suspended for the period beginning June 29, 2020 and ending on the earlier to occur of December 31, 2021 or the earlier termination of the Covenant Relief Period; (iii) permanent amendments to the unsecured-debt-to-unencumbered-asset-value financial covenant were made to allow short-term indebtedness to be offset by unrestricted cash in the calculation and to allow unrestricted cash not otherwise offset against short-term indebtedness to be counted as an unencumbered asset; and (iv) permanent amendments to financial covenants were made to allow accrued deferred payments to be included as recurring property revenue in these calculations. The amendments also imposed additional restrictions on the Company and its subsidiaries during the Covenant Relief Period, including limitations on certain investments, incurrences of indebtedness, capital expenditures and payment of dividends or other distributions and stock repurchases, in each case subject to certain exceptions.

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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
In connection with the amendments, $0.1 million of fees paid to third parties were expensed and included in costs associated with loan refinancing in the accompanying consolidated statements of (loss) income and comprehensive (loss) income for the year ended December 31, 2020. In addition, the Company paid $5.1 million in fees to existing lenders that were capitalized in deferred financing costs and amortized as part of the effective yield. These fees consisted of $3.6 million related to the unsecured revolving credit facility and included in other assets and $1.5 million related to the term loan and shown as a reduction of debt.

As described under (3) below, on June 29, 2020 and December 24, 2020, the Company also amended its Note Purchase Agreement which governs its private placement notes. Under the most favored nations clause included in the Consolidated Credit Agreement, the additional or more restrictive covenants included in the private placement amendments are incorporated into the Consolidated Credit Agreement.

(2) These notes contain various covenants, including: (i) a limitation on incurrence of any debt that would cause the ratio of the Company’s debt to adjusted total assets to exceed 60%; (ii) a limitation on incurrence of any secured debt that would cause the ratio of the Company’s secured debt to adjusted total assets to exceed 40%; (iii) a limitation on incurrence of any debt that would cause the Company’s debt service coverage ratio to be less than 1.5 times; and (iv) the maintenance at all times of the Company's total unencumbered assets such that they are not less than 150% of the Company’s outstanding unsecured debt.

(3) In light of the continuing financial and operational impacts of the COVID-19 pandemic on the Company and its tenants and borrowers, on June 29, 2020 and December 24, 2020, the Company amended its Note Purchase Agreement, which governs its private placement notes. The amendments modified certain provisions and waived the Company's obligation to comply with certain covenants under these debt agreements through October 1, 2021. The Company can elect to extend such period through January 1, 2022 and may elect to terminate the Covenant Relief Period early, subject to certain conditions. These notes: (i) contain certain financial and other covenants that generally conform to the combined credit facility described above; (ii) provide investors thereunder certain additional guaranty and lien rights, in the event that certain events occur; (iii) contain certain "most favored lender" provisions; and (iv) impose restrictions on debt that can be incurred by certain subsidiaries of the Company. As discussed further below, certain of these covenants were modified or waived during 2020.

The amendments provided for an immediate 0.65% waiver premium to be paid on the private placement notes during the Covenant Relief Period. In addition, during the fourth quarter of 2020, as a result of downgrades of the Company's unsecured debt rating to BB+ by both Fitch and Standard and Poor's, the spreads on the private placement notes each increased by an additional 0.60%. As a result, the interest rates for the private placement notes were increased to 5.60% and 5.81% for the Series A notes due 2024 and the Series B notes due 2026, respectively. After the Covenant Relief Period, the interest rates for the private placement notes are scheduled to return to 4.35% and 4.56% for the Series A notes due 2024 and the Series B notes due 2026, respectively.

If the Company elects to extend the Covenant Relief Period until January 1, 2022, the Company must, or must cause certain of its subsidiaries to, grant mortgages on certain unencumbered properties to a collateral agent, on behalf of the holders of the private placement notes and the lenders under the Company's Consolidated Credit Agreement. If the Company provides such mortgages, they must remain in effect until the later of two consecutive fiscal quarters of demonstrated covenant compliance or June 30, 2022, however the additional 0.60% interest rate premium as a result of the downgrades in the Company's unsecured debt rating is removed while mortgages are outstanding. If the Company elects to extend the Covenant Relief Period until January 1, 2022 as described above, the Covenant Relief Period will automatically end on October 29, 2021 if the Company fails to provide such mortgages.

The amendments provide relief from compliance with the following financial covenants during the Covenant Relief Period: the total-debt-to-total-asset-value covenant; the maximum-unsecured-debt-to-unencumbered-asset-value covenant; the minimum unsecured interest coverage ratio; and the minimum fixed charge ratio. The amended Note Purchase Agreement modifies the maximum secured debt to total asset value covenant as follows: (i) neither the Company nor any of its subsidiaries may incur any secured debt during the period beginning on December 24, 2020 and ending on the last day of the Covenant Relief Period, subject to certain exceptions; and (ii) after the Covenant
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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
Relief Period the ratio of secured debt to total asset value is reduced from 0.35 to 1.00 to 0.25 to 1.00 until the Company can demonstrate covenant compliance for at least two fiscal quarters.

The amendments impose certain restrictions on the Company during the Covenant Relief Period, including limitations on certain investments, incurrences of indebtedness, capital expenditures, payment of dividends or other distributions and stock repurchases, and maintenance of a minimum liquidity amount of $500.0 million, in each case subject to certain exceptions. The amendments include the following restrictions: (i) the limitation on investments and guarantees of certain indebtedness from October 1, 2020 to the end of the Covenant Relief Period was set at $175.0 million; and (ii) the limitation on capital expenditures from October 1, 2020 to the end of the Covenant Relief Period was set at $175.0 million. In addition, the amount of proceeds from assets sales that are exempt from the requirement to apply such proceeds to the prepayment of outstanding indebtedness under the Company's existing bank credit agreement and the private placement notes is $150.0 million, subject to certain exceptions relating to the sale of specified assets. In addition, the Company is prohibited from voluntarily prepaying its existing public senior notes during the Covenant Relief Period or its term loan debt under its bank facility during the Covenant Relief Period.

In connection with the amendments, $1.5 million of fees paid to third parties were expensed and included in costs associated with loan refinancing in the accompanying consolidated statements of (loss) income and comprehensive (loss) income for the year ended December 31, 2020. In addition, the Company paid $0.9 million in fees to existing lenders that were capitalized in deferred financing costs and amortized as part of the effective yield and shown as a reduction of debt.

Subsequent to year-end, the Company paid down principal of approximately $23.8 million on its private placement notes resulting from the sale of assets in accordance with the amendments.

Certain of the Company’s debt agreements contain customary restrictive covenants related to financial and operating performance as well as certain cross-default provisions. The Company was in compliance with all financial covenants under the Company's debt instruments at December 31, 2020.

Principal payments due on long-term debt obligations subsequent to December 31, 2020 (without consideration of any extensions) are as follows (in thousands):
 Amount
Year:
2021$0 
2022590,000 
2023675,000 
2024148,000 
2025300,000 
Thereafter2,016,995 
Less: deferred financing costs, net(35,552)
Total$3,694,443 

The Company capitalizes a portion of interest costs as a component of property under development. The following is a summary of interest expense, net from continuing operations for the years ended December 31, 2020, 2019 and 2018 (in thousands):
202020192018
Interest on loans$152,058 $140,697 $137,570 
Amortization of deferred financing costs6,606 6,192 5,797 
Credit facility and letter of credit fees3,064 2,265 2,411 
Interest cost capitalized(1,233)(4,975)(9,541)
Interest income(2,820)(2,177)(367)
Interest expense, net$157,675 $142,002 $135,870 
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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018

9. Derivative Instruments

All derivatives are recognized at fair value in the consolidated balance sheets within the line items "Other assets" and "Accounts payable and accrued liabilities" as applicable. The Company has elected not to offset its derivative position for purposes of balance sheet presentation and disclosure. The Company had derivative assets of $1.1 million at December 31, 2019 and had 0 derivative assets at December 31, 2020. The Company had derivative liabilities of $14.0 million and $4.5 million at December 31, 2020 and 2019, respectively. The Company has not posted or received collateral with its derivative counterparties as of December 31, 2020 and 2019. See Note 10 for disclosures relating to the fair value of the derivative instruments.

Risk Management Objective of Using Derivatives
The Company is exposed to certain risk arising from both its business operations and economic conditions including the effect of changes in foreign currency exchange rates on foreign currency transactions and interest rates on its LIBOR based borrowings. The Company manages this risk by following established risk management policies and procedures including the use of derivatives. The Company’s objective in using derivatives is to add stability to reported earnings and to manage its exposure to foreign exchange and interest rate movements or other identified risks. To accomplish this objective, the Company primarily uses interest rate swaps, cross-currency swaps and foreign currency forwards.

Cash Flow Hedges of Interest Rate Risk
The Company uses interest rate swaps as its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt or payment of variable-rate amounts from a counterparty which results in the Company recording net interest expense that is fixed over the life of the agreements without exchange of the underlying notional amount.

As of December 31, 2020, the Company had 4 interest rate swap agreements designated as cash flow hedges of interest rate risk related to its variable rate unsecured term loan facility totaling $400.0 million. Additionally, at December 31, 2020, the Company had an interest rate swap agreement designated as a cash flow hedge of interest rate risk related to its variable rate secured bonds totaling $25.0 million. Interest rate swap agreements outstanding at December 31, 2020 are summarized below:
Fixed rateNotional Amount (in millions)IndexMaturity
4.3950%(1)$116.7 USD LIBORFebruary 7, 2022
4.4075%(1)116.7 USD LIBORFebruary 7, 2022
4.4080%(1)116.6 USD LIBORFebruary 7, 2022
4.5950%(1)50.0 USD LIBORFebruary 7, 2022
Total$400.0 
1.3925%25.0 USD LIBORSeptember 30, 2024
Total$25.0 
(1) As discussed in Note 8, on June 29, 2020 and November 3, 2020, the Company amended its Consolidated Credit Agreement. The above fixed rates increased by 0.90% during the Covenant Relief Period, and as a result of the Company's unsecured debt ratings being downgraded and a LIBOR floor of 0.50% being established. The rates are scheduled to return to previous levels as defined in the agreement at the end of this period, subject to the Company's unsecured debt ratings.

The change in the fair value of interest rate derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (AOCI) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction.

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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of December 31, 2020, the Company estimates that during the twelve months ending December 31, 2020, $8.2 million will be reclassified from AOCI to interest expense.

Cash Flow Hedges of Foreign Exchange Risk
The Company is exposed to foreign currency exchange risk against its functional currency, USD, on CAD denominated cash flow from its 4 Canadian properties. The Company uses cross-currency swaps to mitigate its exposure to fluctuations in the USD-CAD exchange rate on cash inflows associated with these properties which should hedge a significant portion of the Company's expected CAD denominated cash flows.

During the year ended December 31, 2020, the Company entered into USD-CAD cross-currency swaps that were effective July 1, 2020 with a fixed original notional value of $100.0 million CAD and $76.6 million USD. The net effect of this swap is to lock in an exchange rate of $1.31 CAD per USD on approximately $7.2 million annual CAD denominated cash flows through June 2022.

The change in the fair value of foreign currency derivatives designated and that qualify as cash flow hedges of foreign exchange risk is recorded in AOCI and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction. As of December 31, 2020, the Company estimates that during the twelve months ending December 31, 2020, $0.2 million of losses will be reclassified from AOCI to other expense.

Net Investment Hedges
The Company is exposed to fluctuations in the USD-CAD exchange rate on its net investments in Canada. As such, the Company uses either currency forward agreements or cross-currency swaps to manage its exposure to changes in foreign exchange rates on certain of its foreign net investments. As of December 31, 2020, the Company had the following cross-currency swaps designated as net investment hedges:
Fixed rateNotional Amount (in millions, CAD)Maturity
$1.32 CAD per USD$100.0 July 1, 2023
$1.32 CAD per USD100.0 July 1, 2023
Total$200.0 

The cross-currency swaps also have a monthly settlement feature locked in at an exchange rate of $1.32 CAD per USD on $4.5 million of CAD annual cash flows, the net effect of which is an excluded component from the effectiveness testing of this hedge.

For qualifying foreign currency derivatives designated as net investment hedges, the change in the fair value of the derivatives are reported in AOCI as part of the cumulative translation adjustment. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with the Company's accounting policy election. The earnings recognition of excluded components are presented in other income.

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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
Below is a summary of the effect of derivative instruments on the consolidated statements of changes in equity and income for the years ended December 31, 2020, 2019 and 2018:

Effect of Derivative Instruments on the Consolidated Statements of Changes in Equity and Comprehensive (Loss) Income for the Years Ended December 31, 2020, 2019 and 2018
(Dollars in thousands)
 Year Ended December 31,
Description202020192018
Cash Flow Hedges
Interest Rate Swaps
Amount of (Loss) Gain Recognized in AOCI on Derivative$(11,612)$(7,476)$3,172 
Amount of (Expense) Income Reclassified from AOCI into Earnings (1)(6,159)1,138 1,324 
Cross Currency Swaps
Amount of Gain (Loss) Recognized in AOCI on Derivative5 (450)1,689 
Amount of Income Reclassified from AOCI into Earnings (2)441 545 1,426 
Net Investment Hedges
Cross Currency Swaps
Amount of (Loss) Gain Recognized in AOCI on Derivative(4,664)(4,454)5,108 
Amount of Income Recognized in Earnings (2) (3)599 556 271 
Currency Forward Agreements
Amount of Gain Recognized in AOCI on Derivative0 0 8,560 
Total
Amount of (Loss) Gain Recognized in AOCI on Derivative$(16,271)$(12,380)$18,529 
Amount of (Expense) Income Reclassified from AOCI into Earnings(5,718)1,683 2,750 
Amount of Income Recognized in Earnings599 556 271 
Interest expense, net in accompanying consolidated statements of (loss) income and comprehensive (loss) income$157,675 $142,002 $135,870 
Other income in accompanying consolidated statements of (loss) income and comprehensive (loss) income$9,139 $25,920 $2,076 
(1)    Included in “Interest expense, net” in accompanying consolidated statements of (loss) income and comprehensive (loss) income.
(2)    Included in "Other income" in the accompanying consolidated statements of (loss) income and comprehensive (loss) income.
(3)    Amounts represent derivative gains excluded from the effectiveness testing.

Credit-risk-related Contingent Features
The Company has agreements with each of its interest rate derivative counterparties that contain a provision where if the Company defaults on any of its obligations for borrowed money or credit in an amount exceeding $50.0 million and such default is not waived or cured within a specified period of time, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its interest rate derivative obligations.

As of December 31, 2020, the fair value of the Company's derivatives in a liability position related to these agreements was $14.0 million. If the Company breached any of the contractual provisions of these derivative contracts, it would be required to settle its obligations under the agreements at their termination value of $14.8 million. As of December 31, 2020, the Company had not posted any collateral related to these agreements and was not in breach of any provisions in these agreements.

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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
10. Fair Value Disclosures

The Company has certain financial instruments that are required to be measured under the FASB’s Fair Value Measurement guidance. The Company currently does not have any non-financial assets and non-financial liabilities that are required to be measured at fair value on a recurring basis.

As a basis for considering market participant assumptions in fair value measurements, the FASB’s Fair Value Measurement guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs use quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Derivative Financial Instruments
The Company uses interest rate swaps, foreign currency forwards and cross currency swaps to manage its interest rate and foreign currency risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, foreign exchange rates, and implied volatilities. The fair value of interest rate swaps is determined using the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected variable cash payments. The variable cash payments are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. In conjunction with the FASB's fair value measurement guidance, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives also use Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. As of December 31, 2020, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives and therefore, has classified its derivatives as Level 2 within the fair value reporting hierarchy.

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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
The table below presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2020 and 2019, aggregated by the level in the fair value hierarchy within which those measurements are classified and by derivative type.

Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2020 and 2019
(Dollars in thousands)
DescriptionQuoted Prices in
Active Markets
for Identical
Assets (Level I)		Significant
Other
Observable
Inputs (Level 2)		Significant
Unobservable
Inputs (Level 3)		Balance at
end of period
2020:
Cross Currency Swaps**$0 $(4,271)$0 $(4,271)
Interest Rate Swap Agreements**$0 $(9,723)$0 $(9,723)
2019:
Cross Currency Swaps*$0 $828 $0 $828 
Interest Rate Swap Agreements*$0 $225 $0 $225 
Interest Rate Swap Agreements**$0 $(4,495)$0 $(4,495)
*Included in "Other assets" in the accompanying consolidated balance sheet.
** Included in "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheets.

Non-recurring fair value measurements
The table below presents the Company's assets measured at fair value on a non-recurring basis during the year ended December 31, 2020 and 2019, aggregated by the level in the fair value hierarchy within which those measurements fall.

Assets Measured at Fair Value on a Non-Recurring Basis During the Year Ended
December 31, 2020 and 2019
(Dollars in thousands)
DescriptionQuoted Prices in
Active Markets
for Identical
Assets (Level I)		Significant
Other
Observable
Inputs (Level 2)		Significant
Unobservable
Inputs (Level 3)		Balance at
measurement date
2020:
Real estate investments, net$— $29,684 $9,860 $39,544 
Operating lease right-of-use assets— — 12,953 12,953 
Investment in joint ventures— — 771 771 
Other assets (1)— 0 0 0 
2019:
Real estate investments, net$— $6,160 $0 $6,160 

(1) Includes collateral dependent notes receivable, which are presented within other assets in the accompanying consolidated balance sheet.

As discussed further in Note 4, during the year ended December 31, 2020, the Company recorded impairment charges of $85.7 million, of which $70.7 million related to real estate investments, net and $15.0 million related to operating lease right-of-use assets. Management estimated the fair value of these investments taking into account various factors including purchase offers, independent appraisals, shortened hold periods and current market conditions. The Company determined, based on the inputs, that its valuation of 6 of its properties with purchase offers were classified as Level 2 of the fair value hierarchy and were measured at fair value. NaN properties, 2 of which included operating lease right-of-use assets, were measured at fair value using independent appraisals which used discounted cash flow models. The significant inputs and assumptions used in the real estate appraisals included market rents which ranged from $9 per square foot to $28 per square foot, discount rates which ranged from 9.0% to 12.3% and a terminal capitalization rate of 8.75% for the property not under ground lease. Significant inputs and assumptions used in the right-of-use asset appraisals included market rates which ranged from $10 per square foot to
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EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
$16 per square foot and discount rates which ranged from 8.0% to 8.5%. These measurements were classified within Level 3 of the fair value hierarchy as many of the assumptions were not observable.

Additionally, as discussed further in Note 7, during the year ended December 31, 2020, the Company recorded impairment charges of $3.2 million related to its investment in joint ventures. Management estimated the fair value of these investments, taking into account various factors including implied asset value changes based on discounted cash flow projections and current market conditions. The Company determined, based on the inputs, that its valuation of investment in joint ventures was classified within Level 3 of the fair value hierarchy as many of the assumptions are not observable.

As discussed further in Note 6, during the year ended December 31, 2020, the Company recorded expected credit loss expense totaling $25.5 million related to notes receivable from one borrower to fully reserve the outstanding principal balance of $12.6 million and unfunded commitment to fund $12.9 million, as a result of recent changes in the borrower's financial status due to the impact of the COVID-19 pandemic. Management valued the loan based on the fair value of the underlying collateral which was based on review of the financial statements of the borrower, and was classified within Level 2 of the fair value hierarchy.

As discussed further in Note 4, during the year ended December 31, 2019, the Company recorded an impairment charge of $2.2 million related to real estate investments, net. Management estimated the fair value of this property taking into account various factors including various purchase offers, pending purchase agreements, the shortened holding period and current market conditions. The Company determined, based on the inputs, that its valuation of real estate investments, net was classified within Level 2 of the fair value hierarchy.

Fair Value of Financial Instruments
The following methods and assumptions were used by the Company to estimate the fair value of each class of financial instruments at December 31, 2020 and 2019:

Mortgage notes receivable and related accrued interest receivable:
The fair value of the Company’s mortgage notes and related accrued interest receivable is estimated by discounting the future cash flows of each instrument using current market rates. At December 31, 2020, the Company had a carrying value of $365.6 million in fixed rate mortgage notes receivable outstanding, including related accrued interest, with a weighted average interest rate of approximately 9.03%. The fixed rate mortgage notes bear interest at rates of 7.01% to 11.78%. Discounting the future cash flows for fixed rate mortgage notes receivable using rates of 7.50% to 10.00%, management estimates the fair value of the fixed rate mortgage notes receivable to be $394.0 million with an estimated weighted average market rate of 8.11% at December 31, 2020.

At December 31, 2019, the Company had a carrying value of $357.4 million in fixed rate mortgage notes receivable outstanding, including related accrued interest, with a weighted average interest rate of approximately 8.98%. The fixed rate mortgage notes bear interest at rates of 6.99% to 11.61%. Discounting the future cash flows for fixed rate mortgage notes receivable using rates of 6.99% to 9.25%, management estimates the fair value of the fixed rate mortgage notes receivable to be $395.6 million with an estimated weighted average market rate of 7.76% at December 31, 2019.

Derivative instruments:
Derivative instruments are carried at their fair value.

Debt instruments:
The fair value of the Company's debt as of December 31, 2020 and 2019 is estimated by discounting the future cash flows of each instrument using current market rates. At December 31, 2020, the Company had a carrying value of $1.0 billion in variable rate debt outstanding with an average weighted interest rate of approximately 2.23%. The carrying value of the variable rate debt outstanding approximates the fair value at December 31, 2020.

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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
At December 31, 2019, the Company had a carrying value of $425.0 million in variable rate debt outstanding with an average weighted interest rate of approximately 2.75%. The carrying value of the variable rate debt outstanding approximates the fair value at December 31, 2019.

At December 31, 2020 and 2019, $425.0 million, of the Company's variable rate debt, discussed above, had been effectively converted to a fixed rate by interest rate swap agreements. See Note 9 for additional information related to the Company's interest rate swap agreements.

At December 31, 2020, the Company had a carrying value of $2.72 billion in fixed rate long-term debt outstanding with an average weighted interest rate of approximately 4.70%. Discounting the future cash flows for fixed rate debt using December 31, 2020 market rates of 4.09% to 5.81%, management estimates the fair value of the fixed rate debt to be approximately $2.69 billion with an estimated weighted average market rate of 4.70% at December 31, 2020.

At December 31, 2019, the Company had a carrying value of $2.72 billion in fixed rate long-term debt outstanding with an average weighted interest rate of approximately 4.54%. Discounting the future cash flows for fixed rate debt using December 31, 2019 market rates of 2.87% to 4.56%, management estimates the fair value of the fixed rate debt to be approximately $2.87 billion with an estimated weighted average market rate of 3.51% at December 31, 2019.

11. Common and Preferred Shares

On June 3, 2019, the Company filed a shelf registration statement with the SEC, which is effective for a term of 3 years. The securities covered by this registration statement include common shares, preferred shares, debt securities, depositary shares, warrants, and units. The Company may periodically offer one of more of these securities in amounts, prices and on terms to be announced when and if these securities are offered. The specifics of any future offerings along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering.

Additionally, on June 3, 2019, the Company filed a shelf registration statement with the SEC, which is effective for a term of 3 years, for its Dividend Reinvestment and Direct Share Purchase Plan (DSP Plan) which permits the issuance of up to 15,000,000 common shares.

Common Shares
The Company's Board declared cash dividends totaling $1.515 and $4.500 per common share for the years ended December 31, 2020 and 2019, respectively. The monthly cash dividend to common shareholders was suspended following the common share dividend paid on May 15, 2020 to shareholders of record as of April 30, 2020.
Of the total distributions calculated for tax purposes, the amounts characterized as ordinary income, return of capital and long-term capital gain for cash distributions paid per common share for the years ended December 31, 2020 and 2019 are as follows:
Cash Distributions Per Share
20202019
Taxable ordinary income (1)$0.8888 $2.7411 
Return of capital0.5634 1.3966 
Long-term capital gain (2)0.4378 0.3473 
Totals$1.8900 $4.4850 

(1) Amounts qualify in their entirety as 199A distributions.
(2) Of the long-term capital gain, $0.1439 and $0.3473 were unrecaptured section 1250 gains for the years ended December 31, 2020 and 2019, respectively.

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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
During the year ended December 31, 2020, the Company issued an aggregate of 36,176 common shares under its DSP Plan for net proceeds of $1.1 million.

During the year ended December 31, 2020, the Company's Board approved a share repurchase program pursuant to which the Company may repurchase up to $150.0 million of the Company's common shares. The share repurchase program was scheduled to expire on December 31, 2020; however, the Company suspended the program on the effective date of the covenant modification agreements, June 29, 2020, as discussed in Note 8. During the year ended December 31, 2020, the Company repurchased 4,066,716 common shares under the share repurchase program for approximately $106.0 million. The repurchases were made under a Rule 10b5-1 trading plan.

Series C Convertible Preferred Shares
The Company has outstanding 5.4 million 5.75% Series C cumulative convertible preferred shares (Series C preferred shares). The Company will pay cumulative dividends on the Series C preferred shares from the date of original issuance in the amount of $1.4375 per share each year, which is equivalent to 5.75% of the $25 liquidation preference per share. Dividends on the Series C preferred shares are payable quarterly in arrears. The Company does not have the right to redeem the Series C preferred shares except in limited circumstances to preserve the Company’s REIT status. The Series C preferred shares have no stated maturity and will not be subject to any sinking fund or mandatory redemption. As of December 31, 2020, the Series C preferred shares are convertible, at the holder’s option, into the Company’s common shares at a conversion rate of 0.4137 common shares per Series C preferred share, which is equivalent to a conversion price of $60.43 per common share. This conversion ratio may increase over time upon certain specified triggering events including if the Company’s common dividends per share exceeds a quarterly threshold of $0.6875.

Upon the occurrence of certain fundamental changes, the Company will under certain circumstances increase the conversion rate by a number of additional common shares or, in lieu thereof, may in certain circumstances elect to adjust the conversion rate upon the Series C preferred shares becoming convertible into shares of the public acquiring or surviving company.

The Company may, at its option, cause the Series C preferred shares to be automatically converted into that number of common shares that are issuable at the then prevailing conversion rate. The Company may exercise its conversion right only if, at certain times, the closing price of the Company’s common shares equals or exceeds 135% of the then prevailing conversion price of the Series C preferred shares.

Owners of the Series C preferred shares generally have no voting rights, except under certain dividend defaults. Upon conversion, the Company may choose to deliver the conversion value to the owners in cash, common shares, or a combination of cash and common shares.

The Company's Board declared cash dividends totaling $1.4375 per Series C preferred share for each of the years ended December 31, 2020 and 2019. There were non-cash distributions associated with conversion adjustments of $0.2131 and $0.6822 per Series C preferred share for the years ended December 31, 2020 and 2019, respectively. The conversion adjustment provision entitles the shareholders of the Series C preferred shares, upon certain quarterly common share dividend thresholds being met, to receive additional common shares of the Company upon a conversion of the preferred shares into common shares. The increase in common shares to be received upon a conversion is a deemed distribution for federal income tax purposes.

For tax purposes, the amounts characterized as ordinary income, return of capital and long-term capital gain for cash distributions paid and non-cash deemed distributions per Series C preferred share for the years ended December 31, 2020 and 2019 are as follows:
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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
Cash Distributions per Share
20202019
Taxable ordinary income (1)$0.9631 $1.2758 
Return of capital0 0 
Long-term capital gain (2)0.4744 0.1617 
Totals$1.4375 $1.4375 
(1) Amounts qualify in their entirety as 199A distributions.
(2) Of the long-term capital gain, $0.1559 and $0.1617 were unrecaptured section 1250 gains for the years ended December 31, 2020 and 2019, respectively.
Non-cash Distributions per Share
20202019
Taxable ordinary income (3)$0.0958 $0.1050 
Return of capital0.0701 0.5639 
Long-term capital gain (4)0.0472 0.0133 
Totals$0.2131 $0.6822 
(3) Amounts qualify in their entirety as 199A distributions.
(4) Of the long-term capital gain, $0.0155 and $0.0133 were unrecaptured section 1250 gains for the years ended December 31, 2020 and 2019, respectively.

Series E Convertible Preferred Shares
The Company has outstanding 3.4 million 9.00% Series E cumulative convertible preferred shares (Series E preferred shares). The Company will pay cumulative dividends on the Series E preferred shares from the date of original issuance in the amount of $2.25 per share each year, which is equivalent to 9.00% of the $25 liquidation preference per share. Dividends on the Series E preferred shares are payable quarterly in arrears. The Company does not have the right to redeem the Series E preferred shares except in limited circumstances to preserve the Company’s REIT status. The Series E preferred shares have no stated maturity and will not be subject to any sinking fund or mandatory redemption. As of December 31, 2020, the Series E preferred shares are convertible, at the holder’s option, into the Company’s common shares at a conversion rate of 0.4826 common shares per Series E preferred share, which is equivalent to a conversion price of $51.80 per common share. This conversion ratio may increase over time upon certain specified triggering events including if the Company’s common dividends per share exceeds a quarterly threshold of $0.84.

Upon the occurrence of certain fundamental changes, the Company will under certain circumstances increase the conversion rate by a number of additional common shares or, in lieu thereof, may in certain circumstances elect to adjust the conversion rate upon the Series E preferred shares becoming convertible into shares of the public acquiring or surviving company.

The Company may, at its option, cause the Series E preferred shares to be automatically converted into that number of common shares that are issuable at the then prevailing conversion rate. The Company may exercise its conversion right only if, at certain times, the closing price of the Company’s common shares equals or exceeds 150% of the then prevailing conversion price of the Series E preferred shares.

Owners of the Series E preferred shares generally have no voting rights, except under certain dividend defaults. Upon conversion, the Company may choose to deliver the conversion value to the owners in cash, common shares, or a combination of cash and common shares.

The Company's Board declared cash dividends totaling $2.25 per Series E preferred share for each of the years ended December 31, 2020 and 2019. There were non-cash distributions associated with conversion adjustments of $0.1695 and $0.6024 per Series E preferred share for the years ended December 31, 2020 and 2019, respectively. The conversion adjustment provision entitles the shareholders of the Series E preferred shares, upon certain quarterly common share dividend thresholds being met, to receive additional common shares of the Company upon a conversion of the preferred shares into common shares. The increase in common shares to be received upon a conversion is a deemed distribution for federal income tax purposes.
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Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018

For tax purposes, the amounts characterized as ordinary income, return of capital and long-term capital gain for cash distributions paid and non-cash deemed distributions per Series E preferred share for the years ended December 31, 2020 and 2019 are as follows:
Cash Distributions per Share
20202019
Taxable ordinary income (1)$1.5075 $1.9970 
Return of capital0 0 
Long-term capital gain (2)0.7425 0.2530 
Totals$2.2500 $2.2500 
(1) Amounts qualify in their entirety as 199A distributions.
(2) Of the long-term capital gain, $0.2441 and $0.2530 were unrecaptured section 1250 gains for the years ended December 31, 2020 and 2019, respectively.
Non-cash Distributions per Share
20202019
Taxable ordinary income (3)$0.0176 $0 
Return of capital0.1432 0.6024 
Long-term capital gain (4)0.0087 0 
Totals$0.1695 $0.6024 
(3) Amounts qualify in their entirety as 199A distributions.
(4) Of the long-term capital gain, $0.0610 was unrecaptured section 1250 gains for the year ended December 31, 2020. There were 0 unrecaptured section 1250 gains for the year ended December 31, 2019.

Series G Preferred Shares
The Company has outstanding 6.0 million 5.75% Series G cumulative redeemable preferred shares (Series G preferred shares). The Company will pay cumulative dividends on the Series G preferred shares from the date of original issuance in the amount of $1.4375 per share each year, which is equivalent to 5.75% of the $25.00 liquidation preference per share. Dividends on the Series G preferred shares are payable quarterly in arrears. The Company may not redeem the Series G preferred shares before November 30, 2022, except in limited circumstances to preserve the Company's REIT status. On or after November 30, 2022, the Company may, at its option, redeem the Series G preferred shares in whole at any time or in part from time to time by paying $25.00 per share, plus any accrued and unpaid dividends up to, but not including the date of redemption. The Series G preferred shares have no stated maturity and will not be subject to any sinking fund or mandatory redemption. The Series G preferred shares are not convertible into any of the Company's securities, except under certain circumstances in connection with a change of control. Owners of the Series G preferred shares generally have no voting rights except under certain dividend defaults.

The Company's Board declared cash dividends totaling $1.4375 per Series G preferred share for each of the years ended December 31, 2020 and 2019. For tax purposes, the amounts characterized as ordinary income, return of capital and long-term capital gain for cash distributions paid per Series G preferred share for the years ended December 31, 2020 and 2019 are as follows:
Cash Distributions per Share
20202019
Taxable ordinary income (1)$0.9631 $1.2758 
Return of capital0 0 
Long-term capital gain (2)0.4744 0.1617 
Totals$1.4375 $1.4375 
(1) Amounts qualify in their entirety as 199A distributions.
(2) Of the long-term capital gain, $0.1559 and $0.1617 were unrecaptured section 1250 gains for the years ended December 31, 2020 and 2019, respectively.

109

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
12. Earnings Per Share

The following table summarizes the Company’s computation of basic and diluted earnings per share (EPS) for the years ended December 31, 2020, 2019 and 2018 (amounts in thousands except per share information):
 Year Ended December 31, 2020
 Income
(numerator)		Shares
(denominator)		Per Share
Amount
Basic EPS:
Net loss$(131,728)
Less: preferred dividend requirements(24,136)
Net loss available to common shareholders$(155,864)75,994 $(2.05)
Diluted EPS:
Net loss available to common shareholders$(155,864)75,994 
Effect of dilutive securities:
Share options— 0 
Net loss available to common shareholders$(155,864)75,994 $(2.05)
 Year Ended December 31, 2019
 Income
(numerator)		Shares
(denominator)		Per Share
Amount
Basic EPS:
Income from continuing operations$154,556 
Less: preferred dividend requirements(24,136)
Income from continuing operations available to common shareholders$130,420 76,746 $1.70 
Income from discontinued operations available to common shareholders$47,687 76,746 $0.62 
Net income available to common shareholders$178,107 76,746 $2.32 
Diluted EPS:
Income from continuing operations available to common shareholders$130,420 76,746 
Effect of dilutive securities:
Share options— 36 
Income from continuing operations available to common shareholders$130,420 76,782 $1.70 
Income from discontinued operations available to common shareholders$47,687 76,782 $0.62 
Net income available to common shareholders$178,107 76,782 $2.32 
 Year Ended December 31, 2018
 Income
(numerator)		Shares
(denominator)		Per Share
Amount
Basic EPS:
Income from continuing operations$221,947 
Less: preferred dividend requirements and redemption costs(24,142)
Income from continuing operations available to common shareholders$197,805 74,292 $2.66 
Income from discontinued operations available to common shareholders$45,036 74,292 $0.61 
Net income available to common shareholders$242,841 74,292 $3.27 
Diluted EPS:
Income from continuing operations available to common shareholders$197,805 74,292 
Effect of dilutive securities:
Share options— 45 
Income from continuing operations available to common shareholders$197,805 74,337 $2.66 
Income from discontinued operations available to common shareholders$45,036 74,337 $0.61 
Net income available to common shareholders$242,841 74,337 $3.27 

The additional 2.2 million common shares for both December 31, 2020 and 2019 and 2.1 million common shares for December 31, 2018 that would result from the conversion of the Company’s 5.75% Series C cumulative convertible preferred shares and the additional 1.7 million common shares for December 31, 2020 and 1.6 million common shares for both December 31, 2019 and 2018 that would result from the conversion of the Company’s 9.0% Series E
110

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
cumulative convertible preferred shares and the corresponding add-back of the preferred dividends declared on those shares are not included in the calculation of diluted earnings per share because the effect is anti-dilutive.

The dilutive effect of potential common shares from the exercise of share options is included in diluted earnings per share for the years ended December 31, 2019 and 2018. The dilutive effect of potential common shares from the exercise of share options is excluded from diluted earnings per share for the year ended December 31, 2020 because the effect is anti-dilutive due to the net loss available to common shareholders. Options to purchase 117 thousand, 4 thousand and 26 thousand of common shares were outstanding at the end of 2020, 2019 and 2018, respectively, at per share prices ranging from $44.62 to $76.63 for 2020, $73.84 to $76.63 for 2019 and per share prices ranging from $61.79 to $76.63 for 2018, but were not included in the computation of diluted earnings per share because they were anti-dilutive.

The dilutive effect of the potential common shares from the performance shares is included in diluted earnings per share upon the satisfaction of certain performance and market conditions. These conditions are evaluated at each reporting period and if the conditions have been satisfied during the reporting period, the number of contingently issuable shares are included in the computation of diluted earnings per share. During the year ended December 31, 2020, the Company determined the performance and market conditions were not met, therefore, NaN of the 56 thousand contingently issuable performance shares were included in the computation of diluted earnings per share.

13. Severance Expense

On December 31, 2020, the Company's Senior Vice President - Asset Management, Michael L. Hirons, retired from the Company. Mr. Hirons' retirement was a "Qualifying Termination" under the Company's Employee Severance and Retirement Vesting Plan. For the year ended December 31, 2020, severance expense totaled $2.9 million and included cash payments totaling $1.6 million, and accelerated vesting of nonvested shares and performance shares totaling $1.3 million.

During the year ended December 31, 2019, the Company recorded severance expense related to various employees totaling $2.4 million. For the year ended December 31, 2019, severance expense included cash payments totaling $1.8 million, and accelerated vesting of nonvested shares totaling $0.6 million.

On April 5, 2018, the Company and Mr. Earnest, its then Senior Vice President and Chief Investment Officer, entered into an Amended and Restated Employment Agreement, effective March 31, 2018, to reflect the changes in connection with Mr. Earnest's transition to Executive Advisor of the Company. As the Company determined that such services were no longer needed, on December 27, 2018, the Company gave notice that the agreement was going to be terminated pursuant to the provisions of the Amended and Restated Employment Agreement. As a result, during the year ended December 31, 2018, the Company recorded severance expense related to Mr. Earnest, as well as another employee terminated under a similar such agreement, totaling $5.9 million. For the year ended December 31, 2018, severance expense includes cash payments totaling $2.6 million, accelerated vesting of nonvested shares totaling $3.2 million and $0.1 million of related taxes and other expenses.

14. Equity Incentive Plan

All grants of common shares and options to purchase common shares were issued under the Company's 2007 Equity Incentive Plan prior to May 12, 2016 and under the 2016 Equity Incentive Plan on and after May 12, 2016. Under the 2016 Equity Incentive Plan, an aggregate of 1,950,000 common shares, options to purchase common shares and restricted share units, subject to adjustment in the event of certain capital events, may be granted. During the year ended December 31, 2020, the Compensation and Human Capital Committee of the Board approved the 2020 Long Term Incentive Plan (2020 LTIP) as a sub-plan under the Company's 2016 Equity Incentive Plan. Under the 2020 LTIP, the Company awards performance shares and restricted shares to the Company's executive officers. At December 31, 2020, there were 746,828 shares available for grant under the 2016 Equity Incentive Plan.

111

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
Share Options
Share options have exercise prices equal to the fair market value of a common share at the date of grant. The options may be granted for any reasonable term, not to exceed 10 years. The Company generally issues new common shares upon option exercise. A summary of the Company’s share option activity and related information is as follows:
 Number of
shares		Option price
per share		Weighted avg.
exercise price
Outstanding at December 31, 2017257,606 $19.02 — $76.63 $51.81 
Exercised(25,721)45.20 — 61.79 50.68 
Granted3,835 56.94 — 56.94 56.94 
Forfeited/Expired(845)51.64 — 61.79 61.12 
Outstanding at December 31, 2018234,875 $19.02 — $76.63 $51.98 
Exercised(118,786)19.02 — 61.79 48.71 
Granted1,941 73.84 — 73.84 73.84 
Outstanding at December 31, 2019118,030 $44.62 — $76.63 $55.63 
Exercised(1,410)44.98 — 44.98 44.98 
Granted2,890 69.19 — 69.19 69.19 
Forfeited/Expired(2,820)44.98 — 44.98 44.98 
Outstanding at December 31, 2020116,690 $44.62 — $76.63 $56.36 

The weighted average fair value of options granted was $3.73, $4.64 and $3.03 during 2020, 2019 and 2018, respectively. The intrinsic value of stock options exercised was $22 thousand, $2.8 million, and $0.4 million during the years ended December 31, 2020, 2019 and 2018, respectively. Additionally, the Company repurchased 1,043 shares in conjunction with the stock options exercised during the year ended December 31, 2020 with a total value of $63 thousand.

The following table summarizes outstanding and exercisable options at December 31, 2020:
Options outstandingOptions exercisable
Exercise price rangeOptions
outstanding		Weighted avg. life remainingWeighted avg. exercise priceAggregate intrinsic value (in thousands)Options outstandingWeighted avg. life remainingWeighted avg. exercise priceAggregate intrinsic value (in thousands)
44.62 - 49.9927,215 1.327,215 1.3
50.00 - 59.9931,710 3.529,793 3.3
60.00 - 69.9953,609 5.550,719 4.1
70.00 - 76.634,156 7.12,148 6.6
116,690 4.0$56.36 $0 109,875 3.3$55.67 $0 

Nonvested Shares
A summary of the Company’s nonvested share activity and related information is as follows:
Number of
shares		Weighted avg. grant date
fair value		Weighted avg.
life remaining
Outstanding at December 31, 2019509,338 $67.88 
Granted211,549 69.09 
Vested(269,716)67.84 
Forfeited(5,769)67.95 
Outstanding at December 31, 2020445,402 $68.47 0.82
112

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
The holders of nonvested shares have voting rights and receive dividends from the date of grant. The fair value of the nonvested shares that vested was $17.4 million, $22.7 million, and $16.0 million for the years ended December 31, 2020, 2019 and 2018, respectively. At December 31, 2020, unamortized share-based compensation expense related to nonvested shares was $11.8 million and will be recognized in future periods as follows (in thousands):
 Amount
Year:
2021$6,783 
20223,811 
20231,248 
Total$11,842 

Nonvested Performance Shares
A summary of the Company's nonvested performance share activity and related information is as follows:
Number of
Performance Shares
Outstanding at December 31, 20190 
Granted61,615 
Vested(5,277)
Forfeited0 
Outstanding at December 31, 202056,338 

The number of common shares issuable upon settlement of the performance shares granted during the year ended December 31, 2020 will be based upon the Company's achievement level relative to the following performance measures at December 31, 2022: 50% based upon the Company's Total Shareholder Return (TSR) relative to the TSRs of the Company's peer group companies, 25% based upon the Company's TSR relative to the TSRs of companies in the MSCI US REIT Index and 25% based upon the Company's Average Annual Growth in AFFO per share over the three-year performance period. The Company's achievement level relative to the performance measures is assigned a specific payout percentage which is multiplied by a target number of performance shares.

The performance shares based on relative TSR performance have market conditions and are valued using a Monte Carlo simulation model on the grant date, which resulted in a grant date fair value of approximately $3.0 million. The estimated fair value is amortized to expense over the three-year vesting period, which ends on December 31, 2022. The following assumptions were used in the Monte Carlo simulation for computing the grant date fair value of the performance shares with a market condition: risk-free interest rate of 1.4%, volatility factors in the expected market price of the Company's common shares of 18% and an expected life of three years. At December 31, 2020, unamortized share-based compensation expense related to nonvested performance shares was $1.8 million.

The performance shares based on growth in AFFO have a performance condition. The probability of achieving the performance condition is assessed at each reporting period. If it is deemed probable that the performance condition will be met, compensation cost will be recognized based on the closing price per share of the Company's common shares on the date of the grant multiplied by the number of awards expected to be earned. If it is deemed that it is not probable that the performance condition will be met, the Company will discontinue the recognition of compensation cost and any compensation cost previously recorded will be reversed. At December 31, 2020, achievement of the performance condition for the performance shares granted during the year ended December 31, 2020 was deemed not probable.

The performance shares accrue dividend equivalents which are paid only if common shares are issued upon settlement of the performance shares. During the year ended December 31, 2020, the Company accrued dividend equivalents expected to be paid on earned awards of $50 thousand. In connection with the retirement of the Company's Senior Vice President - Asset Management, Michael L. Hirons, $14 thousand in dividend equivalents were paid resulting in $36 thousand of accrued dividend equivalents expected to be paid on earned awards at December 31, 2020.
113

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018

Restricted Share Units
A summary of the Company’s restricted share unit activity and related information is as follows:
Number of
Shares		Weighted Average
Grant Date
Fair Value		Weighted Average
Life
Remaining
Outstanding at December 31, 201926,236 $77.54 
Granted74,767 31.57 
Vested(26,236)77.54 
Outstanding at December 31, 202074,767 $31.57 0.42
The holders of restricted share units receive dividend equivalents from the date of grant. At December 31, 2020, unamortized share-based compensation expense related to restricted share units was $602$983 thousand whichwhich will be recognized in 2019.2021.


17.15. Operating Leases


Most of theThe Company’s rental propertiesreal estate investments are leased under operating leases with expiration dates rangingremaining terms ranging from one year to 29 years. The Company adopted Topic 842 on January 1, 2019 and elected to 31 years. Futurenot reassess its prior conclusions about lease classification. Accordingly, these arrangements continue to be classified as operating leases.

The following table summarizes the future minimum rentals on non-cancelable tenant operating leasesthe Company's lessor and sub-lessor arrangements at December 31, 2018 are as follows2020 and 2019 (in thousands):
December 31, 2020December 31, 2019
Operating leasesSub-lessor operating ground leasesOperating leasesSub-lessor operating ground leases
 Amount (1) (2)Amount (1) (2)TotalAmount (2)Amount (2)Total
Year:Year:
2021$461,473 $20,440 $481,913 2020$525,809 $23,468 $549,277 
2022477,454 20,743 498,197 2021518,590 23,863 542,453 
2023474,504 20,022 494,526 2022504,119 23,291 527,410 
2024471,149 19,521 490,670 2023474,889 22,609 497,498 
2025464,850 19,636 484,486 2024453,043 22,196 475,239 
Thereafter3,939,241 182,206 4,121,447 Thereafter3,707,326 226,150 3,933,476 
Total$6,288,671 $282,568 $6,571,239 Total$6,183,776 $341,577 $6,525,353 
 Amount
Year: 
2019$520,139
2020503,344
2021492,165
2022477,671
2023449,686
Thereafter3,953,717
Total$6,396,722

(1) Amounts presented above are based on contractual obligations and exclude the impact of COVID-19 deferred rent payments. As of December 31, 2018,2020, receivables from tenants included fixed rent payments of approximately $76.0 million that were deferred due to the COVID-19 pandemic and determined to be collectible. The Company had 57is currently scheduled to collect approximately $24.3 million in 2021, $31.6 million in 2022, $19.0 million in 2023 and $1.1 million in 2024.
(2) Included in rental revenue.

In addition to its lessor arrangements on its real estate investments, as of December 31, 2020 and 2019, the Company was lessee in 53 and 58 operating ground leases, atrespectively, as well as lessee in an operating lease of its properties.executive office. The Company's tenants, who are generally sub-tenants under these ground leases, are responsible for paying the rent under these ground leases. As of December 31, 2020, rental revenue from several of the Company's tenants, who are also sub-tenants under the ground leases, is being recognized on a cash basis. In most cases, the ground lease sub-tenants have continued to pay the rent under these ground leases. In addition, 2 of these properties are vacant. In the event the tenant fails to pay the ground lease rent or if the property is vacant, the Company would beis primarily responsible for the payment, assuming the Company does not sell or re-tenant the property. FutureAs of December 31, 2020, the ground lease arrangements have remaining terms ranging from one year to 46 years. Most of these leases include one or more options to renew. The Company assesses these options using a threshold of reasonably certain, which also includes an assessment of the term of the Company's tenants' leases. For leases where renewal is reasonably certain, those option periods are included within the lease term and also the measurement of
114

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
the operating lease right-of-use asset and liability. The ground lease arrangements do not contain any residual value guarantees or any material restrictions. As of December 31, 2020, the Company does not have any leases that have not commenced but that create significant rights and obligations.

The Company determines whether an arrangement is or includes a lease at contract inception. Operating lease right-of-use assets and liabilities are recognized at commencement date and initially measured based on the present value of lease payments over the defined lease term. As the Company's leases do not provide an implicit rate, the Company used its incremental borrowing rate in determining the present value of lease payments. The incremental borrowing rate was adjusted for collateral based on the information available at adoption or the commencement date. Inputs to the calculation of the Company's incremental borrowing rate include its senior notes and their option adjusted credit spreads over comparable U.S. Treasury rates, adjusted to a collateralized basis by estimating the credit spread improvement that would result from an upgrade of one ratings classification.

The following table summarizes the future minimum lease payments under thesethe ground lease obligations and the office lease at December 31, 2018 are as follows,2020 and 2019, excluding contingent rent due under leases where the ground lease payment, or a portion thereof, is based on the level of the tenant's sales (in thousands):
December 31, 2020December 31, 2019
 Ground Leases (1)Office lease (2)Ground Leases (1)Office lease (2)
Year:Year:
2021$22,520 $884 2020$24,085 $856 
202222,058 967 202124,529 884 
202321,340 967 202223,961 967 
202420,840 967 202323,283 967 
202520,936 967 202422,871 967 
Thereafter203,467 724 Thereafter243,411 1,691 
Total lease payments$311,161 $5,476 $362,140 $6,332 
Less: imputed interest113,730 684 131,901 921 
Present value of lease liabilities$197,431 $4,792 $230,239 $5,411 
 Amount
Year: 
2019$22,867
202023,236
202123,600
202222,996
202322,303
Thereafter257,446
Total$372,448
(1) Included in property operating expense.
(2) Included in general and administrative expense.

The following table summarizes the carrying amounts of the operating lease right-of-use assets and liabilities as of December 31, 2020 (in thousands):
As of December 31,
ClassificationDecember 31, 2020December 31, 2019
Assets:
Operating ground lease assetsOperating lease right-of-use assets$159,245 $205,997 
Office lease assetOperating lease right-of-use assets4,521 5,190 
Total operating lease right-of-use assets$163,766 $211,187 
Sub-lessor straight-line rent receivableAccounts receivable12,433 24,569 
Total leased assets$176,199 $235,756 
Liabilities:
Operating ground lease liabilitiesOperating lease liabilities$197,431 $230,239 
Office lease liabilityOperating lease liabilities4,792 5,411 
Total lease liabilities$202,223 $235,650 


115

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018

The Company leases its executive office from an unrelated landlord. Rental expense totaled approximately $1.0 million, $1.0 millionfollowing table summarizes rental revenue, including sublease arrangements and $681 thousandlease costs, including impairment charges on operating lease right-of-use assets for the years ended December 31, 2018, 20172020 and 2016, respectively, and is included as a component of general and administrative expense2019 (in thousands):
Year ended December 31,
Classification20202019
Rental revenue
Operating leases (1)Rental revenue$361,393 $569,530 
Sublease income - operating ground leases (2)Rental revenue$10,783 $23,492 
Lease costs
Operating ground lease costProperty operating expense$24,386 $24,656 
Operating office lease costGeneral and administrative expense$905 $909 
Operating lease right-of-use asset impairment charges (3)Impairment charges$15,009 $0 
(1) During the year ended December 31, 2020, the Company wrote-off straight-line rent receivables totaling $26.5 million, to straight-line rental revenue classified in rental revenue in the accompanying consolidated statements of (loss) income and comprehensive (loss) income. Future minimum lease payments under this lease at Additionally, during the year ended December 31, 2018 are2020, the Company wrote-off lease receivables from tenants totaling $25.7 million, to minimum rent, tenant reimbursements and percentage rent classified in rental revenue in the accompanying consolidated statements of (loss) income and comprehensive (loss) income related to tenants being recognized on a cash basis.

(2) During the year ended December 31, 2020, the Company wrote-off sub-lessor ground lease straight-line rent receivables totaling $11.5 million, to straight-line rental revenue classified in rental revenue in the accompanying consolidated statements of (loss) income and comprehensive (loss) income. Additionally, during the year ended December 31, 2020, the Company wrote-off sub-lessor ground lease receivables from tenants totaling $1.4 million to minimum rent classified in rental revenue in the accompanying consolidated statements of (loss) income and comprehensive (loss) income related to tenants being recognized on a cash basis.

(3) During the year ended December 31, 2020, the Company recognized impairment charges of $15.0 million related to the operating lease right-of-use assets at 2 of its properties. See Note 4 for the details on these impairments.

The following table summarizes the weighted-average remaining lease term and the weighted-average discount rate as follows (in thousands):of December 31, 2020:
As of December 31,
20202019
Weighted-average remaining lease term in years
Operating ground leases15.816.0
Operating office lease5.86.8
Weighted-average discount rate
Operating ground leases4.97 %4.96 %
Operating office lease4.62 %4.62 %

116
 Amount
Year: 
2019$856
2020856
2021884
2022967
2023967
Thereafter2,658
Total$7,188


EPR PROPERTIES
Notes to Consolidated Financial Statements
18.December 31, 2020, 2019 and 2018
16. Quarterly Financial Information (unaudited)


Summarized quarterly financial data for the years ended December 31, 20182020 and 20172019 are as follows (in thousands, except per share data):
March 31June 30September 30December 31
2020:
Total revenue$151,012 $106,360 $63,877 $93,412 
Net income (loss)37,118 (62,965)(85,904)(19,977)
Net income (loss) available to common shareholders of EPR Properties31,084 (68,999)(91,938)(26,011)
Basic net income (loss) per common share0.40 (0.90)(1.23)(0.35)
Diluted net income (loss) per common share0.40 (0.90)(1.23)(0.35)
March 31June 30September 30December 31
2019:
Total revenue$150,527 $161,740 $169,356 $170,346 
Net income65,349 66,594 34,003 36,297 
Net income available to common shareholders of EPR Properties59,315 60,560 27,969 30,263 
Basic net income per common share0.79 0.80 0.36 0.39 
Diluted net income per common share0.79 0.79 0.36 0.39 
During the year ended December 31, 2019, the Company completed the sale of its public charter school portfolio. Accordingly, the historical financial results of public charter school investments disposed of by the Company in 2019 are reflected in the Company's consolidated statements of (loss) income and comprehensive (loss) income as discontinued operations for all periods presented. See Note 17 for further details on discontinued operations.

17. Discontinued Operations

During the year ended December 31, 2019, the Company completed the sale of its public charter school portfolio with the largest disposition occurring on November 22, 2019 consisting of 47 public charter school related assets, for net proceeds of approximately $449.6 million. See Note 3 for additional information related to the sale and Note 4 for additional information related to the impairment recognized related to this sale. The Company determined the dispositions of the remaining public charter school portfolio in 2019 represented a strategic shift that had a major effect on the Company's operations and financial results. Therefore, all public charter school investments disposed of by the Company during the year ended December 31, 2019 qualified as discontinued operations. Accordingly, the historical financial results of these public charter school investments are reflected in the Company's consolidated financial statements as discontinued operations for all periods presented.

The operating results relating to discontinued operations are as follows (in thousands):
 Year Ended December 31,
 20192018
Rental revenue$36,289 $47,277 
Mortgage and other financing income14,284 13,533 
Total revenue50,573 60,810 
Property operating expense573 1,102 
Costs associated with loan refinancing or payoff181 0 
Interest expense, net(351)(363)
Depreciation and amortization12,929 15,035 
Income from discontinued operations before other items37,241 45,036 
Impairment on public charter school portfolio sale(21,433)0 
Gain on sale of real estate31,879 0 
Income from discontinued operations$47,687 $45,036 

117

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2020, 2019 and 2018
 March 31 June 30 September 30 December 31
2018:       
Total revenue$154,968
 $202,867
 $176,409
 $166,487
Net income29,538
 91,581
 91,833
 54,031
Net income available to common shareholders of EPR Properties23,502
 85,545
 85,797
 47,997
Basic net income per common share0.32
 1.15
 1.15
 0.65
Diluted net income per common share0.32
 1.15
 1.15
 0.65
The cash flow information relating to discontinued operations are as follows (in thousands):

 Year Ended December 31,
 20192018
Depreciation and amortization$12,929 $15,035 
Acquisition of and investments in real estate and other assets(6,968)(5,956)
Proceeds from sale of real estate182,934 0 
Proceeds from sale of public charter school portfolio449,555 0 
Investment in mortgage notes receivable(5,115)(17,933)
Proceeds from mortgage notes receivable paydowns28,662 3,355 
Additions to properties under development(22,981)(31,036)
Non-cash activity:
Transfer of property under development to real estate investments$28,099 $24,900 
Conversion or reclassification of mortgage notes receivable to real estate investments0 12,013 
Interest cost capitalized351 363 

 March 31 June 30 September 30 December 31
2017:       
Total revenue$129,112
 $147,782
 $151,397
 $147,700
Net income53,916
 80,535
 62,954
 65,563
Net income available to common shareholders of EPR Properties47,964
 74,583
 57,003
 54,668
Basic net income per common share0.75
 1.02
 0.77
 0.74
Diluted net income per common share0.75
 1.02
 0.77
 0.74

19.18. Other Commitments and Contingencies


As of December 31, 2018,2020, the CompanyCompany had 17 development projects with commitments to fund an aggregate of approximately $98.7 million of commitments to fund development projects including 10 entertainment development projects for which it has commitments to fund approximately $25.4 million, five recreation development projects for which it has commitments to fund approximately $45.9 million and six education development projects for which it has commitments to fund approximately $27.4$118.3 million. Development costs are advanced by the Company in periodic draws. If the Company determines that construction is not beingbeing completed in accordance with the terms of the development agreements,agreement, it can discontinue funding construction draws. The Company has agreed to lease the properties to the operators at pre-determined rates upon completion of construction.


Additionally, as of December 31, 2018, the Company had a commitment to fund approximately $206.9 million, of which $149.3 million has been funded, to complete an indoor waterpark hotel and adventure park at the casino and resort project in Sullivan County, New York. This project is expected to go in service in Spring 2019. The Company

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 2017 and 2016

is also responsible for the construction of this project's common infrastructure. In June 2016, the Sullivan County Infrastructure Local Development Corporation issued $110.0 million of Series 2016 Revenue Bonds, which has funded a substantial portion of such construction costs. The Company received reimbursements of $43.4 million and $23.9 million of construction costs during the years ended December 31, 2016 and 2017, respectively. During the year ended December 31, 2018, the Company received an additional reimbursement of $6.9 million and anticipates receiving $11.5 million in 2019. Construction of infrastructure improvements was completed in 2018.
The Company has certain commitments related to its mortgage notenotes and notes receivable investments that it may be required to fund in the future. The Company is generally obligated to fund these commitments at the request of the borrower or upon thethe occurrence of events outside of its direct control. As of December 31, 2018,2020, the Company had four3 mortgage notes and 1 note receivable with commitments totaling approximately $6.9$31.8 million. If commitmentscommitments are funded in the future, interest will be charged at rates consistent with the existing investments.


The Company guarantees the payment of certain economic development revenue bonds that are secured by leasehold interest and improvements at two theatres in Louisiana. During the year ended December 31, 2017, these bonds were re-issued and the maturity date of these bonds was extended to December 22, 2047. At December 31, 2018, the Company's guarantees of the payment of these bonds totaled $24.7 million.

The Company has recorded $5.3 million in other assets and $16.1 million in other liabilities in the accompanying consolidated balance sheet as of December 31, 2018 related to these guarantees. During the year ended December 31, 2018, the Company recorded an impairment to its asset of $7.8 million and an incremental contingent liability of $2.9 million as payment on a portion of the bonds is considered probable and is reasonably estimable, resulting in a total impairment charge of $10.7 million. See Note 4 for further discussion.

In connection with construction of its development projects and related infrastructure, certain public agencies require posting of surety bonds to guarantee that the Company's obligations are satisfied. These bonds expire upon the completion of the improvements or infrastructure. As of December 31, 2018,2020, the CompanyCompany had five2 surety bonds outstanding totaling $22.5$31.6 million.


Resort Project in Sullivan County, New York
Prior proposed casino19. Segment Information

The Company groups its investments into 2 reportable segments: Experiential and resort developers Concord Associates, L.P., Concord Resort, LLC and Concord Kiamesha LLC, which are affiliates of Louis Cappelli and from whom the Company acquired the Resorts World Catskills resort property (the Cappelli Group), commenced litigation against the Company beginning in 2011 regarding matters relatingEducation. Due to the acquisition of that property and the Company's relationship with the Empire Resorts, Inc. and certain of its subsidiaries. This litigation involved three separate cases filed in state and federal court. Two of the cases, a state and the federal case, are closed and resulted in no liability by the Company.

The remaining case was filed on October 20, 2011 by the Cappelli Group against the Company and two of its affiliates in the Supreme Court of the State of New York, County of Westchester (the Westchester Action), asserting a claim for breach of contract and the implied covenant of good faith, and seeking damages of at least $800 million, based on allegations that the Company had breached a casino development agreement, dated June 18, 2010. On June 29, 2018, the Company entered into a settlement agreement with the Cappelli Group whereby each of the parties fully settled all disputes between and among them. The terms of the settlement agreement include, among other terms, the Company’s payment of $2.0 millionchange to the Cappelli Group, the mutual release of all parties, and the dismissal of the Westchester Action with prejudice. Additionally,2 reportable segments during the year ended December 31, 2019, certain reclassifications have been made to the 2018 presentation to conform to the Company paid approximately $90 thousand in professional fees associated with the settlement.current presentation.


Early Childhood Education TenantThe financial information summarized below is presented by reportable segment (in thousands):
During 2017, cash flow of CLA was negatively impacted by challenges brought on by its rapid expansion and related ramp up to stabilization and by adverse weather conditions in Texas during the third quarter of 2017. As a result, CLA initiated negotiations with the Company and other landlords regarding a potential restructuring. However, CLA did not secure the investments necessary to accomplish the restructuring. As a result, the Company sent CLA notices of lease termination on October 12, 2017 for the following CLA properties: (i) Broomfield, Colorado, (ii) Ashburn, Virginia,
Balance Sheet Data:
As of December 31, 2020
ExperientialEducationCorporate/UnallocatedConsolidated
Total Assets$5,133,486 $529,755 $1,040,944 $6,704,185 
As of December 31, 2019
ExperientialEducationCorporate/UnallocatedConsolidated
Total Assets$5,307,295 $730,165 $540,051 $6,577,511 

118

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018

(iii) West Chester, Ohio, (iv) Chanhassen, Minnesota, (v) Ellisville, Missouri, (vi) Farm Road-Las Vegas, Nevada, (vii) Fishers, Indiana, (viii) Tredyffrin, Pennsylvania, and (ix) Westerville, Ohio.

On December 18, 2017, ten subsidiaries of Children's Learning Adventure USA, LLC (CLA Parent) filed separate voluntary petitions for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court (Court) for the District of Arizona (Jointly Administered under Case No. 2:17-bk-14851-BMW), covering substantially all of the Company's properties leased to CLA. CLA Parent has not filed a petition for bankruptcy. It is the Company's understanding that the CLA Debtors filed bankruptcy petitions to stay the termination of the remaining CLA leases and delay the eviction process.

On January 8, 2018, the Company filed with the Court (i) motions seeking rent for the post-petition period beginning on December 18, 2017, and (ii) motions seeking relief from the automatic stay seeking the right to terminate the remaining leases and evict the CLA Debtors from the properties. On March 14, 2018, the CLA Parties and the Company entered into a Stipulation providing that (a) the CLA Parties would pay rent for the months of March through July for an aggregate total of $4.3 million, (b) resolution of restructuring of the leases between the Company and the CLA Parties would be concluded no later than July 31, 2018 (the Forbearance Period), (c) relief from stay would be granted with respect to the Company’s properties as needed to implement the Stipulation, (d) the parties would not commence or prosecute litigation against any other party during the Forbearance Period, and (e) the deadline for any motion by the CLA Debtors to assume or reject the leases under the U.S. Bankruptcy Code would be extended to July 31, 2018. On May 7, 2018, the Court entered an order approving the Stipulation. The CLA Parties made all of the rent payments required by the Stipulation.

In July 2018, the Company entered into a new lease agreement with CLA related to the 21 operating properties which replaced the prior lease arrangements and continued on a month-to-month basis. The lease agreement provided for monthly rent of $1.0 million plus approximately $170 thousand for pro rata property taxes. CLA relinquished control of four properties that were still under development as the Company no longer intends to develop these properties for CLA. Two of these properties were sold in February 2019. See Note 4 for further discussion regarding CLA.

In February 2019, CLA and the Company entered into agreements (collectively, the PSA) providing for the purchase and sale of certain assets associated with the businesses located at the 21 operating CLA properties whereby the Company can nominate a third party operator to take an assignment and transfer of such assets from CLA and to receive certain beneficial rights under various related ancillary agreements. Consideration provided by the Company for the asset transfers includes the release of past due rent obligations, previously fully reserved by the Company, and additional consideration of approximately $15.0 million which includes approximately $3.5 million for equipment used in the operations of the Company's schools. CLA has agreed to surrender possession of any of those properties that have not been transferred to a replacement operator prior to March 31, 2020 and has agreed to lease and operate each of the 21 properties for an aggregate of approximately $1.0 million per month of minimum rent until the transfer of each property to the Company’s replacement tenant or surrender of the property.

The primary closing condition for each transfer will be the requirement that the replacement tenant has obtained all required licenses and permits. There can be no assurance that the replacement tenant of a property will timely satisfy this or other conditions which could delay or prevent the closing of one or more transfers. As a result, there can be no assurance that one or more properties will not be surrendered until after March 31, 2020, in which case the Company would receive such properties without the ability to provide active operations to a replacement tenant which could adversely affect the terms of the leases of such properties to replacement tenants.

CLA is required to file a motion by March 1, 2019 with the bankruptcy court (Court) seeking authorization of the sale of certain assets pursuant to the PSA. A condition to the parties’ obligations under the PSA is the Court’s approval of the motion. There can be no assurance that this motion will be approved by the Court or that the Court will not require modifications to the PSA as a condition to its approval.

Additionally, in February 2019, the Company entered into leases of all 21 operating CLA properties with Crème de la Crème (Crème), a premium, national early childhood education operator. These leases are contingent upon the Company delivering possession of the properties and include different financial terms based on whether or not CLA delivers
Operating Data:
For the Year Ended December 31, 2020
ExperientialEducationCorporate/UnallocatedConsolidated
Rental revenue$311,130 $61,046 $0 $372,176 
Other income8,085 13 1,041 9,139 
Mortgage and other financing income32,017 1,329 0 33,346 
Total revenue351,232 62,388 1,041 414,661 
Property operating expense55,500 2,283 804 58,587 
Other expense16,513 0 (39)16,474 
Total investment expenses72,013 2,283 765 75,061 
Net operating income - before unallocated items279,219 60,105 276 339,600 
Reconciliation to Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income:
General and administrative expense(42,596)
Severance expense(2,868)
Costs associated with loan refinancing or payoff(1,632)
Interest expense, net(157,675)
Transaction costs(5,436)
Credit loss expense(30,695)
Impairment charges(85,657)
Depreciation and amortization(170,333)
Equity in loss from joint ventures(4,552)
Impairment charges on joint ventures(3,247)
Gain on sale of real estate50,119 
Income tax expense(16,756)
Net loss(131,728)
Preferred dividend requirements(24,136)
Net loss available to common shareholders of EPR Properties$(155,864)

119

EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018

Crème the assets associated with the in-place operations of the school. The leases have 20-year terms that commence upon Crème beginning operations of the schools. Additionally, Crème and the Company each have early termination rights based on school level economic performance.

There can be no assurance as to the outcome of the contemplated transaction or whether some or all of the properties will be transferred to Crème with in-place operations. If some or all of the schools are not transferred to Crème with in-place operations, there will be a delay in re-opening such schools and a corresponding reduction in near term rents from Crème.

20. Segment Information

The Company groups its investments into four reportable operating segments: Entertainment, Recreation, Education and Other. The financial information summarized below is presented by reportable operating segment:
For the Year Ended December 31, 2019
ExperientialEducationCorporate/UnallocatedConsolidated
Rental revenue$525,085 $67,937 $0 $593,022 
Other income24,818 0 1,102 25,920 
Mortgage and other financing income31,594 1,433 0 33,027 
Total revenue581,497 69,370 1,102 651,969 
Property operating expense56,369 3,481 889 60,739 
Other expense29,222 0 445 29,667 
Total investment expenses85,591 3,481 1,334 90,406 
Net operating income - before unallocated items495,906 65,889 (232)561,563 
Reconciliation to Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income:
General and administrative expense(46,371)
Severance expense(2,364)
Costs associated with loan refinancing or payoff(38,269)
Interest expense, net(142,002)
Transaction costs(23,789)
Impairment charges(2,206)
Depreciation and amortization(158,834)
Equity in loss from joint ventures(381)
Gain on sale of real estate4,174 
Income tax benefit3,035 
Discontinued operations:
Income from discontinued operations before other items37,241 
Impairment on public charter school portfolio sale(21,433)
Gain on sale of real estate from discontinued operations31,879 
Net income202,243 
Preferred dividend requirements(24,136)
Net income available to common shareholders of EPR Properties$178,107 
120
Balance Sheet Data:
  As of December 31, 2018
  EntertainmentRecreationEducationOtherCorporate/UnallocatedConsolidated
Total Assets $2,344,855
$2,187,808
$1,366,278
$207,724
$24,725
$6,131,390
        
  As of December 31, 2017
  EntertainmentRecreationEducationOtherCorporate/UnallocatedConsolidated
Total Assets $2,380,129
$2,102,041
$1,429,992
$199,052
$80,279
$6,191,493


EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018

For the Year Ended December 31, 2018
ExperientialEducationCorporate/UnallocatedConsolidated
Rental revenue$453,721 $55,365 $0 $509,086 
Other income332 0 1,744 2,076 
Mortgage and other financing income117,171 11,588 0 128,759 
Total revenue571,224 66,953 1,744 639,921 
Property operating expense26,168 2,831 655 29,654 
Other expense0 0 443 443 
Total investment expenses26,168 2,831 1,098 30,097 
Net operating income - before unallocated items545,056 64,122 646 609,824 
Reconciliation to Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income:
General and administrative expense(48,889)
Severance expense(5,938)
Litigation settlement expense(2,090)
Costs associated with loan refinancing or payoff(31,958)
Interest expense, net(135,870)
Transaction costs(3,698)
Impairment charges(27,283)
Depreciation and amortization(138,395)
Equity in loss from joint ventures(22)
Gain on sale of real estate3,037 
Gain on sale of investment in a direct financing lease5,514 
Income tax expense(2,285)
Discontinued operations:
Income from discontinued operations before other items45,036 
Net income266,983 
Preferred dividend requirements(24,142)
Net income available to common shareholders of EPR Properties$242,841 

20. Supplemental Guarantor Financial Information

As of December 31, 2020, the Company had outstanding $2.4 billion in aggregate principal amount of unsecured senior notes (excluding the Company's private placement notes), which were registered under the Securities Act of 1933, as amended (the Registered Notes). All of the Registered Notes were issued by the Company and are guaranteed on a joint and several basis by all of the Company's domestic subsidiaries that guarantee the Company's indebtedness under its combined unsecured revolving credit facility and term loan facility and private placement notes (the Guarantor Subsidiaries). See Note 8 for additional information regarding the terms of the Registered Notes. The Company owns, directly or indirectly, 100% of the Guarantor Subsidiaries. The guarantees are senior unsecured obligations of each Guarantor Subsidiary, have equal rank with all existing and future senior debt of each such Guarantor Subsidiary, and are senior to all subordinated debt of such Guarantor Subsidiary. The guarantees are effectively subordinated to any secured debt of each such Guarantor Subsidiary to the extent of the assets securing such debt. Each guarantee is limited so that it does not constitute a fraudulent conveyance under applicable law, which may reduce the Guarantor Subsidiaries' obligations under the guarantees. The guarantees are subject to customary release provisions, including a release upon a sale or other disposition of all the capital stock or all or substantially all of the assets of a Guarantor Subsidiary, the designation of a Guarantor Subsidiary as an unrestricted subsidiary in accordance with the applicable indenture governing the Registered Notes or the release of a Guarantor Subsidiary's guarantee under the Company's combined unsecured revolving credit facility and term loan facility (or replacement thereof), private placement notes and the other then outstanding Registered Notes.

121
Operating Data:       
  For the Year Ended December 31, 2018
  EntertainmentRecreationEducationOtherCorporate/UnallocatedConsolidated
Rental revenue $301,782
$142,822
$102,642
$9,117
$—
$556,363
Other income 270
62
—
—
1,744
2,076
Mortgage and other financing income 7,971
109,200
25,121
—
—
142,292
Total revenue 310,023
252,084
127,763
9,117
1,744
700,731
        
Property operating expense 24,141
126
3,933
1,901
655
30,756
Other expense —
—
—
—
443
443
Total investment expenses 24,141
126
3,933
1,901
1,098
31,199
Net operating income - before unallocated items 285,882
251,958
123,830
7,216
646
669,532
        
Reconciliation to Consolidated Statements of Income:    
General and administrative expense    (48,889)
Severance expense   (5,938)
Litigation settlement expense   (2,090)
Costs associated with loan refinancing or payoff   (31,958)
Interest expense, net      (135,507)
Transaction costs      (3,698)
Impairment charges      (27,283)
Depreciation and amortization   (153,430)
Equity in loss from joint ventures    (22)
Gain on sale of real estate   3,037
Gain on sale of investment in a direct financing lease   5,514
Income tax expense   (2,285)
Net income   266,983
Preferred dividend requirements  (24,142)
Net income available to common shareholders of EPR Properties$242,841



EPR PROPERTIES
Notes to Consolidated Financial Statements
December 31, 2018, 20172020, 2019 and 20162018

The following tables present summarized financial information for the Company and Guarantor Subsidiaries on a combined basis after transactions and balances within the combined entities have been eliminated and excludes investments in and equity earnings in the Company's subsidiaries that do not guarantee the Registered Notes (the Non-Guarantor Subsidiaries).

  For the Year Ended December 31, 2017
  EntertainmentRecreationEducationOtherCorporate/UnallocatedConsolidated
Rental revenue $283,247
$112,763
$79,031
$9,162
$—
$484,203
Other income 614
—
1
—
2,480
3,095
Mortgage and other financing income 4,407
48,740
35,546
—
—
88,693
Total revenue 288,268
161,503
114,578
9,162
2,480
575,991
        
Property operating expense 23,175
117
6,314
1,407
640
31,653
Other expense —
—
—
—
242
242
Total investment expenses 23,175
117
6,314
1,407
882
31,895
Net operating income - before unallocated items 265,093
161,386
108,264
7,755
1,598
544,096
        
Reconciliation to Consolidated Statements of Income:    
General and administrative expense    (43,383)
Costs associated with loan refinancing or payoff (1,549)
Gain on early extinguishment of debt 977
Interest expense, net      (133,124)
Transaction costs      (523)
Impairment charges      (10,195)
Depreciation and amortization    (132,946)
Equity in income from joint ventures   72
Gain on sale of real estate   41,942
Income tax expense   (2,399)
Net income   262,968
Preferred dividend requirements  (24,293)
Preferred share redemption costs    (4,457)
Net income available to common shareholders of EPR Properties$234,218
Summarized Financial Information:



Summarized Balance Sheet
As of December 31, 2020
(Dollars in thousands)
Real estate investments, net of accumulated depreciation of $979,269$4,666,835 
Total assets6,488,007 
Total liabilities4,038,101 
EPR PROPERTIES
NotesExcluded from total assets in the table above is $173.7 million of intercompany notes receivable due to Consolidated Financial Statements
the Company and the Guarantor Subsidiaries from the Non-Guarantor Subsidiaries as of December 31, 2018, 20172020.

Summarized Statement of Loss
Year Ended December 31, 2020
(Dollars in thousands)
Total revenue$382,799 
Loss from continuing operations(93,257)
Net loss(93,257)
Net loss available to common shareholders of EPR Properties(117,393)

Excluded from total revenue in the table above is $2.9 million in intercompany fee income and 2016$9.3 million in intercompany interest income due to the Company and the Guarantor Subsidiaries from the Non-Guarantor Subsidiaries for the year ended December 31, 2020.
122

  For the Year Ended December 31, 2016
  EntertainmentRecreationEducationOtherCorporate/UnallocatedConsolidated
Rental revenue $266,247
$62,527
$77,775
$8,635
$—
$415,184
Other income 249
4,482
1,648
—
2,660
9,039
Mortgage and other financing income 6,187
30,190
32,539
103
—
69,019
Total revenue 272,683
97,199
111,962
8,738
2,660
493,242
        
Property operating expense 21,303
8
—
662
629
22,602
Other expense —
—
—
5
—
5
Total investment expenses 21,303
8
—
667
629
22,607
Net operating income - before unallocated items 251,380
97,191
111,962
8,071
2,031
470,635
        
Reconciliation to Consolidated Statements of Income:    
General and administrative expense    (37,543)
Costs associated with loan refinancing or payoff (905)
Interest expense, net      (97,144)
Transaction costs      (7,869)
Depreciation and amortization    (107,573)
Equity in income from joint ventures    619
Gain on sale of real estate    5,315
Income tax expense   (553)
Net income   224,982
Preferred dividend requirements    (23,806)
Net income available to common shareholders of EPR Properties  $201,176



EPR Properties
Schedule II - Valuation and Qualifying Accounts
December 31, 20182020
(Dollars in thousands)
Description
Balance at
December 31, 2017
 
Additions
During 2018
 
Deductions
During 2018
 
Balance at
December 31, 2018
DescriptionBalance at
December 31, 2019		Additions
During 2020		Deductions
During 2020		Balance at
December 31, 2020
Reserve for Doubtful Accounts$7,485,000
 $2,851,000
 $(7,437,000) $2,899,000
Reserve for Doubtful Accounts$407 $0 $(344)$63 
Allowance for Loan Losses—
 —
 —
 —
Allowance for Credit LossesAllowance for Credit Losses0 32,858 0 32,858 
See accompanying report of independent registered public accounting firm.

EPR Properties
EPR Properties
Schedule II - Valuation and Qualifying Accounts
December 31, 20172019
(Dollars in thousands)
Description
Balance at
December 31, 2016
 
Additions
During 2017
 
Deductions
During 2017
 
Balance at
December 31, 2017
DescriptionBalance at
December 31, 2018		Additions
During 2019		Deductions
During 2019		Balance at
December 31, 2019
Reserve for Doubtful Accounts$871,000
 $7,256,000
 $(642,000) $7,485,000
Reserve for Doubtful Accounts$2,899 $633 $(3,125)$407 
Allowance for Loan Losses—
 —
 —
 —
Allowance for Credit LossesAllowance for Credit Losses0 0 0 0 
See accompanying report of independent registered public accounting firm.

EPR Properties
EPR Properties
Schedule II - Valuation and Qualifying Accounts
December 31, 20162018
(Dollars in thousands)
Description
Balance at
December 31, 2015
 
Additions
During 2016
 
Deductions
During 2016
 
Balance at
December 31, 2016
DescriptionBalance at
December 31, 2017		Additions
During 2018		Deductions
During 2018		Balance at
December 31, 2018
Reserve for Doubtful Accounts$3,210,000
 $—
 $(2,339,000) $871,000
Reserve for Doubtful Accounts$7,485 $2,851 $(7,437)$2,899 
Allowance for Loan Losses—
 —
 —
 —
Allowance for Credit LossesAllowance for Credit Losses0 0 0 0 
See accompanying report of independent registered public accounting firm.



123
EPR Properties
 Schedule III - Real Estate and Accumulated Depreciation
December 31, 2018
(Dollars in thousands)
    Initial cost Additions (Dispositions) (Impairments) Subsequent to acquisition Gross Amount at December 31, 2018      
Location Debt Land 
Buildings,
Equipment, Leasehold Interests &
Improvements
 Land 
Buildings,
Equipment, Leasehold Interests &
Improvements
 Total 
Accumulated
depreciation
 
Date
acquired
 
Depreciation
life
Megaplex Theatres                    
Omaha, NE —
 5,215
 16,700
 59
 5,215
 16,759
 21,974
 (8,798) 11/97 40 years
Sugar Land, TX —
 —
 19,100
 67
 —
 19,167
 19,167
 (10,063) 11/97 40 years
San Antonio, TX —
 3,006
 13,662
 8,455
 3,006
 22,117
 25,123
 (8,414) 11/97 40 years
Columbus, OH —
 —
 12,685
 —
 —
 12,685
 12,685
 (6,501) 11/97 40 years
San Diego, CA —
 —
 16,028
 —
 —
 16,028
 16,028
 (8,215) 11/97 40 years
Ontario, CA —
 5,521
 19,449
 7,130
 5,521
 26,579
 32,100
 (10,370) 11/97 40 years
Houston, TX —
 6,023
 20,037
 —
 6,023
 20,037
 26,060
 (10,269) 11/97 40 years
Creve Coeur, MO —
 4,985
 12,601
 4,075
 4,985
 16,676
 21,661
 (7,355) 11/97 40 years
Leawood, KS —
 3,714
 12,086
 4,110
 3,714
 16,196
 19,910
 (6,791) 11/97 40 years
Houston, TX —
 4,304
 21,496
 76
 4,304
 21,572
 25,876
 (11,280) 02/98 40 years
South Barrington, IL —
 6,577
 27,723
 4,618
 6,577
 32,341
 38,918
 (14,984) 03/98 40 years
Mesquite, TX —
 2,912
 20,288
 4,885
 2,912
 25,173
 28,085
 (11,414) 04/98 40 years
Hampton, VA —
 3,822
 24,678
 4,510
 3,822
 29,188
 33,010
 (13,221) 06/98 40 years
Pompano Beach, FL —
 6,771
 9,899
 3,845
 6,771
 13,744
 20,515
 (8,733) 08/98 24 years
Raleigh, NC —
 2,919
 5,559
 3,492
 2,919
 9,051
 11,970
 (3,380) 08/98 40 years
Davie, FL —
 2,000
 13,000
 11,512
 2,000
 24,512
 26,512
 (10,808) 11/98 40 years
Aliso Viejo, CA —
 8,000
 14,000
 —
 8,000
 14,000
 22,000
 (7,000) 12/98 40 years
Boise, ID —
 —
 16,003
 —
 —
 16,003
 16,003
 (8,002) 12/98 40 years
Woodridge, IL —
 9,926
 8,968
 —
 9,926
 8,968
 18,894
 (8,968) 06/99 18 years
Cary, NC —
 3,352
 11,653
 3,091
 3,352
 14,744
 18,096
 (5,844) 12/99 40 years
Tampa, FL —
 6,000
 12,809
 1,452
 6,000
 14,261
 20,261
 (7,403) 06/99 40 years
Metairie, LA —
 —
 11,740
 3,049
 —
 14,789
 14,789
 (5,036) 03/02 40 years
Harahan, LA —
 5,264
 14,820
 —
 5,264
 14,820
 20,084
 (6,237) 03/02 40 years
Hammond, LA —
 2,404
 6,780
 1,607
 1,839
 8,952
 10,791
 (2,909) 03/02 40 years
Houma, LA —
 2,404
 6,780
 —
 2,404
 6,780
 9,184
 (2,853) 03/02 40 years
Harvey, LA —
 4,378
 12,330
 3,735
 4,266
 16,177
 20,443
 (5,309) 03/02 40 years
Greenville, SC —
 1,660
 7,570
 247
 1,660
 7,817
 9,477
 (3,195) 06/02 40 years
Sterling Heights, MI —
 5,975
 17,956
 3,400
 5,975
 21,356
 27,331
 (10,622) 06/02 40 years
Olathe, KS —
 4,000
 15,935
 2,558
 3,042
 19,451
 22,493
 (7,894) 06/02 40 years
Livonia, MI —
 4,500
 17,525
 —
 4,500
 17,525
 22,025
 (7,193) 08/02 40 years
Alexandria, VA —
 —
 22,035
 —
 —
 22,035
 22,035
 (8,952) 10/02 40 years
Little Rock, AR —
 3,858
 7,990
 —
 3,858
 7,990
 11,848
 (3,213) 12/02 40 years
Macon, GA —
 1,982
 5,056
 —
 1,982
 5,056
 7,038
 (1,991) 03/03 40 years
Lawrence, KS —
 1,500
 3,526
 2,017
 1,500
 5,543
 7,043
 (1,544) 06/03 40 years
Columbia, SC —
 1,000
 10,534
 339
 1,000
 10,873
 11,873
 (3,153) 11/03 40 years
Hialeah, FL —
 7,985
 —
 —
 7,985
 —
 7,985
 —
 12/03 n/a
Phoenix, AZ —
 4,276
 15,934
 3,518
 4,276
 19,452
 23,728
 (6,114) 03/04 40 years
Hamilton, NJ —
 4,869
 18,143
 —
 4,869
 18,143
 23,012
 (6,690) 03/04 40 years
Mesa, AZ —
 4,446
 16,565
 3,263
 4,446
 19,828
 24,274
 (6,375) 03/04 40 years
Peoria, IL —
 2,948
 11,177
 —
 2,948
 11,177
 14,125
 (4,028) 07/04 40 years
Lafayette, LA —
 —
 10,318
 —
 —
 10,318
 10,318
 (3,735) 07/04 40 years
Hurst, TX —
 5,000
 11,729
 1,015
 5,000
 12,744
 17,744
 (4,500) 11/04 40 years
Melbourne, FL —
 3,817
 8,830
 320
 3,817
 9,150
 12,967
 (3,203) 12/04 40 years
D'Iberville, MS —
 2,001
 8,043
 3,612
 808
 12,848
 13,656
 (3,723) 12/04 40 years



EPR Properties
Schedule III - Real Estate and Accumulated Depreciation
December 31, 2020
(Dollars in thousands)
  Initial costAdditions (Dispositions) (Impairments) Subsequent to acquisitionGross Amount at December 31, 2020   
LocationDebtLandBuildings,
Equipment, Leasehold Interests &
Improvements		LandBuildings,
Equipment, Leasehold Interests &
Improvements		TotalAccumulated
depreciation		Date
acquired		Depreciation
life
Theatres
Omaha, NE$0 $5,215 $16,700 $(17,967)$1,705 $2,243 $3,948 $0 11/9740 years
Sugar Land, TX0 0 19,100 4,152 0 23,252 23,252 (11,301)11/9740 years
San Antonio, TX0 3,006 13,662 8,455 3,006 22,117 25,123 (9,905)11/9740 years
Columbus, OH0 0 12,685 573 0 13,258 13,258 (7,144)11/9740 years
San Diego, CA0 0 16,028 0 0 16,028 16,028 (9,016)11/9740 years
Ontario, CA0 5,521 19,449 7,130 5,521 26,579 32,100 (12,033)11/9740 years
Houston, TX0 6,023 20,037 0 6,023 20,037 26,060 (11,271)11/9740 years
Creve Coeur, MO0 4,985 12,601 (10,818)1,736 5,033 6,769 0 11/9733 years
Leawood, KS0 3,714 12,086 4,110 3,714 16,196 19,910 (7,602)11/9740 years
Dallas, TX0 3,060 15,281 (7,890)1,765 8,686 10,451 0 11/9740 years
Houston, TX0 4,304 21,496 76 4,304 21,572 25,876 (12,359)02/9840 years
South Barrington, IL0 6,577 27,723 4,618 6,577 32,341 38,918 (16,755)03/9840 years
Mesquite, TX0 2,912 20,288 4,885 2,912 25,173 28,085 (12,838)04/9840 years
Hampton, VA0 3,822 24,678 4,510 3,822 29,188 33,010 (14,855)06/9840 years
Pompano Beach, FL0 6,771 9,899 10,984 6,771 20,883 27,654 (13,689)08/9824 years
Raleigh, NC0 2,919 5,559 3,492 2,919 9,051 11,970 (3,956)08/9840 years
Davie, FL0 2,000 13,000 11,512 2,000 24,512 26,512 (12,167)11/9840 years
Aliso Viejo, CA0 8,000 14,000 0 8,000 14,000 22,000 (7,700)12/9840 years
Boise, ID0 0 16,003 400 0 16,403 16,403 (8,806)12/9840 years
Cary, NC0 3,352 11,653 3,091 3,352 14,744 18,096 (6,690)12/9940 years
Tampa, FL0 6,000 12,809 1,452 6,000 14,261 20,261 (8,204)06/9940 years
Metairie, LA0 0 11,740 3,049 0 14,789 14,789 (5,877)03/0240 years
Harahan, LA0 5,264 14,820 0 5,264 14,820 20,084 (6,978)03/0240 years
Hammond, LA0 2,404 6,780 1,607 1,839 8,952 10,791 (3,369)03/0240 years
Houma, LA0 2,404 6,780 0 2,404 6,780 9,184 (3,192)03/0240 years
Harvey, LA0 4,378 12,330 3,735 4,266 16,177 20,443 (6,246)03/0240 years
Greenville, SC0 1,660 7,570 473 1,660 8,043 9,703 (3,610)06/0240 years
Sterling Heights, MI0 5,975 17,956 3,400 5,975 21,356 27,331 (11,705)06/0240 years
Olathe, KS0 4,000 15,935 2,558 3,042 19,451 22,493 (9,133)06/0240 years
Livonia, MI0 4,500 17,525 0 4,500 17,525 22,025 (8,069)08/0240 years
Alexandria, VA0 0 22,035 0 0 22,035 22,035 (10,053)10/0240 years
Little Rock, AR0 3,858 7,990 0 3,858 7,990 11,848 (3,612)12/0240 years
Macon, GA0 1,982 5,056 0 1,982 5,056 7,038 (2,244)03/0340 years
Southfield, MI0 8,000 20,518 4,092 5,794 26,816 32,610 (26,817)05/0315 years
Lawrence, KS0 1,500 3,526 2,017 1,500 5,543 7,043 (1,871)06/0340 years
Columbia, SC0 1,000 10,534 339 1,000 10,873 11,873 (3,776)11/0340 years
Hialeah, FL0 7,985 0 0 7,985 0 7,985 0 12/03n/a
Phoenix, AZ0 4,276 15,934 3,518 4,276 19,452 23,728 (7,170)03/0440 years
Hamilton, NJ0 4,869 18,143 93 4,869 18,236 23,105 (7,597)03/0440 years
Mesa, AZ0 4,446 16,565 3,263 4,446 19,828 24,274 (7,441)03/0440 years
Peoria, IL0 2,948 11,177 0 2,948 11,177 14,125 (4,587)07/0440 years
Lafayette, LA0 0 10,318 0 0 10,318 10,318 (4,251)07/0440 years
Hurst, TX0 5,000 11,729 1,015 5,000 12,744 17,744 (5,138)11/0440 years
124

EPR Properties
 Schedule III - Real Estate and Accumulated Depreciation
December 31, 2018
(Dollars in thousands)
    Initial cost Additions (Dispositions) (Impairments) Subsequent to acquisition Gross Amount at December 31, 2018      
Location Debt Land 
Buildings,
Equipment, Leasehold Interests &
Improvements
 Land 
Buildings,
Equipment, Leasehold Interests &
Improvements
 Total 
Accumulated
depreciation
 
Date
acquired
 
Depreciation
life
Wilmington, NC —
 1,650
 7,047
 3,033
 1,650
 10,080
 11,730
 (2,599) 02/05 40 years
Chattanooga, TN —
 2,799
 11,467
 —
 2,799
 11,467
 14,266
 (3,966) 03/05 40 years
Conroe, TX —
 1,836
 8,230
 —
 1,836
 8,230
 10,066
 (2,777) 06/05 40 years
Indianapolis, IN —
 1,481
 4,565
 2,375
 1,481
 6,940
 8,421
 (1,714) 06/05 40 years
Hattiesburg, MS —
 1,978
 7,733
 4,720
 1,978
 12,453
 14,431
 (3,438) 09/05 40 years
Arroyo Grande, CA —
 2,641
 3,810
 —
 2,641
 3,810
 6,451
 (1,246) 12/05 40 years
Auburn, CA —
 2,178
 6,185
 (65) 2,113
 6,185
 8,298
 (2,023) 12/05 40 years
Fresno, CA —
 7,600
 11,613
 2,894
 7,600
 14,507
 22,107
 (4,816) 12/05 40 years
Modesto, CA —
 2,542
 3,910
 1,889
 2,542
 5,799
 8,341
 (1,399) 12/05 40 years
Columbia, MD —
 —
 12,204
 —
 —
 12,204
 12,204
 (3,890) 03/06 40 years
Garland, TX —
 8,028
 14,825
 —
 8,028
 14,825
 22,853
 (4,725) 03/06 40 years
Garner, NC —
 1,305
 6,899
 —
 1,305
 6,899
 8,204
 (2,185) 04/06 40 years
Winston Salem, NC —
 —
 12,153
 4,188
 —
 16,341
 16,341
 (4,535) 07/06 40 years
Huntsville, AL —
 3,508
 14,802
 —
 3,508
 14,802
 18,310
 (4,564) 08/06 40 years
Kalamazoo, MI —
 5,125
 12,216
 5,950
 5,125
 18,166
 23,291
 (9,704) 11/06 17 years
Pensacola, FL —
 5,316
 15,099
 —
 5,316
 15,099
 20,415
 (4,530) 12/06 40 years
Slidell, LA 10,635
 —
 11,499
 —
 —
 11,499
 11,499
 (3,450) 12/06 40 years
Panama City Beach, FL —
 6,486
 11,156
 —
 6,486
 11,156
 17,642
 (3,231) 05/07 40 years
Kalispell, MT —
 2,505
 7,323
 —
 2,505
 7,323
 9,828
 (2,075) 08/07 40 years
Greensboro, NC —
 —
 12,606
 914
 —
 13,520
 13,520
 (4,246) 11/07 40 years
Glendora, CA —
 —
 10,588
 —
 —
 10,588
 10,588
 (2,691) 10/08 40 years
Ypsilanti, MI —
 4,716
 227
 2,817
 4,716
 3,044
 7,760
 (147) 12/09 40 years
Manchester, CT —
 3,628
 11,474
 —
 3,628
 11,474
 15,102
 (2,582) 12/09 40 years
Centreville, VA —
 3,628
 1,769
 —
 3,628
 1,769
 5,397
 (398) 12/09 40 years
Davenport, IA —
 3,599
 6,068
 2,265
 3,564
 8,368
 11,932
 (1,445) 12/09 40 years
Fairfax, VA —
 2,630
 11,791
 2,000
 2,630
 13,791
 16,421
 (2,723) 12/09 40 years
Flint, MI —
 1,270
 1,723
 —
 1,270
 1,723
 2,993
 (388) 12/09 40 years
Hazlet, NJ —
 3,719
 4,716
 —
 3,719
 4,716
 8,435
 (1,061) 12/09 40 years
Huber Heights, OH —
 970
 3,891
 —
 970
 3,891
 4,861
 (875) 12/09 40 years
North Haven, CT —
 5,442
 1,061
 2,000
 3,458
 5,045
 8,503
 (1,364) 12/09 40 years
Okolona, KY —
 5,379
 3,311
 —
 5,379
 3,311
 8,690
 (745) 12/09 40 years
Voorhees, NJ —
 1,723
 9,614
 —
 1,723
 9,614
 11,337
 (2,163) 12/09 40 years
Louisville, KY —
 4,979
 6,567
 —
 4,979
 6,567
 11,546
 (1,478) 12/09 40 years
Beaver Creek, OH —
 1,578
 6,630
 1,700
 1,578
 8,330
 9,908
 (1,501) 12/09 40 years
West Springfield, MA —
 2,540
 3,755
 —
 2,540
 3,755
 6,295
 (845) 12/09 40 years
Cincinnati, OH —
 1,361
 1,741
 —
 635
 2,467
 3,102
 (456) 12/09 40 years
Pasadena, TX —
 2,951
 10,684
 1,759
 2,951
 12,443
 15,394
 (2,279) 06/10 40 years
Plano, TX —
 1,052
 1,968
 —
 1,052
 1,968
 3,020
 (418) 06/10 40 years
McKinney, TX —
 1,917
 3,319
 —
 1,917
 3,319
 5,236
 (705) 06/10 40 years
Mishawaka, IN —
 2,399
 5,454
 1,383
 2,399
 6,837
 9,236
 (1,267) 06/10 40 years
Grand Prairie, TX —
 1,873
 3,245
 2,104
 1,873
 5,349
 7,222
 (905) 06/10 40 years
Redding, CA —
 2,044
 4,500
 1,177
 2,044
 5,677
 7,721
 (956) 06/10 40 years
Pueblo, CO —
 2,238
 5,162
 1,265
 2,238
 6,427
 8,665
 (1,100) 06/10 40 years
Beaumont, TX —
 1,065
 11,669
 1,644
 1,065
 13,313
 14,378
 (2,546) 06/10 40 years
Pflugerville, TX —
 4,356
 11,533
 2,056
 4,356
 13,589
 17,945
 (2,524) 06/10 40 years

  Initial costAdditions (Dispositions) (Impairments) Subsequent to acquisitionGross Amount at December 31, 2020   
LocationDebtLandBuildings,
Equipment, Leasehold Interests &
Improvements		LandBuildings,
Equipment, Leasehold Interests &
Improvements		TotalAccumulated
depreciation		Date
acquired		Depreciation
life
Melbourne, FL0 3,817 8,830 320 3,817 9,150 12,967 (3,660)12/0440 years
D'Iberville, MS0 2,001 8,043 3,612 808 12,848 13,656 (4,418)12/0440 years
Wilmington, NC0 1,650 7,047 3,033 1,650 10,080 11,730 (3,172)02/0540 years
Chattanooga, TN0 2,799 11,467 0 2,799 11,467 14,266 (4,539)03/0540 years
Conroe, TX0 1,836 8,230 2,304 1,836 10,534 12,370 (3,314)06/0540 years
Indianapolis, IN0 1,481 4,565 2,375 1,481 6,940 8,421 (2,109)06/0540 years
Hattiesburg, MS0 1,978 7,733 4,720 1,978 12,453 14,431 (4,107)09/0540 years
Arroyo Grande, CA0 2,641 3,810 0 2,641 3,810 6,451 (1,437)12/0540 years
Auburn, CA0 2,178 6,185 (65)2,113 6,185 8,298 (2,332)12/0540 years
Fresno, CA0 7,600 11,613 2,894 7,600 14,507 22,107 (6,113)12/0540 years
Modesto, CA0 2,542 3,910 1,889 2,542 5,799 8,341 (1,726)12/0540 years
Columbia, MD0 0 12,204 0 0 12,204 12,204 (4,500)03/0640 years
Garland, TX0 8,028 14,825 0 8,028 14,825 22,853 (5,467)03/0640 years
Garner, NC0 1,305 6,899 0 1,305 6,899 8,204 (2,530)04/0640 years
Winston Salem, NC0 0 12,153 4,188 0 16,341 16,341 (5,393)07/0640 years
Huntsville, AL0 3,508 14,802 0 3,508 14,802 18,310 (5,304)08/0640 years
Kalamazoo, MI0 5,125 12,216 (15,931)370 1,040 1,410 0 11/0617 years
Pensacola, FL0 5,316 15,099 0 5,316 15,099 20,415 (5,285)12/0640 years
Slidell, LA10,635 0 11,499 0 0 11,499 11,499 (4,025)12/0640 years
Panama City Beach, FL0 6,486 11,156 2,704 6,486 13,860 20,346 (3,918)05/0740 years
Kalispell, MT0 2,505 7,323 0 2,505 7,323 9,828 (2,441)08/0740 years
Greensboro, NC0 0 12,606 914 0 13,520 13,520 (6,270)11/0740 years
Glendora, CA0 0 10,588 0 0 10,588 10,588 (3,220)10/0840 years
Ypsilanti, MI0 4,716 227 2,817 4,716 3,044 7,760 (345)12/0940 years
Manchester, CT0 3,628 11,474 2,315 3,628 13,789 17,417 (3,299)12/0940 years
Centreville, VA0 3,628 1,769 0 3,628 1,769 5,397 (486)12/0940 years
Davenport, IA0 3,599 6,068 2,265 3,564 8,368 11,932 (1,897)12/0940 years
Fairfax, VA0 2,630 11,791 2,000 2,630 13,791 16,421 (3,441)12/0940 years
Flint, MI0 1,270 1,723 0 1,270 1,723 2,993 (474)12/0940 years
Hazlet, NJ0 3,719 4,716 0 3,719 4,716 8,435 (1,297)12/0940 years
Huber Heights, OH0 970 3,891 0 970 3,891 4,861 (1,070)12/0940 years
North Haven, CT0 5,442 1,061 2,000 3,458 5,045 8,503 (1,565)12/0940 years
Okolona, KY0 5,379 3,311 2,000 5,379 5,311 10,690 (1,034)12/0940 years
Voorhees, NJ0 1,723 9,614 0 1,723 9,614 11,337 (2,644)12/0940 years
Louisville, KY0 4,979 6,567 (1,046)3,933 6,567 10,500 (1,806)12/0940 years
Beaver Creek, OH0 1,578 6,630 1,700 1,578 8,330 9,908 (1,941)12/0940 years
West Springfield, MA0 2,540 3,755 2,650 2,540 6,405 8,945 (1,197)12/0940 years
Cincinnati, OH0 1,361 1,741 0 635 2,467 3,102 (586)12/0940 years
Pasadena, TX0 2,951 10,684 1,759 2,951 12,443 15,394 (2,922)06/1040 years
Plano, TX0 1,052 1,968 0 1,052 1,968 3,020 (517)06/1040 years
McKinney, TX0 1,917 3,319 0 1,917 3,319 5,236 (871)06/1040 years
Mishawaka, IN0 2,399 5,454 1,383 2,399 6,837 9,236 (1,621)06/1040 years
Grand Prairie, TX0 1,873 3,245 2,104 1,873 5,349 7,222 (1,187)06/1040 years
Redding, CA0 2,044 4,500 1,177 2,044 5,677 7,721 (1,256)06/1040 years
Pueblo, CO0 2,238 5,162 1,265 2,238 6,427 8,665 (1,438)06/1040 years
Beaumont, TX0 1,065 11,669 1,644 1,065 13,313 14,378 (3,230)06/1040 years
Pflugerville, TX0 4,356 11,533 2,056 4,356 13,589 17,945 (3,227)06/1040 years
Houston, TX0 4,109 9,739 2,617 4,109 12,356 16,465 (2,683)06/1040 years
El Paso, TX0 4,598 13,207 2,296 4,598 15,503 20,101 (3,652)06/1040 years
Colorado Springs, CO0 4,134 11,220 1,427 2,938 13,843 16,781 (3,218)06/1040 years
Hooksett, NH0 2,639 11,605 1,254 2,639 12,859 15,498 (2,925)03/1140 years
125

EPR Properties
 Schedule III - Real Estate and Accumulated Depreciation
December 31, 2018
(Dollars in thousands)
    Initial cost Additions (Dispositions) (Impairments) Subsequent to acquisition Gross Amount at December 31, 2018      
Location Debt Land 
Buildings,
Equipment, Leasehold Interests &
Improvements
 Land 
Buildings,
Equipment, Leasehold Interests &
Improvements
 Total 
Accumulated
depreciation
 
Date
acquired
 
Depreciation
life
Houston, TX —
 4,109
 9,739
 —
 4,109
 9,739
 13,848
 (2,070) 06/10 40 years
El Paso, TX —
 4,598
 13,207
 2,296
 4,598
 15,503
 20,101
 (2,848) 06/10 40 years
Colorado Springs, CO —
 4,134
 11,220
 1,427
 2,938
 13,843
 16,781
 (2,497) 06/10 40 years
Virginia Beach, VA —
 —
 1,736
 —
 —
 1,736
 1,736
 (1,736) 12/10 40 years
Hooksett, NH —
 2,639
 11,605
 —
 2,639
 11,605
 14,244
 (2,273) 03/11 40 years
Saco, ME —
 1,508
 3,826
 —
 1,508
 3,826
 5,334
 (749) 03/11 40 years
Merrimack, NH —
 3,160
 5,642
 —
 3,160
 5,642
 8,802
 (1,105) 03/11 40 years
Westbrook, ME —
 2,273
 7,119
 —
 2,273
 7,119
 9,392
 (1,394) 03/11 40 years
Twin Falls, ID —
 —
 4,783
 —
 —
 4,783
 4,783
 (787) 04/11 40 years
Dallas, TX —
 —
 12,146
 750
 —
 12,896
 12,896
 (2,097) 03/12 40 years
Albuquerque, NM —
 —
 13,733
 —
 —
 13,733
 13,733
 (1,745) 06/12 40 years
Southern Pines, NC —
 1,709
 4,747
 12
 1,709
 4,759
 6,468
 (772) 06/12 40 years
Austin, TX —
 2,608
 6,373
 —
 2,608
 6,373
 8,981
 (863) 09/12 40 years
Champaign, IL —
 —
 9,381
 125
 —
 9,506
 9,506
 (1,208) 09/12 40 years
Gainesville, VA —
 —
 10,846
 —
 —
 10,846
 10,846
 (1,378) 02/13 40 years
Lafayette, LA 14,360
 —
 12,728
 —
 —
 12,728
 12,728
 (1,671) 08/13 40 years
New Iberia, LA —
 —
 1,630
 —
 —
 1,630
 1,630
 (214) 08/13 40 years
Tuscaloosa, AL —
 —
 11,287
 —
 1,815
 9,472
 11,287
 (1,243) 09/13 40 years
Tampa, FL —
 1,700
 23,483
 3,769
 1,700
 27,252
 28,952
 (4,463) 10/13 40 years
Warrenville, IL —
 14,000
 17,318
 4,816
 14,000
 22,134
 36,134
 (3,731) 10/13 40 years
San Francisco, CA —
 2,077
 12,914
 —
 2,077
 12,914
 14,991
 (969) 08/13 40 years
Opelika, AL —
 1,314
 8,951
 —
 1,314
 8,951
 10,265
 (1,007) 11/12 40 years
Bedford, IN —
 349
 1,594
 —
 349
 1,594
 1,943
 (213) 04/14 40 years
Seymour, IN —
 1,028
 2,291
 —
 1,028
 2,291
 3,319
 (287) 04/14 40 years
Wilder, KY —
 983
 11,233
 2,004
 983
 13,237
 14,220
 (1,490) 04/14 40 years
Bowling Green, KY —
 1,241
 10,222
 —
 1,241
 10,222
 11,463
 (1,270) 04/14 40 years
New Albany, IN —
 2,461
 14,807
 —
 2,461
 14,807
 17,268
 (1,803) 04/14 40 years
Clarksville, TN —
 3,764
 16,769
 4,706
 3,764
 21,475
 25,239
 (2,125) 04/14 40 years
Williamsport, PA —
 2,243
 6,684
 —
 2,243
 6,684
 8,927
 (857) 04/14 40 years
Noblesville, IN —
 886
 7,453
 2,019
 886
 9,472
 10,358
 (1,000) 04/14 40 years
Moline, IL —
 1,963
 10,183
 —
 1,963
 10,183
 12,146
 (1,255) 04/14 40 years
O'Fallon, MO —
 1,046
 7,342
 —
 1,046
 7,342
 8,388
 (899) 04/14 40 years
McDonough, GA —
 2,235
 16,842
 —
 2,235
 16,842
 19,077
 (2,068) 04/14 40 years
Sterling Heights, MI —
 10,849
 —
 258
 10,919
 188
 11,107
 (1) 12/14 15 years
Virginia Beach, VA —
 2,544
 6,478
 —
 2,544
 6,478
 9,022
 (621) 02/15 40 years
Yulee, FL —
 1,036
 6,934
 —
 1,036
 6,934
 7,970
 (664) 02/15 40 years
Jacksonville, FL —
 5,080
 22,064
 —
 5,080
 22,064
 27,144
 (3,153) 05/15 25 years
Denham Springs, LA —
 —
 5,093
 4,162
 —
 9,255
 9,255
 (518) 05/15 40 years
Crystal Lake, IL —
 2,980
 13,521
 568
 2,980
 14,089
 17,069
 (1,972) 07/15 25 years
Laredo, TX —
 1,353
 7,886
 —
 1,353
 7,886
 9,239
 (591) 12/15 40 years
Corpus, Christi, TX —
 1,286
 8,252
 —
 1,286
 8,252
 9,538
 (395) 12/15 40 years
Delmont, PA —
 673
 621
 —
 673
 621
 1,294
 (74) 06/16 25 years
Kennewick, WA —
 2,484
 4,901
 —
 2,484
 4,901
 7,385
 (550) 06/16 25 years
Franklin, TN —
 10,158
 17,549
 9,018
 10,158
 26,567
 36,725
 (2,359) 06/16 25 years
Mobile, AL —
 2,116
 16,657
 —
 2,116
 16,657
 18,773
 (1,770) 06/16 25 years

  Initial costAdditions (Dispositions) (Impairments) Subsequent to acquisitionGross Amount at December 31, 2020   
LocationDebtLandBuildings,
Equipment, Leasehold Interests &
Improvements		LandBuildings,
Equipment, Leasehold Interests &
Improvements		TotalAccumulated
depreciation		Date
acquired		Depreciation
life
Saco, ME0 1,508 3,826 1,124 1,508 4,950 6,458 (1,005)03/1140 years
Merrimack, NH0 3,160 5,642 0 3,160 5,642 8,802 (1,387)03/1140 years
Westbrook, ME0 2,273 7,119 0 2,273 7,119 9,392 (1,750)03/1140 years
Twin Falls, ID0 0 4,783 0 0 4,783 4,783 (1,026)04/1140 years
Dallas, TX0 0 12,146 (11,086)0 1,060 1,060 (24)03/1230 years
Albuquerque, NM0 0 13,733 0 0 13,733 13,733 (2,432)06/1240 years
Southern Pines, NC0 1,709 4,747 3,705 1,709 8,452 10,161 (1,126)06/1240 years
Austin, TX0 2,608 6,373 0 2,608 6,373 8,981 (1,182)09/1240 years
Champaign, IL0 0 9,381 125 0 9,506 9,506 (1,683)09/1240 years
Gainesville, VA0 0 10,846 0 0 10,846 10,846 (1,921)02/1340 years
Lafayette, LA14,360 0 12,728 0 0 12,728 12,728 (2,307)08/1340 years
New Iberia, LA0 0 1,630 0 0 1,630 1,630 (296)08/1340 years
Tuscaloosa, AL0 0 11,287 0 1,815 9,472 11,287 (1,717)09/1340 years
Tampa, FL0 1,700 23,483 3,648 1,579 27,252 28,831 (6,358)10/1340 years
Warrenville, IL0 14,000 17,318 (5,417)8,270 17,631 25,901 (4,095)10/1340 years
San Francisco, CA0 2,077 12,914 0 2,077 12,914 14,991 (1,614)08/1340 years
Opelika, AL0 1,314 8,951 0 1,314 8,951 10,265 (1,455)11/1240 years
Bedford, IN0 349 1,594 0 349 1,594 1,943 (305)04/1440 years
Seymour, IN0 1,028 2,291 0 1,028 2,291 3,319 (411)04/1440 years
Wilder, KY0 983 11,233 2,004 983 13,237 14,220 (2,185)04/1440 years
Bowling Green, KY0 1,241 10,222 0 1,241 10,222 11,463 (1,814)04/1440 years
New Albany, IN0 2,461 14,807 0 2,461 14,807 17,268 (2,575)04/1440 years
Clarksville, TN0 3,764 16,769 4,706 3,764 21,475 25,239 (3,265)04/1440 years
Williamsport, PA0 2,243 6,684 0 2,243 6,684 8,927 (1,225)04/1440 years
Noblesville, IN0 886 7,453 2,019 886 9,472 10,358 (1,505)04/1440 years
Moline, IL0 1,963 10,183 0 1,963 10,183 12,146 (1,793)04/1440 years
O'Fallon, MO0 1,046 7,342 0 1,046 7,342 8,388 (1,285)04/1440 years
McDonough, GA0 2,235 16,842 0 2,235 16,842 19,077 (2,955)04/1440 years
Sterling Heights, MI0 10,849 0 (404)10,257 188 10,445 (74)12/1415 years
Virginia Beach, VA0 2,544 6,478 0 2,544 6,478 9,022 (945)02/1540 years
Yulee, FL0 1,036 6,934 0 1,036 6,934 7,970 (1,011)02/1540 years
Jacksonville, FL0 5,080 22,064 0 5,080 22,064 27,144 (4,919)05/1525 years
Denham Springs, LA0 0 5,093 4,162 0 9,255 9,255 (1,016)05/1540 years
Crystal Lake, IL0 2,980 13,521 568 2,980 14,089 17,069 (3,129)07/1525 years
Laredo, TX0 1,353 7,886 0 1,353 7,886 9,239 (986)12/1540 years
Corpus, Christi, TX0 1,286 8,252 0 1,286 8,252 9,538 (808)12/1540 years
Kennewick, WA0 2,484 4,901 0 2,484 4,901 7,385 (991)06/1625 years
Franklin, TN0 10,158 17,549 9,018 10,158 26,567 36,725 (4,662)06/1625 years
Mobile, AL0 2,116 16,657 0 2,116 16,657 18,773 (3,186)06/1625 years
El Paso, TX0 2,957 10,961 3,905 2,957 14,866 17,823 (2,536)06/1625 years
Edinburg, TX0 1,982 16,964 5,680 1,982 22,644 24,626 (3,919)06/1625 years
Hendersonville, TN0 2,784 8,034 4,160 2,784 12,194 14,978 (1,565)07/1630 years
Houston, TX0 965 10,002 0 965 10,002 10,967 (1,000)10/1640 years
Detroit, MI0 4,299 13,810 0 4,299 13,810 18,109 (1,918)11/1630 years
Fort Worth, TX0 0 11,385 0 0 11,385 11,385 (735)02/1740 years
Fort Wayne, IN0 1,926 11,054 0 1,926 11,054 12,980 (1,597)05/1727 years
Wichita, KS0 267 7,535 0 267 7,535 7,802 (1,174)05/1723 years
Wichita, KS0 3,132 23,270 0 3,132 23,270 26,402 (3,798)05/1723 years
Richmond, TX0 7,251 36,534 (27)7,251 36,507 43,758 (3,402)08/1740 years
Tomball, TX0 3,416 26,918 0 3,416 26,918 30,334 (2,445)08/1740 years
Cleveland, OH0 2,671 17,526 0 2,671 17,526 20,197 (2,622)08/1725 years
126

EPR Properties
 Schedule III - Real Estate and Accumulated Depreciation
December 31, 2018
(Dollars in thousands)
    Initial cost Additions (Dispositions) (Impairments) Subsequent to acquisition Gross Amount at December 31, 2018      
Location Debt Land 
Buildings,
Equipment, Leasehold Interests &
Improvements
 Land 
Buildings,
Equipment, Leasehold Interests &
Improvements
 Total 
Accumulated
depreciation
 
Date
acquired
 
Depreciation
life
El Paso, TX —
 2,957
 10,961
 3,905
 2,957
 14,866
 17,823
 (1,230) 06/16 25 years
Edinburg, TX —
 1,982
 16,964
 5,680
 1,982
 22,644
 24,626
 (2,032) 06/16 25 years
Hendersonville, TN —
 2,784
 8,034
 4,160
 2,784
 12,194
 14,978
 (734) 07/16 30 years
Houston, TX —
 965
 10,002
 —
 965
 10,002
 10,967
 (333) 10/16 40 years
Detroit, MI —
 4,299
 13,810
 —
 4,299
 13,810
 18,109
 (997) 11/16 30 years
Fort Worth, TX —
 —
 11,385
 —
 —
 11,385
 11,385
 (166) 02/17 40 years
Fort Wayne, IN —
 1,926
 11,054
 —
 1,926
 11,054
 12,980
 (715) 05/17 27 years
Wichita, KS —
 267
 7,535
 —
 267
 7,535
 7,802
 (519) 05/17 23 years
Wichita, KS —
 3,132
 23,270
 —
 3,132
 23,270
 26,402
 (1,659) 05/17 23 years
Richmond, TX —
 7,251
 36,534
 (27) 7,251
 36,507
 43,758
 (1,361) 08/17 40 years
Tomball, TX —
 3,416
 26,918
 —
 3,416
 26,918
 30,334
 (978) 08/17 40 years
Cleveland, OH —
 2,671
 17,526
 —
 2,671
 17,526
 20,197
 (1,087) 08/17 25 years
Little Rock, AR —
 1,789
 10,780
 —
 1,789
 10,780
 12,569
 (283) 01/18 40 years
Conway, AR —
 1,316
 5,553
 —
 1,316
 5,553
 6,869
 (168) 03/18 30 years
Lynbrook, NY —
 1,753
 28,400
 —
 1,753
 28,400
 30,153
 (363) 06/18 40 years
Long Island, NY —
 —
 12,479
 267
 —
 12,746
 12,746
 —
 12/18 25 years
                     
ERC's/Retail                    
Dallas, TX —
 3,060
 15,281
 18,983
 3,060
 34,264
 37,324
 (16,866) 11/97 40 years
Westminster, CO —
 6,205
 12,600
 22,859
 6,205
 35,459
 41,664
 (18,393) 12/01 40 years
Westminster, CO —
 5,850
 17,314
 4,257
 5,850
 21,571
 27,421
 (7,528) 06/99 40 years
Houston, TX —
 3,653
 1,365
 (1,531) 3,408
 79
 3,487
 (14) 05/00 40 years
Southfield, MI —
 8,000
 20,518
 6,298
 8,000
 26,816
 34,816
 (26,773) 05/03 15 years
New Rochelle, NY —
 6,100
 97,696
 10,774
 6,100
 108,470
 114,570
 (41,540) 10/03 40 years
Kanata, ON —
 10,044
 36,630
 27,615
 9,236
 65,053
 74,289
 (21,622) 03/04 40 years
Mississagua, ON —
 9,221
 17,593
 19,988
 11,150
 35,652
 46,802
 (10,169) 03/04 40 years
Oakville, ON —
 10,044
 23,646
 5,407
 9,236
 29,861
 39,097
 (10,947) 03/04 40 years
Whitby, ON —
 10,202
 21,960
 24,076
 12,051
 44,187
 56,238
 (14,415) 03/04 40 years
Burbank, CA —
 16,584
 35,016
 12,536
 16,584
 47,552
 64,136
 (14,043) 03/05 40 years
Cleveland, OH —
 2,389
 3,546
 —
 2,389
 3,546
 5,935
 (266) 08/17 25 years
                     
Other Entertainment                    
Northbrook, IL —
 —
 7,025
 586
 —
 7,611
 7,611
 (1,346) 07/11 40 years
Oakbrook, IL —
 —
 8,068
 536
 —
 8,604
 8,604
 (1,298) 03/12 40 years
Jacksonville, FL —
 4,510
 5,061
 4,670
 4,510
 9,731
 14,241
 (2,354) 02/12 30 years
Indianapolis, IN —
 4,298
 6,320
 5,454
 4,377
 11,695
 16,072
 (1,854) 02/12 40 years
Warrenville, IL —
 —
 6,469
 2,216
 —
 8,685
 8,685
 (1,429) 10/13 40 years
Schaumburg, IL —
 598
 5,372
 —
 598
 5,372
 5,970
 (537) 04/15 30 years
Marietta, GA —
 3,116
 11,872
 —
 3,116
 11,872
 14,988
 (1,341) 02/16 35 years
Orlando, FL —
 9,382
 16,225
 58
 9,382
 16,283
 25,665
 (509) 05/16 40 years
Stapleton, CO —
 1,062
 6,329
 —
 1,062
 6,329
 7,391
 (212) 05/16 40 years
Dallas, TX —
 3,318
 7,835
 4
 3,318
 7,839
 11,157
 (298) 12/16 40 years
San Antonio, TX —
 6,502
 15,338
 —
 6,502
 15,338
 21,840
 (103) 08/17 40 years
                     
Ski Areas                    
Bellfontaine, OH —
 5,108
 5,994
 8,327
 5,251
 14,178
 19,429
 (3,931) 11/05 40 years

  Initial costAdditions (Dispositions) (Impairments) Subsequent to acquisitionGross Amount at December 31, 2020   
LocationDebtLandBuildings,
Equipment, Leasehold Interests &
Improvements		LandBuildings,
Equipment, Leasehold Interests &
Improvements		TotalAccumulated
depreciation		Date
acquired		Depreciation
life
Little Rock, AR0 1,789 10,780 0 1,789 10,780 12,569 (900)01/1840 years
Conway, AR0 1,316 5,553 0 1,316 5,553 6,869 (573)03/1830 years
Lynbrook, NY0 1,753 28,400 0 1,753 28,400 30,153 (1,816)06/1840 years
Long Island, NY0 0 12,479 267 0 12,746 12,746 (1,144)12/1825 years
Brandywine, MD0 5,251 10,520 0 5,251 10,520 15,771 (636)03/1934 years
Cincinnati, OH0 2,831 11,430 0 2,831 11,430 14,261 (657)03/1935 years
Louisville, KY0 3,726 27,312 0 3,726 27,312 31,038 (1,319)03/1940 years
Riverview, FL0 2,339 15,901 0 2,339 15,901 18,240 (843)03/1937 years
Savoy, IL0 1,938 10,554 184 1,938 10,738 12,676 (888)06/1925 years
Dublin, CA0 15,662 25,496 0 15,662 25,496 41,158 (1,576)06/1930 years
Ontario, CA0 8,019 15,708 0 8,019 15,708 23,727 (1,156)06/1924 years
Columbia, SC0 7,009 17,318 0 7,009 17,318 24,327 (764)06/1940 years
Columbia, MD0 12,642 14,152 0 12,642 14,152 26,794 (822)06/1934 years
Charlotte, NC0 4,257 15,121 0 4,257 15,121 19,378 (784)06/1935 years
Foothill Ranch, CA0 7,653 14,090 0 7,653 14,090 21,743 (1,074)06/1929 years
Wilsonville, OR0 2,742 1,301 0 2,742 1,301 4,043 (233)06/1923 years
Raleigh, NC0 5,376 12,516 0 5,376 12,516 17,892 (811)06/1930 years
Gastonia, NC0 4,039 9,199 0 4,039 9,199 13,238 (607)06/1930 years
Abingdon, MD0 4,613 6,171 0 4,613 6,171 10,784 (599)06/1924 years
Midland, TX0 2,495 12,965 0 2,495 12,965 15,460 (697)06/1935 years
Port Richey, FL0 1,564 7,103 0 1,564 7,103 8,667 (599)06/1926 years
Hillsboro, OR0 3,392 5,697 0 3,392 5,697 9,089 (607)06/1923 years
Woodway, TX0 2,376 7,309 0 2,376 7,309 9,685 (648)06/1924 years
San Jacinto, CA0 1,960 5,073 0 1,960 5,073 7,033 (461)06/1923 years
Albany, OR0 2,049 3,920 0 2,049 3,920 5,969 (293)06/1930 years
Lake City, FL0 1,257 4,756 0 1,257 4,756 6,013 (364)06/1927 years
Anderson, SC0 1,554 3,948 0 1,554 3,948 5,502 (362)06/1924 years
New Hartford, NY0 946 11,985 0 946 11,985 12,931 (542)10/1931 years
Columbus, OH0 5,211 14,179 571 5,211 14,750 19,961 (680)10/1938 years
Kenner, LA0 5,299 14,000 0 5,299 14,000 19,299 (1,279)10/1934 years
Marana, AZ0 2,384 5,438 0 2,384 5,438 7,822 (309)12/1928 years
Bluffton, SC0 1,912 3,053 110 1,912 3,163 5,075 (155)03/2025 years
Cherry Hill, NJ0 5,038 9,206 0 5,038 9,206 14,244 (554)03/2025 years
Eat & Play
Westminster, CO0 6,205 12,600 21,139 4,998 34,946 39,944 (20,119)12/0140 years
Westminster, CO0 5,850 17,314 4,257 5,850 21,571 27,421 (8,751)06/9940 years
Houston, TX0 3,653 1,365 (1,531)3,408 79 3,487 (24)05/0040 years
New Rochelle, NY0 6,100 97,696 11,796 6,100 109,492 115,592 (47,894)10/0340 years
Kanata, ON0 10,044 36,630 33,206 9,896 69,984 79,880 (27,311)03/0440 years
Mississagua, ON0 9,221 17,593 23,765 11,947 38,632 50,579 (13,286)03/0440 years
Oakville, ON0 10,044 23,646 10,576 9,896 34,370 44,266 (14,113)03/0440 years
Whitby, ON0 10,202 21,960 29,075 12,913 48,324 61,237 (18,262)03/0440 years
Burbank, CA0 16,584 35,016 12,618 16,584 47,634 64,218 (16,659)03/0540 years
Northbrook, IL0 0 7,025 586 0 7,611 7,611 (1,730)07/1140 years
Allen, TX0 0 10,007 1,151 0 11,158 11,158 (3,329)02/1229 years
Dallas, TX0 0 10,007 1,771 0 11,778 11,778 (3,378)02/1230 years
Oakbrook, IL0 0 8,068 536 0 8,604 8,604 (1,731)03/1240 years
Jacksonville, FL0 4,510 5,061 4,748 4,510 9,809 14,319 (3,136)02/1230 years
Indianapolis, IN0 4,298 6,320 (4,754)1,813 4,051 5,864 (716)02/1240 years
Houston, TX0 0 12,403 394 0 12,797 12,797 (2,700)09/1240 years
127

EPR Properties
 Schedule III - Real Estate and Accumulated Depreciation
December 31, 2018
(Dollars in thousands)
    Initial cost Additions (Dispositions) (Impairments) Subsequent to acquisition Gross Amount at December 31, 2018      
Location Debt Land 
Buildings,
Equipment, Leasehold Interests &
Improvements
 Land 
Buildings,
Equipment, Leasehold Interests &
Improvements
 Total 
Accumulated
depreciation
 
Date
acquired
 
Depreciation
life
Tannersville, PA —
 34,940
 34,629
 4,377
 34,940
 39,006
 73,946
 (14,546) 09/13 40 years
McHenry, MD —
 8,394
 15,910
 3,207
 9,708
 17,803
 27,511
 (6,106) 12/12 40 years
Wintergreen, VA —
 5,739
 16,126
 635
 5,739
 16,761
 22,500
 (3,673) 02/15 40 years
Northstar, CA —
 48,178
 88,532
 —
 48,178
 88,532
 136,710
 (11,125) 04/17 40 years
Northstar, CA —
 7,827
 18,112
 —
 7,827
 18,112
 25,939
 (905) 04/17 40 years
                     
Attractions                    
Tannersville, PA —
 —
 120,354
 1,615
 —
 121,969
 121,969
 (10,361) 05/15 40 years
Powells Point, NC —
 5,284
 39,516
 (2,604) 5,284
 36,912
 42,196
 (1,930) 10/16 30 years
Corfu, NY —
 5,112
 43,637
 2,500
 5,112
 46,137
 51,249
 (3,885) 04/17 30 years
Oklahoma City, OK —
 7,976
 17,624
 —
 7,976
 17,624
 25,600
 (1,286) 04/17 30 years
Hot Springs, AR —
 3,351
 4,967
 —
 3,351
 4,967
 8,318
 (360) 04/17 30 years
Riviera Beach, FL —
 17,450
 29,713
 —
 17,450
 29,713
 47,163
 (2,172) 04/17 30 years
Oklahoma City, OK —
 1,423
 18,097
 —
 1,423
 18,097
 19,520
 (1,361) 04/17 30 years
Palm Springs, CA —
 4,109
 —
 —
 4,109
 —
 4,109
 —
 04/17 n/a
Springs, TX —
 18,776
 31,402
 —
 18,776
 31,402
 50,178
 (2,350) 04/17 30 years
Glendale, AZ —
 —
 20,514
 2,969
 —
 23,483
 23,483
 (1,837) 04/17 30 years
Kapolei, HI —
 —
 8,351
 1,542
 —
 9,893
 9,893
 (710) 04/17 30 years
Federal Way, WA —
 —
 13,949
 (63) —
 13,886
 13,886
 (1,085) 04/17 30 years
Colony, TX —
 —
 7,617
 (567) —
 7,050
 7,050
 (535) 04/17 30 years
Garland, TX —
 —
 5,601
 389
 —
 5,990
 5,990
 (452) 04/17 30 years
Santa Monica, CA —
 —
 13,874
 15,717
 —
 29,591
 29,591
 (2,408) 04/17 30 years
Concord, CA —
 —
 9,808
 5,787
 —
 15,595
 15,595
 (1,166) 04/17 30 years
St. Louis, MO —
 5,481
 41,951
 —
 5,481
 41,951
 47,432
 —
 12/18 40 years
                     
Golf Entertainment Complexes                    
Colony, TX —
 4,004
 13,665
 (240) 4,004
 13,425
 17,429
 (1,678) 12/12 40 years
Allen, TX —
 —
 10,007
 1,151
 —
 11,158
 11,158
 (2,552) 02/12 29 years
Dallas, TX —
 —
 10,007
 1,771
 —
 11,778
 11,778
 (2,578) 02/12 30 years
Houston, TX —
 —
 12,403
 394
 —
 12,797
 12,797
 (2,017) 09/12 40 years
Alpharetta, GA —
 5,608
 16,616
 —
 5,608
 16,616
 22,224
 (1,869) 05/13 40 years
Scottsdale, AZ —
 —
 16,942
 —
 —
 16,942
 16,942
 (1,906) 06/13 40 years
Spring, TX —
 4,928
 14,522
 —
 4,928
 14,522
 19,450
 (1,694) 07/13 40 years
San Antonio, TX —
 —
 15,976
 —
 —
 15,976
 15,976
 (1,531) 12/13 40 years
Tampa, FL —
 —
 15,726
 (67) —
 15,659
 15,659
 (1,676) 02/14 40 years
Gilbert, AZ —
 4,735
 16,130
 (267) 4,735
 15,863
 20,598
 (1,586) 02/14 40 years
Overland Park, KS —
 5,519
 17,330
 —
 5,519
 17,330
 22,849
 (1,509) 05/14 40 years
Centennial, CO —
 3,013
 19,106
 403
 3,013
 19,509
 22,522
 (1,620) 06/14 40 years
Atlanta, GA —
 8,143
 17,289
 —
 8,143
 17,289
 25,432
 (1,477) 06/14 40 years
Ashburn VA —
 —
 16,873
 —
 —
 16,873
 16,873
 (1,406) 06/14 40 years
Naperville, IL —
 8,824
 20,279
 (665) 8,824
 19,614
 28,438
 (1,635) 08/14 40 years
Oklahoma City, OK —
 3,086
 16,421
 (252) 3,086
 16,169
 19,255
 (1,415) 09/14 40 years
Webster, TX —
 5,631
 17,732
 927
 5,338
 18,952
 24,290
 (1,479) 11/14 40 years
Virginia Beach, VA —
 6,948
 18,715
 296
 6,948
 19,011
 25,959
 (1,422) 12/14 40 years
Edison, NJ —
 —
 22,792
 1,422
 —
 24,214
 24,214
 (1,205) 04/15 40 years

  Initial costAdditions (Dispositions) (Impairments) Subsequent to acquisitionGross Amount at December 31, 2020   
LocationDebtLandBuildings,
Equipment, Leasehold Interests &
Improvements		LandBuildings,
Equipment, Leasehold Interests &
Improvements		TotalAccumulated
depreciation		Date
acquired		Depreciation
life
Colony, TX0 4,004 13,665 (240)4,004 13,425 17,429 (2,349)12/1240 years
Alpharetta, GA0 5,608 16,616 0 5,608 16,616 22,224 (2,700)05/1340 years
Scottsdale, AZ0 0 16,942 0 0 16,942 16,942 (2,753)06/1340 years
Spring, TX0 4,928 14,522 0 4,928 14,522 19,450 (2,420)07/1340 years
Warrenville, IL0 0 6,469 9,625 2,906 13,188 16,094 (3,417)10/1340 years
San Antonio, TX0 0 15,976 79 0 16,055 16,055 (2,334)12/1340 years
Tampa, FL0 0 15,726 (67)0 15,659 15,659 (2,453)02/1440 years
Gilbert, AZ0 4,735 16,130 (267)4,735 15,863 20,598 (2,379)02/1440 years
Overland Park, KS0 5,519 17,330 0 5,519 17,330 22,849 (2,376)05/1440 years
Centennial, CO0 3,013 19,106 403 3,013 19,509 22,522 (2,596)06/1440 years
Atlanta, GA0 8,143 17,289 0 8,143 17,289 25,432 (2,341)06/1440 years
Ashburn VA0 0 16,873 101 0 16,974 16,974 (2,253)06/1440 years
Naperville, IL0 8,824 20,279 (665)8,824 19,614 28,438 (2,615)08/1440 years
Oklahoma City, OK0 3,086 16,421 (252)3,086 16,169 19,255 (2,223)09/1440 years
Webster, TX0 5,631 17,732 927 5,338 18,952 24,290 (2,428)11/1440 years
Virginia Beach, VA0 6,948 18,715 (304)6,348 19,011 25,359 (2,373)12/1440 years
Edison, NJ0 0 22,792 1,489 0 24,281 24,281 (2,418)04/1540 years
Jacksonville, FL0 6,732 21,823 (1,201)6,732 20,622 27,354 (2,177)09/1540 years
Roseville, CA0 6,868 23,959 (1,928)6,868 22,031 28,899 (2,367)10/1530 years
Portland, OR0 0 23,466 (541)0 22,925 22,925 (2,520)11/1540 years
Orlando, FL0 8,586 22,493 1,120 8,586 23,613 32,199 (2,030)01/1640 years
Marietta, GA0 3,116 11,872 0 3,116 11,872 14,988 (2,008)02/1635 years
Charlotte, NC0 4,676 21,422 (867)4,676 20,555 25,231 (1,936)04/1640 years
Orlando, FL0 9,382 16,225 58 9,382 16,283 25,665 (1,323)05/1640 years
Stapleton, CO0 1,062 6,329 0 1,062 6,329 7,391 (602)05/1640 years
Fort Worth, TX0 4,674 17,537 0 4,674 17,537 22,211 (1,608)08/1640 years
Nashville, TN0 0 26,685 136 0 26,821 26,821 (2,295)12/1640 years
Dallas, TX0 3,318 7,835 4 3,318 7,839 11,157 (809)12/1640 years
San Antonio, TX0 6,502 15,338 (628)6,502 14,710 21,212 (893)08/1740 years
Cleveland, OH0 2,389 3,546 374 2,389 3,920 6,309 (658)08/1725 years
Huntsville, AL0 53 17,595 (1,938)53 15,657 15,710 (1,479)08/1740 years
El Paso, TX0 2,688 17,373 0 2,688 17,373 20,061 (1,655)02/1840 years
Pittsburgh, PA0 7,897 21,812 (1,039)7,897 20,773 28,670 (1,379)07/1840 years
Philadelphia, PA0 5,484 25,211 97 5,484 25,308 30,792 (1,465)12/1840 years
Auburn Hills, MI0 4,219 27,704 (2,881)4,219 24,823 29,042 (1,371)12/1840 years
Greenville, SC0 6,272 18,240 0 6,272 18,240 24,512 (1,096)06/1840 years
Thornton, CO0 5,419 23,635 0 5,419 23,635 29,054 (910)09/1840 years
Eugene, OR0 1,321 0 0 1,321 0 1,321 0 06/19n/a
Katy, TX0 5,210 16,247 293 3,492 18,258 21,750 (367)06/1940 years
Ski
Bellfontaine, OH0 5,108 5,994 8,327 5,251 14,178 19,429 (4,900)11/0540 years
Tannersville, PA0 34,940 34,629 4,377 34,940 39,006 73,946 (17,215)09/1340 years
McHenry, MD0 8,394 15,910 3,207 9,708 17,803 27,511 (7,103)12/1240 years
Wintergreen, VA0 5,739 16,126 1,927 5,739 18,053 23,792 (5,186)02/1540 years
Northstar, CA0 48,178 88,532 0 48,178 88,532 136,710 (19,778)04/1740 years
Northstar, CA0 7,827 18,112 0 7,827 18,112 25,939 (1,938)04/1740 years
Attractions
Denver, CO0 753 6,218 0 753 6,218 6,971 (812)02/1730 years
Fort Worth, TX0 824 7,066 0 824 7,066 7,890 (883)03/1730 years
128

EPR Properties
 Schedule III - Real Estate and Accumulated Depreciation
December 31, 2018
(Dollars in thousands)
    Initial cost Additions (Dispositions) (Impairments) Subsequent to acquisition Gross Amount at December 31, 2018      
Location Debt Land 
Buildings,
Equipment, Leasehold Interests &
Improvements
 Land 
Buildings,
Equipment, Leasehold Interests &
Improvements
 Total 
Accumulated
depreciation
 
Date
acquired
 
Depreciation
life
Jacksonville, FL —
 6,732
 21,823
 (1,201) 6,732
 20,622
 27,354
 (1,145) 09/15 40 years
Roseville, CA —
 6,868
 23,959
 (1,928) 6,868
 22,031
 28,899
 (1,263) 10/15 30 years
Portland, OR —
 —
 23,466
 (541) —
 22,925
 22,925
 (1,372) 11/15 40 years
Orlando, FL —
 8,586
 22,493
 1,120
 8,586
 23,613
 32,199
 (728) 01/16 40 years
Charlotte, NC —
 4,676
 21,422
 (867) 4,676
 20,555
 25,231
 (824) 04/16 40 years
Fort Worth, TX —
 4,674
 17,537
 —
 4,674
 17,537
 22,211
 (731) 08/16 40 years
Nashville, TN —
 —
 26,685
 136
 —
 26,821
 26,821
 (894) 12/16 40 years
Huntsville, AL —
 53
 17,595
 (1,938) 53
 15,657
 15,710
 (534) 08/17 40 years
El Paso, TX —
 2,688
 17,373
 —
 2,688
 17,373
 20,061
 (458) 02/18 40 years
Pittsburgh, PA —
 7,897
 21,812
 —
 7,897
 21,812
 29,709
 (290) 07/18 40 years
Philadelphia, PA —
 5,484
 25,211
 —
 5,484
 25,211
 30,695
 (112) 12/18 40 years
Auburn Hills, MI —
 4,219
 27,704
 —
 4,219
 27,704
 31,923
 (61) 12/18 40 years
                     
Other Recreation                    
Denver, CO —
 753
 6,218
 —
 753
 6,218
 6,971
 (397) 02/17 30 years
Olathe, KS —
 2,417
 16,878
 —
 2,417
 16,878
 19,295
 (985) 03/17 30 years
Fort Worth, TX —
 824
 7,066
 —
 824
 7,066
 7,890
 (412) 03/17 30 years
Tampa, FL —
 —
 8,665
 2,493
 2,493
 8,665
 11,158
 (385) 08/17 30 years
Roseville, CA —
 1,807
 6,082
 —
 1,807
 6,082
 7,889
 (293) 09/17 30 years
Fort Lauderdale, FL —
 —
 10,816
 —
 —
 10,816
 10,816
 (420) 10/17 30 years
Fort Collins, CO —
 2,043
 5,769
 —
 2,043
 5,769
 7,812
 (215) 01/18 30 years
Pagosa Springs, CO —
 9,791
 15,635
 —
 9,791
 15,635
 25,426
 (381) 06/18 30 years
                     
Public Charter Schools                    
Columbus, OH —
 700
 3,790
 —
 700
 3,790
 4,490
 (241) 09/07 40 years
Groveport, OH —
 600
 12,250
 —
 600
 12,250
 12,850
 (778) 10/07 40 years
Cleveland, OH —
 640
 5,613
 —
 640
 5,613
 6,253
 (655) 10/04 30 years
Baton Rouge, LA —
 996
 5,638
 —
 996
 5,638
 6,634
 (1,067) 03/11 40 years
Goodyear, AZ —
 766
 6,517
 —
 766
 6,517
 7,283
 (1,387) 04/11 30 years
Phoenix, AZ —
 1,060
 8,140
 —
 1,060
 8,140
 9,200
 (1,635) 11/11 40 years
Buckeye, AZ —
 914
 9,715
 14,461
 914
 24,176
 25,090
 (3,278) 04/12 40 years
Tarboro, NC —
 350
 12,560
 3,037
 350
 15,597
 15,947
 (2,408) 07/12 40 years
Chester Upland, PA —
 518
 5,900
 —
 518
 5,900
 6,418
 (1,027) 03/13 30 years
Hollywood, SC —
 806
 5,776
 1,805
 806
 7,581
 8,387
 (1,042) 03/13 40 years
Camden, NJ —
 548
 10,569
 7,271
 548
 17,840
 18,388
 (3,113) 04/13 30 years
Queen Creek, AZ —
 2,612
 —
 (1,845) 767
 —
 767
 —
 04/13 n/a
Chicago, IL —
 509
 5,895
 4,619
 509
 10,514
 11,023
 (1,212) 05/13 40 years
Gilbert, AZ —
 1,336
 6,593
 —
 1,336
 6,593
 7,929
 (865) 05/13 40 years
Columbus, OH —
 600
 5,720
 —
 600
 5,720
 6,320
 (363) 05/13 40 years
Dayton, OH —
 599
 5,068
 —
 599
 5,068
 5,667
 (322) 05/13 40 years
Chandler, AZ —
 1,039
 9,590
 —
 1,039
 9,590
 10,629
 (1,537) 07/13 40 years
Salt Lake City, UT —
 8,173
 10,982
 1,928
 8,173
 12,910
 21,083
 (1,425) 07/13 40 years
Palm Beach, FL —
 3,323
 15,824
 (81) 3,323
 15,743
 19,066
 (2,117) 10/13 30 years
Columbus, OH —
 840
 5,640
 —
 840
 5,640
 6,480
 (358) 11/13 40 years
Lancaster, CA —
 2,109
 6,032
 166
 2,109
 6,198
 8,307
 (855) 12/13 30 years

  Initial costAdditions (Dispositions) (Impairments) Subsequent to acquisitionGross Amount at December 31, 2020   
LocationDebtLandBuildings,
Equipment, Leasehold Interests &
Improvements		LandBuildings,
Equipment, Leasehold Interests &
Improvements		TotalAccumulated
depreciation		Date
acquired		Depreciation
life
Corfu, NY0 5,112 43,637 2,500 5,112 46,137 51,249 (8,183)04/1730 years
Oklahoma City, OK0 7,976 17,624 0 7,976 17,624 25,600 (2,747)04/1730 years
Hot Springs, AR0 3,351 4,967 0 3,351 4,967 8,318 (761)04/1730 years
Riviera Beach, FL0 17,450 29,713 0 17,450 29,713 47,163 (4,626)04/1730 years
Oklahoma City, OK0 1,423 18,097 0 1,423 18,097 19,520 (2,911)04/1730 years
Springs, TX0 18,776 31,402 0 18,776 31,402 50,178 (5,017)04/1730 years
Glendale, AZ0 0 20,514 2,969 0 23,483 23,483 (3,930)04/1730 years
Kapolei, HI0 0 8,351 1,542 0 9,893 9,893 (1,516)04/1730 years
Federal Way, WA0 0 13,949 (12,149)0 1,800 1,800 (99)04/1712 years
Colony, TX0 0 7,617 (567)0 7,050 7,050 (1,770)04/1730 years
Garland, TX0 0 5,601 389 0 5,990 5,990 (1,296)04/1730 years
Santa Monica, CA0 0 13,874 15,717 0 29,591 29,591 (5,058)04/1730 years
Concord, CA0 0 9,808 5,787 0 15,595 15,595 (2,498)04/1730 years
Tampa, FL0 0 8,665 2,493 2,493 8,665 11,158 (963)08/1730 years
Fort Lauderdale, FL0 0 10,816 0 0 10,816 10,816 (1,142)10/1730 years
Experiential Lodging
Tannersville, PA0 0 120,354 1,615 0 121,969 121,969 (16,462)05/1540 years
Pagosa Springs, CO0 9,791 15,635 0 9,791 15,635 25,426 (1,903)06/1830 years
Kiamesha Lake, NY0 34,897 228,462 (5,430)34,897 223,032 257,929 (18,777)07/1030 years
Gaming
Kiamesha Lake, NY0 155,658 0 19,524 156,785 18,397 175,182 (933)07/10n/a
Cultural
St. Louis, MO0 5,481 41,951 0 5,481 41,951 47,432 (2,976)12/1840 years
Branson, MO0 1,847 7,599 0 1,847 7,599 9,446 (362)05/1940 years
Pigeon Forge, TN0 4,849 9,668 0 4,849 9,668 14,517 (466)05/1940 years
Fitness & Wellness
Olathe, KS0 2,417 16,878 0 2,417 16,878 19,295 (2,110)03/1730 years
Roseville, CA0 1,807 6,082 0 1,807 6,082 7,889 (762)09/1730 years
Fort Collins, CO0 2,043 5,769 0 2,043 5,769 7,812 (646)01/1830 years
Early Childhood Education Centers
Lake Pleasant, AZ0 986 3,524 902 986 4,426 5,412 (973)03/1330 years
Goodyear, AZ0 1,308 7,275 222 1,308 7,497 8,805 (1,869)06/1330 years
Oklahoma City, OK0 1,149 9,839 979 1,149 10,818 11,967 (2,284)08/1340 years
Coppell, TX0 1,547 10,168 635 1,547 10,803 12,350 (2,422)09/1330 years
Las Vegas, NV0 944 9,191 373 944 9,564 10,508 (2,250)09/1330 years
Las Vegas, NV0 985 6,721 466 985 7,187 8,172 (1,717)09/1330 years
Mesa, AZ0 762 6,987 1,501 762 8,488 9,250 (2,033)01/1430 years
Gilbert, AZ0 1,295 9,192 316 1,295 9,508 10,803 (2,052)03/1430 years
Cedar Park, TX0 1,520 10,500 418 1,278 11,160 12,438 (2,189)07/1430 years
Thornton, CO0 1,384 10,542 339 1,370 10,895 12,265 (2,041)07/1430 years
Chicago, IL0 1,294 4,375 19 1,294 4,394 5,688 (611)07/1430 years
Centennial, CO0 1,249 10,771 707 1,249 11,478 12,727 (2,249)08/1430 years
McKinney, TX0 1,812 12,419 1,841 1,812 14,260 16,072 (2,956)11/1430 years
Ashburn, VA0 2,289 14,748 0 2,289 14,748 17,037 (2,592)06/1530 years
129

EPR Properties
 Schedule III - Real Estate and Accumulated Depreciation
December 31, 2018
(Dollars in thousands)
    Initial cost Additions (Dispositions) (Impairments) Subsequent to acquisition Gross Amount at December 31, 2018      
Location Debt Land 
Buildings,
Equipment, Leasehold Interests &
Improvements
 Land 
Buildings,
Equipment, Leasehold Interests &
Improvements
 Total 
Accumulated
depreciation
 
Date
acquired
 
Depreciation
life
Kernersville, NC —
 1,362
 8,182
 (244) 1,362
 7,938
 9,300
 (1,110) 12/13 40 years
Fort Collins, CO —
 618
 5,031
 5,134
 618
 10,165
 10,783
 (1,345) 02/14 40 years
Wilson, NC —
 424
 5,342
 4,553
 449
 9,870
 10,319
 (1,001) 03/14 30 years
Baker, LA —
 190
 6,563
 203
 190
 6,766
 6,956
 (689) 04/14 40 years
Charlotte, NC —
 1,559
 1,477
 19,519
 1,559
 20,996
 22,555
 (1,400) 05/14 30 years
Chicago, IL —
 1,544
 6,074
 4,154
 1,544
 10,228
 11,772
 (1,004) 05/14 40 years
Chandler, AZ —
 1,530
 6,877
 144
 1,530
 7,021
 8,551
 (612) 08/14 40 years
Port Royal, SC —
 387
 4,383
 1,259
 387
 5,642
 6,029
 (462) 09/14 40 years
Macon, GA —
 401
 7,883
 —
 401
 7,883
 8,284
 (3,035) 02/15 15 years
Memphis, TN —
 1,535
 4,089
 2,646
 1,535
 6,735
 8,270
 (733) 02/15 30 years
Parker, CO —
 2,190
 6,815
 57
 2,136
 6,926
 9,062
 (858) 01/15 40 years
Rock Hill, SC —
 2,046
 8,024
 (27) 2,046
 7,997
 10,043
 (786) 04/15 30 years
Palm Bay, FL —
 782
 6,212
 2,035
 782
 8,247
 9,029
 (864) 03/15 40 years
East Point, GA —
 553
 5,938
 —
 553
 5,938
 6,491
 (561) 05/15 30 years
Trenton, NJ —
 1,351
 15,327
 —
 1,351
 15,327
 16,678
 (830) 08/15 40 years
Memphis, TN —
 910
 7,927
 (41) 910
 7,886
 8,796
 (443) 09/15 40 years
Bridgeton, NJ —
 153
 2,392
 (39) 153
 2,353
 2,506
 (202) 09/15 30 years
Macon, GA —
 351
 7,460
 —
 351
 7,460
 7,811
 (788) 11/15 30 years
Galloway, NJ —
 575
 3,692
 (816) 575
 2,876
 3,451
 (246) 12/15 30 years
Bronx, NY —
 1,232
 8,472
 —
 1,232
 8,472
 9,704
 (512) 01/16 40 years
Parker, CO —
 1,248
 12,892
 356
 1,248
 13,248
 14,496
 (802) 04/16 40 years
Holland, OH —
 549
 4,642
 25
 549
 4,667
 5,216
 (276) 04/16 40 years
Holly Springs, NC —
 1,703
 10,240
 (67) 1,703
 10,173
 11,876
 (452) 03/17 30 years
Evans, GA —
 669
 8,838
 —
 669
 8,838
 9,507
 (450) 03/17 30 years
Chicoppe, MA —
 1,489
 6,382
 —
 1,489
 6,382
 7,871
 (336) 05/17 30 years
Walnut Creek, CA —
 4,917
 6,418
 785
 4,917
 7,203
 12,120
 (426) 07/17 30 years
Lexington, NC —
 441
 6,678
 —
 441
 6,678
 7,119
 (98) 12/17 30 years
Ridgeland, SC —
 446
 6,486
 —
 446
 6,486
 6,932
 (74) 03/18 30 years
East Point, GA —
 1,258
 —
 —
 1,258
 —
 1,258
 —
 04/18 30 years
Spring, TX —
 1,155
 6,179
 —
 1,155
 6,179
 7,334
 (94) 04/18 30 years
                     
Early Childhood Education                    
Lake Pleasant, AZ —
 986
 3,524
 —
 986
 3,524
 4,510
 (702) 03/13 30 years
Goodyear, AZ —
 1,308
 7,275
 11
 1,308
 7,286
 8,594
 (1,352) 06/13 30 years
Oklahoma City, OK —
 1,149
 9,839
 385
 1,149
 10,224
 11,373
 (1,559) 08/13 40 years
Coppell, TX —
 1,547
 10,168
 (99) 1,547
 10,069
 11,616
 (1,527) 09/13 30 years
Las Vegas, NV —
 944
 9,191
 —
 944
 9,191
 10,135
 (1,620) 09/13 30 years
Las Vegas, NV —
 985
 6,721
 145
 985
 6,866
 7,851
 (1,205) 09/13 30 years
Mesa, AZ —
 762
 6,987
 —
 762
 6,987
 7,749
 (1,481) 01/14 30 years
Gilbert, AZ —
 1,295
 9,192
 —
 1,295
 9,192
 10,487
 (1,424) 03/14 30 years
Cedar Park, TX —
 1,520
 10,500
 (412) 1,278
 10,330
 11,608
 (1,427) 07/14 30 years
Thornton, CO —
 1,384
 10,542
 —
 1,384
 10,542
 11,926
 (1,248) 07/14 30 years
Chicago, IL —
 1,294
 4,375
 19
 1,294
 4,394
 5,688
 (318) 07/14 30 years

  Initial costAdditions (Dispositions) (Impairments) Subsequent to acquisitionGross Amount at December 31, 2020   
LocationDebtLandBuildings,
Equipment, Leasehold Interests &
Improvements		LandBuildings,
Equipment, Leasehold Interests &
Improvements		TotalAccumulated
depreciation		Date
acquired		Depreciation
life
West Chester, OH0 1,807 12,913 455 1,807 13,368 15,175 (2,087)07/1530 years
Ellisville, MO0 2,465 15,063 0 2,465 15,063 17,528 (2,060)07/1530 years
Chanhassen, MN0 2,603 15,613 523 2,603 16,136 18,739 (2,360)08/1530 years
Maple Grove, MN0 3,743 14,927 561 3,743 15,488 19,231 (2,976)08/1530 years
Carmel, IN0 1,567 12,854 366 1,561 13,226 14,787 (2,153)09/1530 years
Fishers, IN0 1,226 13,144 832 1,226 13,976 15,202 (1,714)12/1530 years
Westerville, OH0 2,988 14,339 362 2,988 14,701 17,689 (2,134)04/1630 years
Las Vegas, NV0 1,476 14,422 (1,287)1,476 13,135 14,611 (1,998)06/1630 years
Louisville, KY0 377 1,526 0 377 1,526 1,903 (225)08/1630 years
Louisville, KY0 216 1,006 0 216 1,006 1,222 (148)08/1630 years
Cheshire, CT0 420 3,650 0 420 3,650 4,070 (477)11/1630 years
Edina, MN0 1,235 5,493 (323)1,235 5,170 6,405 (597)11/1630 years
Eagan, MN0 783 4,833 (286)783 4,547 5,330 (609)11/1630 years
Louisville, KY0 481 2,050 0 481 2,050 2,531 (279)12/1630 years
Bala Cynwyd, PA0 1,785 3,759 0 1,785 3,759 5,544 (512)12/1630 years
Schaumburg, IL0 642 4,962 0 642 4,962 5,604 (492)12/1630 years
Kennesaw, GA0 690 844 0 690 844 1,534 (113)01/1730 years
Charlotte, NC0 1,200 2,557 0 1,200 2,557 3,757 (233)01/1735 years
Charlotte, NC0 2,501 2,079 0 2,501 2,079 4,580 (190)01/1735 years
Richardson, TX0 474 2,046 0 474 2,046 2,520 (195)01/1735 years
Frisco, TX0 999 3,064 0 999 3,064 4,063 (286)01/1735 years
Allen, TX0 910 3,719 0 910 3,719 4,629 (355)01/1735 years
Southlake, TX0 920 2,766 0 920 2,766 3,686 (263)01/1735 years
Lewis Center, OH0 410 4,285 0 410 4,285 4,695 (379)01/1735 years
Dublin, OH0 581 4,223 0 581 4,223 4,804 (372)01/1735 years
Plano, TX0 400 2,647 0 400 2,647 3,047 (258)01/1735 years
Carrollton, TX0 329 1,389 0 329 1,389 1,718 (139)01/1735 years
Davenport, FL0 3,000 5,877 0 3,000 5,877 8,877 (538)01/1735 years
Tallahassee, FL0 952 3,205 0 952 3,205 4,157 (312)01/1735 years
Sunrise, FL0 1,400 1,856 0 1,400 1,856 3,256 (175)01/1735 years
Chaska, MN0 328 6,140 0 328 6,140 6,468 (539)01/1735 years
Loretto, MN0 286 3,511 0 286 3,511 3,797 (319)01/1735 years
Minneapolis, MN0 920 3,700 0 920 3,700 4,620 (326)01/1735 years
Wayzata, MN0 810 1,962 0 810 1,962 2,772 (181)01/1735 years
Plymouth, MN0 1,563 4,905 0 1,563 4,905 6,468 (452)01/1735 years
Maple Grove, MN0 951 3,291 0 951 3,291 4,242 (298)01/1735 years
Chula Vista, CA0 210 2,186 0 210 2,186 2,396 (216)01/1735 years
Lincolnshire, IL0 1,006 4,799 0 1,006 4,799 5,805 (522)02/1730 years
New Berlin, WI0 368 1,704 0 368 1,704 2,072 (222)02/1730 years
Oak Creek, WI0 283 1,690 0 283 1,690 1,973 (221)02/1730 years
Minnetonka, MN0 911 4,833 659 931 5,472 6,403 (689)03/1730 years
Berlin, CT0 494 2,958 0 494 2,958 3,452 (353)06/1730 years
Portland, OR0 2,604 585 0 2,604 585 3,189 (58)01/1835 years
Orlando, FL0 955 4,273 0 955 4,273 5,228 (374)02/1835 years
McKinney, TX0 1,233 4,447 0 1,233 4,447 5,680 (221)02/1830 years
Fort Mill, SC0 629 3,957 0 629 3,957 4,586 (280)09/1835 years
Indian Land, SC0 907 3,784 0 907 3,784 4,691 (285)09/1835 years
130

EPR Properties
 Schedule III - Real Estate and Accumulated Depreciation
December 31, 2018
(Dollars in thousands)
    Initial cost Additions (Dispositions) (Impairments) Subsequent to acquisition Gross Amount at December 31, 2018      
Location Debt Land 
Buildings,
Equipment, Leasehold Interests &
Improvements
 Land 
Buildings,
Equipment, Leasehold Interests &
Improvements
 Total 
Accumulated
depreciation
 
Date
acquired
 
Depreciation
life
Centennial, CO —
 1,249
 10,771
 417
 1,249
 11,188
 12,437
 (1,472) 08/14 30 years
McKinney, TX —
 1,812
 12,419
 930
 1,812
 13,349
 15,161
 (1,935) 11/14 30 years
Lakewood, CO —
 291
 823
 40
 291
 863
 1,154
 (126) 01/15 30 years
Castle Rock, CO —
 250
 1,646
 —
 250
 1,646
 1,896
 (235) 01/15 30 years
Emeryville, CA —
 1,814
 5,780
 —
 1,814
 5,780
 7,594
 (546) 03/15 30 years
Lafayette, CO —
 293
 663
 57
 293
 720
 1,013
 (129) 04/15 25 years
Ashburn, VA —
 2,289
 14,748
 —
 2,289
 14,748
 17,037
 (1,268) 06/15 30 years
West Chester, OH —
 1,807
 12,913
 153
 1,807
 13,066
 14,873
 (992) 07/15 30 years
Ellisville, MO —
 2,465
 15,063
 —
 2,465
 15,063
 17,528
 (961) 07/15 30 years
Chanhassen, MN —
 2,603
 15,613
 303
 2,603
 15,916
 18,519
 (1,154) 08/15 30 years
Maple Grove, MN —
 3,743
 14,927
 63
 3,743
 14,990
 18,733
 (1,752) 08/15 30 years
Carmel, IN —
 1,567
 12,854
 199
 1,567
 13,053
 14,620
 (1,140) 09/15 30 years
Atlanta, GA —
 956
 1,850
 —
 956
 1,850
 2,806
 (200) 10/15 30 years
Atlanta, GA —
 1,262
 2,038
 —
 1,262
 2,038
 3,300
 (221) 10/15 30 years
Fishers, IN —
 1,226
 13,144
 538
 1,226
 13,682
 14,908
 (643) 12/15 30 years
Westerville, OH —
 2,988
 14,339
 56
 2,988
 14,395
 17,383
 (877) 04/16 30 years
Las Vegas, NV —
 1,476
 14,422
 —
 1,476
 14,422
 15,898
 (1,009) 06/16 30 years
Louisville, KY —
 377
 1,526
 —
 377
 1,526
 1,903
 (123) 08/16 30 years
Louisville, KY —
 216
 1,006
 —
 216
 1,006
 1,222
 (81) 08/16 30 years
Cheshire, CT —
 420
 3,650
 —
 420
 3,650
 4,070
 (194) 11/16 30 years
Edina, MN —
 1,235
 5,493
 (323) 1,235
 5,170
 6,405
 (209) 11/16 30 years
Eagan, MN —
 783
 4,833
 (286) 783
 4,547
 5,330
 (229) 11/16 30 years
Louisville, KY —
 481
 2,050
 —
 481
 2,050
 2,531
 (142) 12/16 30 years
Bala Cynwyd, PA —
 1,785
 3,759
 —
 1,785
 3,759
 5,544
 (261) 12/16 30 years
Schaumburg, IL —
 642
 4,962
 —
 642
 4,962
 5,604
 (55) 12/16 30 years
Kennesaw, GA —
 690
 844
 —
 690
 844
 1,534
 (56) 01/17 30 years
Charlotte, NC —
 1,200
 2,557
 —
 1,200
 2,557
 3,757
 (73) 01/17 35 years
Charlotte, NC —
 2,501
 2,079
 —
 2,501
 2,079
 4,580
 (60) 01/17 35 years
Richardson, TX —
 474
 2,046
 —
 474
 2,046
 2,520
 (61) 01/17 35 years
Frisco, TX —
 999
 3,064
 —
 999
 3,064
 4,063
 (90) 01/17 35 years
Allen, TX —
 910
 3,719
 —
 910
 3,719
 4,629
 (111) 01/17 35 years
Southlake, TX —
 920
 2,766
 —
 920
 2,766
 3,686
 (83) 01/17 35 years
Lewis Center, OH —
 410
 4,285
 —
 410
 4,285
 4,695
 (119) 01/17 35 years
Dublin, OH ��
 581
 4,223
 —
 581
 4,223
 4,804
 (117) 01/17 35 years
Plano, TX —
 400
 2,647
 —
 400
 2,647
 3,047
 (81) 01/17 35 years
Carrollton, TX —
 329
 1,389
 —
 329
 1,389
 1,718
 (44) 01/17 35 years
Davenport, FL —
 3,000
 5,877
 —
 3,000
 5,877
 8,877
 (169) 01/17 35 years
Tallahassee, FL —
 952
 3,205
 —
 952
 3,205
 4,157
 (98) 01/17 35 years
Sunrise, FL —
 1,400
 1,856
 —
 1,400
 1,856
 3,256
 (55) 01/17 35 years
Chaska, MN —
 328
 6,140
 —
 328
 6,140
 6,468
 (170) 01/17 35 years
Loretto, MN —
 286
 3,511
 —
 286
 3,511
 3,797
 (100) 01/17 35 years

  Initial costAdditions (Dispositions) (Impairments) Subsequent to acquisitionGross Amount at December 31, 2020   
LocationDebtLandBuildings,
Equipment, Leasehold Interests &
Improvements		LandBuildings,
Equipment, Leasehold Interests &
Improvements		TotalAccumulated
depreciation		Date
acquired		Depreciation
life
Sicklerville, NJ0 694 1,876 0 694 1,876 2,570 (135)06/1930 years
Pennington, NJ0 1,018 2,284 0 1,018 2,284 3,302 (229)08/1924 years
Private Schools
Chicago, IL0 3,057 46,784 0 3,057 46,784 49,841 (6,433)02/1440 years
Cumming, GA0 500 6,892 0 500 6,892 7,392 (685)01/1735 years
Cumming, GA0 325 4,898 0 325 4,898 5,223 (501)01/1735 years
Henderson, NV0 1,400 6,914 0 1,400 6,914 8,314 (670)01/1735 years
Atlanta, GA0 2,001 5,989 0 2,001 5,989 7,990 (525)01/1735 years
Pearland, TX0 2,360 9,292 0 2,360 9,292 11,652 (864)01/1735 years
Pearland, TX0 372 2,568 0 372 2,568 2,940 (235)01/1735 years
Palm Harbor, FL0 1,490 1,400 0 1,490 1,400 2,890 (136)01/1735 years
Mason, OH0 975 11,243 0 975 11,243 12,218 (985)01/1735 years
Property under development0 57,630 0 0 57,630 0 57,630 0 n/an/a
Land held for development0 23,225 0 0 23,225 0 23,225 0 n/an/a
Senior unsecured notes payable and term loan3,705,000 0 0 0 0 0 0 0 n/an/a
Less: deferred financing costs, net(35,552)— — — — — — — 
Total$3,694,443 $1,344,707 $4,295,921 $353,615 $1,323,518 $4,670,726 $5,994,244 $(1,062,087)
131
EPR Properties
 Schedule III - Real Estate and Accumulated Depreciation
December 31, 2018
(Dollars in thousands)
    Initial cost Additions (Dispositions) (Impairments) Subsequent to acquisition Gross Amount at December 31, 2018      
Location Debt Land 
Buildings,
Equipment, Leasehold Interests &
Improvements
 Land 
Buildings,
Equipment, Leasehold Interests &
Improvements
 Total 
Accumulated
depreciation
 
Date
acquired
 
Depreciation
life
Minneapolis, MN —
 920
 3,700
 —
 920
 3,700
 4,620
 (103) 01/17 35 years
Wayzata, MN —
 810
 1,962
 —
 810
 1,962
 2,772
 (57) 01/17 35 years
Plymouth, MN —
 1,563
 4,905
 —
 1,563
 4,905
 6,468
 (142) 01/17 35 years
Maple Grove, MN —
 951
 3,291
 —
 951
 3,291
 4,242
 (94) 01/17 35 years
Chula Vista, CA —
 210
 2,186
 —
 210
 2,186
 2,396
 (68) 01/17 35 years
Lincolnshire, IL —
 1,006
 4,799
 —
 1,006
 4,799
 5,805
 (104) 02/17 30 years
New Berlin, WI —
 368
 1,704
 —
 368
 1,704
 2,072
 (109) 02/17 30 years
Oak Creek, WI —
 283
 1,690
 —
 283
 1,690
 1,973
 (108) 02/17 30 years
Minnetonka, MN —
 911
 4,833
 659
 931
 5,472
 6,403
 (245) 03/17 30 years
Crowley, TX —
 1,150
 2,862
 —
 1,150
 2,862
 4,012
 (158) 05/17 30 years
Fort Worth, TX —
 1,927
 2,077
 —
 1,927
 2,077
 4,004
 (118) 05/17 30 years
Berlin, CT —
 494
 2,958
 —
 494
 2,958
 3,452
 (155) 06/17 30 years
Portland, OR —
 2,604
 585
 —
 2,604
 585
 3,189
 (18) 01/18 35 years
Orlando, FL —
 955
 4,273
 —
 955
 4,273
 5,228
 (110) 02/18 35 years
Fort Mill, SC —
 629
 3,957
 —
 629
 3,957
 4,586
 (40) 09/18 35 years
Indian Land, SC —
 907
 3,784
 —
 907
 3,784
 4,691
 (41) 09/18 35 years
                     
Private Schools                    
San Jose, CA —
 9,966
 25,535
 2,407
 9,966
 27,942
 37,908
 (3,532) 12/13 40 years
Brooklyn, NY —
 —
 46,440
 3,255
 —
 49,695
 49,695
 (5,202) 12/13 40 years
Chicago, IL —
 3,057
 46,784
 —
 3,057
 46,784
 49,841
 (4,094) 02/14 40 years
McLean, VA —
 12,792
 43,472
 3,170
 12,792
 46,642
 59,434
 (2,895) 06/15 40 years
Mission Viejo, CA —
 1,378
 3,687
 —
 1,378
 3,687
 5,065
 (287) 09/16 30 years
Cumming, GA —
 500
 6,892
 —
 500
 6,892
 7,392
 (215) 01/17 35 years
Cumming, GA —
 325
 4,898
 —
 325
 4,898
 5,223
 (157) 01/17 35 years
Henderson, NV —
 1,400
 6,914
 —
 1,400
 6,914
 8,314
 (211) 01/17 35 years
Atlanta, GA —
 2,001
 5,989
 —
 2,001
 5,989
 7,990
 (165) 01/17 35 years
Pearland, TX —
 2,360
 9,292
 —
 2,360
 9,292
 11,652
 (271) 01/17 35 years
Pearland, TX —
 372
 2,568
 —
 372
 2,568
 2,940
 (74) 01/17 35 years
Palm Harbor, FL —
 1,490
 1,400
 —
 1,490
 1,400
 2,890
 (43) 01/17 35 years
Mason, OH —
 975
 11,243
 —
 975
 11,243
 12,218
 (310) 01/17 35 years
          
 
 
 
    
Other                    
Kiamesha Lake, NY —
 155,658
 —
 19,055
 156,785
 17,928
 174,713
 (37) 07/10 n/a
                     
Property under development —
 287,546
 —
 —
 287,546
 —
 287,546
 —
 n/a n/a
Land held for development —
 50,725
 —
 (16,548) 34,177
 —
 34,177
 —
 n/a n/a
Senior unsecured notes payable and term loan 2,995,000
 —
 —
 —
 —
 —
 —
 —
 n/a n/a
Less: deferred financing costs, net (33,941) —
 —
 —
 —
 —
 —
 —
    
Total $2,986,054
 $1,529,104
 $4,215,855
 $483,995
 $1,512,291
 $4,716,663
 $6,228,954
 $(883,174)    


EPR Properties
Schedule III - Real Estate and Accumulated Depreciation (continued)
Reconciliation
(Dollars in thousands)
December 31, 2018
  
Real Estate: 
Reconciliation: 
Balance at beginning of the year$5,636,886
Acquisition and development of rental properties during the year629,944
Disposition of rental properties during the year(21,328)
Impairment of rental properties during the year(16,548)
Balance at close of year$6,228,954
Accumulated Depreciation: 
Reconciliation: 
Balance at beginning of the year$741,334
Depreciation during the year144,042
Disposition of rental properties during the year(2,202)
Balance at close of year$883,174

EPR Properties
Schedule III - Real Estate and Accumulated Depreciation (continued)
Reconciliation
(Dollars in thousands)
December 31, 2020
Real Estate Investments:
Reconciliation:
Balance at beginning of the year$6,251,398 
Acquisition and development of real estate investments during the year74,710 
Disposition of real estate investments during the year(193,258)
Impairment of real estate investments during the year(138,606)
Balance at close of year$5,994,244 
Accumulated Depreciation:
Reconciliation:
Balance at beginning of the year$989,254 
Depreciation during the year164,256 
Disposition of real estate investments during the year(23,465)
Impairment of real estate investments during the year(67,958)
Balance at close of year$1,062,087 
See accompanying report of independent registered public accounting firm.

132

Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.

Item 9A.Controls and Procedures
Evaluation of disclosures controls and procedures
As of December 31, 2018,2020, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based upon and as of the date of that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this report our disclosure controls and procedures were effective to ensureprovide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Limitations on the effectiveness of controls
Our disclosure controls were designed to provide reasonable assurance that the controls and procedures would meet their objectives. Our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls will prevent all errorserror and all fraud. A control system, no matter how well designed and operated, can provide only reasonable assurance of achieving the designed control objectives and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusions of two or more people, or by management override of the control. Because of the inherent limitations in a cost-effective, maturing control system, misstatements due to error or fraud may occur and not be detected.

Change in internal controls
Effective January 1, 2018,2020, we adopted ASC 606 Revenue from Contracts with Customer and ASC 610-20 Other Income: Gains and326, Financial Instruments - Credit Losses from the Derecognition of Nonfinancial Assets. Effective January 1, 2019, we adopted ASC 842 Leases.. Except for the enhancements to the Company's internal control over financial reporting in relation to our adoption of these standards,this standard, there have not been any changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of the fiscal year to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control–Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of December 31, 2018.2020. KPMG LLP, the independent registered public accounting firm that audited the consolidated financial statements included in this Annual Report on Form 10-K, has issued a report on the effectiveness of our internal control over financial reporting, which is included in Item 8.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements, errors or fraud. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of or compliance with the policies or procedures may deteriorate.

133

During 2018, we made enhancements to the Company’s internal control over financial reporting in relation to our upcoming adoption of the new leasing standard effective in the first quarter of 2019. We implemented or modified

internal controls to address the monitoring of the adoption process, the evaluation analysis used in determining in-scope transactions and related disclosures required for the new standard.

Item 9B. Other Information
Not applicable.
PART III


Item 10. Directors, Executive Officers and Corporate Governance
The Company’s definitive Proxy Statement for its Annual Meeting of Shareholders to be held onon May 30, 2019 (the28, 2021 (the “Proxy Statement”), contains under the captions “Election of Trustees”, “Company Governance”, and “Executive Officers”, and “Section 16(a) Beneficial Ownership Reporting Compliance” the information required by Item 10 of this Annual Report on Form 10-K, which information is incorporated herein by this reference.
We have adopted a Code of Business Conduct and Ethics that applies to our Chief Executive Officer, Chief Financial Officer, and all other officers, employees and trustees. The Code of Business Conduct and Ethics may be viewed on our website at www.eprkc.com. Changes to and waivers granted with respect to the Code of Business Conduct and Ethics required to be disclosed pursuant to applicable rules and regulations will be posted on our website.

Item 11.Executive Compensation
The Proxy Statement contains under the captions “Election of Trustees”, “Executive Compensation”, and “Compensation Committee Report”, the information required by Item 11 of this Annual Report on Form 10-K, which information is incorporated herein by this reference.

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The Proxy Statement contains under the captions “Share Ownership” and “Equity Compensation Plan Information” the information required by Item 12 of this Annual Report on Form 10-K, which information is incorporated herein by this reference.

Item 13.Certain Relationships and Related Transactions, and Director Independence
The Proxy Statement contains under the captions “Transactions Between the Company and Trustees, Officers or their Affiliates,” “Election of Trustees” and “Additional Information Concerning the Board of Trustees” the information required by Item 13 of this Annual Report on Form 10-K, which information is incorporated herein by this reference.

Item 14.Principal Accounting Fees and Services
The Proxy Statement contains under the caption “Ratification of Appointment of Independent Registered Public Accounting Firm” the information required by Item 14 of this Annual Report on Form 10-K, which information is incorporated herein by this reference.

PART IV


Item 15.Exhibits and Financial Statement Schedules
(1) Financial Statements: See Part II, Item 8 hereof
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 20182020 and 20172019
Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for the years ended December 31, 2018, 20172020, 2019 and 20162018
Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017 and 2016
Consolidated Statements of Changes in Equity for the years ended December 31, 2018, 20172020, 2019 and 20162018
Consolidated Statements of Cash Flows for the years ended December 31, 2018, 20172020, 2019 and 20162018
Notes to Consolidated Financial Statements

(2)Financial Statement Schedules: See Part II, Item 8 hereof
(2)
Financial Statement Schedules: See Part II, Item 8 hereof
Schedule II – Valuation and Qualifying Accounts
Schedule III – Real Estate and Accumulated Depreciation
(3)Exhibits

(3)Exhibits
134

The Company has incorporated by reference certain exhibits as specified below pursuant to Rule 12b-32 under the Exchange Act.
Exhibit No.Description
3.1
Composite of Amended and Restated Declaration of Trust of the Company (inclusive of all amendments through June 1, 2018)2020), which is attached as Exhibit 3.1 to the Company's Form 10-Q (Commission File No. 001-13561) filed on July 31, 2018,August 6, 2020, is hereby incorporated by reference as Exhibit 3.1
3.2
Articles Supplementary designating the powers, preferences and rights of the 5.750% Series C Cumulative Convertible Preferred Shares, which is attached as Exhibit 3.2 to the Company's Form 8-K (Commission File No. 001-13561) filed on December 21, 2006, is hereby incorporated by reference as Exhibit 3.2
3.3
Articles Supplementary designating powers, preferences and rights of the 9.000% Series E Cumulative Convertible Preferred Shares, which is attached as Exhibit 3.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on April 2, 2008, is hereby incorporated by reference as Exhibit 3.3
3.4
Articles Supplementary designating the powers, preferences and rights of the 5.750% Series G Cumulative Redeemable Preferred Shares, which is attached as Exhibit 3.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on November 30, 2017, is hereby incorporated by reference as Exhibit 3.4
3.5
Amended and Restated Bylaws of the Company (inclusive of all amendments through March 20, 2017)May 30, 2019), which is attached as Exhibit 3.2 to the Company's Form 8-K (Commission File No. 001-13561) filed on March 21, 2017,May 30, 2019, is hereby incorporated by reference as Exhibit 3.5
4.1
Form of share certificate for common shares of beneficial interest of the Company, which is attached as Exhibit 4.3 to the Company's Registration Statement on Form S-3ASR (Registration No. 333-35281), filed on June 3, 2013, is hereby incorporated by reference as Exhibit 4.1
4.2
Form of 5.750% Series C Cumulative Convertible Preferred Shares Certificate, which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on December 21, 2006, is hereby incorporated by reference as Exhibit 4.2
4.3
Form of 9.000% Series E Cumulative Convertible Preferred Shares, which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on April 2, 2008, is hereby incorporated by reference as Exhibit 4.3
4.4
Form of 5.750% Series G Cumulative Redeemable Preferred Shares Certificate, which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on November 30, 2017, is hereby incorporated by reference as Exhibit 4.4
4.5
Indenture, dated June 30, 2010, by and among the Company, certain of its subsidiaries, and UMB Bank, n.a., as trustee (including the form of 5.750% Senior Notes due 2022 included as Exhibit A thereto), which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on July 1, 2010, is hereby incorporated by reference as Exhibit 4.5
4.6
Indenture, dated June 18, 2013, by and among the Company, certain of its subsidiaries, and U.S. Bank National Association, as trustee (including the form of 5.250% Senior Notes due 2023 included as Exhibit A thereto), which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on June 18, 2013, is hereby incorporated by reference as Exhibit 4.64.5
4.74.6
Indenture, dated March 16, 2015, by and among the Company, certain of its subsidiaries, and UMB Bank, n.a., as trustee (including the form of 4.500% Senior Notes due 2025 included as Exhibit A thereto), which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on March 16, 2015, is hereby incorporated by reference as Exhibit 4.7

4.6
4.84.7
Indenture, dated December 14, 2016, by and among the Company, certain of its subsidiaries, and UMB Bank, n.a., as trustee (including the form of 4.750% Senior Notes due 2026 included as Exhibit A thereto), which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on December 14, 2016, is hereby incorporated by reference as Exhibit 4.84.7
4.94.8
Indenture, dated May 23, 2017, by and among the Company, certain of its subsidiaries, and UMB Bank, n.a., as trustee (including the form of 4.500% Senior Notes due 2027 included as Exhibit A thereto), which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on May 23, 2017, is hereby incorporated by reference as Exhibit 4.94.8
4.104.9
Indenture, dated April 16, 2018, by and between the Company and UMB Bank, n.a., as trustee (including the form of 4.950% Senior Notes due 2028 included as Exhibit A thereto), which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on April 16, 2018, is hereby incorporated by reference as Exhibit 4.104.9
135

4.114.1
Indenture, dated August 15, 2019, between the Company and UMB Bank, n.a., as trustee (including the form of 3.750% Senior Note due 2029 included as Exhibit A thereto), which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on August 15, 2019, is hereby incorporated by reference as Exhibit 4.10
4.11.1
Note Purchase Agreement, dated August 1, 2016, by and among the Company and the purchasers named therein, which is attached as Exhibit 4.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on August 3, 2016, is hereby incorporated by reference as Exhibit 4.114.11.1
4.124.11.2
First Amendment to Note Purchase Agreement, dated September 27, 2017, by and among the Company and the purchasers named therein, which is attached as Exhibit 10.2 to the Company's Form 8-K (Commission File No. 001-13561) filed on September 27, 2017, is hereby incorporated as Exhibit 4.124.11.2
10.14.11.3
Second Amendment to Note Purchase Agreement, dated June 29, 2020, by and among the Company and the purchasers named therein, which is attached as Exhibit 10.2 to the Company's Form 10-Q (Commission File No. 001-13561) filed on August 6, 2020, is hereby incorporated by reference as Exhibit 4.11.3
4.11.4
Third Amendment to Note Purchase Agreement, dated December 24, 2020, by and among the Company and the purchasers named therein is attached hereto as Exhibit 4.11.4
4.12
Description of Securities Registered under Section 12 of the Exchange Act is attached hereto as Exhibit 4.12
10.1.1
Second Amended, Restated and Consolidated Credit Agreement, dated September 27, 2017, by and among the Company, as borrower, KeyBank National Association, as administrative agent, and the other agents and lenders party thereto, which is attached as Exhibit 10.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on September 27, 2017, is hereby incorporated by reference as Exhibit 10.110.1.1
10.1.2
Amendment No. 1 to Second Amended, Restated and Consolidated Credit Agreement, dated as of June 29, 2020, by and among the Company, as borrower, KeyBank National Association, as administrative agent, and the other agents and lenders party thereto, which is attached as Exhibit 10.1 to the Company's Form 10-Q (Commission File No. 001-13561) filed on August 6, 2020, is hereby incorporated by reference as Exhibit 10.1.2
10.1.3
Amendment No. 2 to the Second Amended, Restated and Consolidated Credit Agreement, dated as of November 3, 2020, by and among the Company, as borrower, KeyBank National Association, as administrative agent, and the other agents and lenders party thereto is attached hereto as Exhibit 10.1.3
10.2*
Form of Indemnification Agreement entered into between the Company and each of its trustees and officers, which is attached as Exhibit 10.2 to the Company's Form 8-K (Commission File No. 001-13561) filed on May 14, 2007, is hereby incorporated by reference as Exhibit 10.2
10.3*
Deferred Compensation Plan for Non-Employee Trustees, which is attached as Exhibit 10.10 to Amendment No. 2, filed on November 5, 1997, to the Company's Registration Statement on Form S-11 (Registration No. 333-35281), is hereby incorporated by reference as Exhibit 10.3
10.4*
2007 Equity Incentive Plan, as amended, which is attached as Exhibit 10.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on May 15, 2013, is hereby incorporated by reference as Exhibit 10.4
10.5*
Form of 2007 Equity Incentive Plan Nonqualified Share Option Agreement for Employee Trustees, which is attached as Exhibit 10.2 to the Company's Registration Statement on Form S-8 (Registration No. 333-142831) filed on May 11, 2007, is hereby incorporated by reference as Exhibit 10.5
10.6*
Form of 2007 Equity Incentive Plan Nonqualified Share Option Agreement for Non-Employee Trustees, which is attached as Exhibit 10.3 to the Company's Registration Statement on Form S-8 (Registration No. 333-142831) filed on May 11, 2007, is hereby incorporated by reference as Exhibit 10.6
10.7*
Form of 2007 Equity Incentive Plan Restricted Shares Agreement for Employees, which is attached as Exhibit 10.4 to the Company's Registration Statement on Form S-8 (Registration No. 333-142831) filed on May 11, 2007, is hereby incorporated by reference as Exhibit 10.7
10.8*
Form of 2007 Equity Incentive Plan Restricted Shares Agreement for Non-Employee Trustees, which is attached as Exhibit 10.3 to the Company's Form 8-K (Commission File No. 001-13561) filed on May 20, 2009, is hereby incorporated by reference as Exhibit 10.8
136

10.9*
EPR Properties 2016 Equity Incentive Plan, which is attached as Exhibit 10.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on May 12, 2016, is hereby incorporated by reference as Exhibit 10.9
10.10*
Form of 2016 Equity Incentive Plan Incentive and Nonqualified Share Option Award Agreement for Employees, which is attached as Exhibit 10.2 to the Company's Form 8-K (Commission File No. 001-13561) filed on May 12, 2016, is hereby incorporated by reference as Exhibit 10.10

10.11*
Form of 2016 Equity Incentive Plan Restricted Shares Award Agreement for Employees, which is attached as Exhibit 10.3 to the Company's Form 8-K (Commission File No. 001-13561) filed on May 12, 2016, is hereby incorporated by reference as Exhibit 10.11
10.12*
Form of 2016 Equity Incentive Plan Restricted Share Unit Award Agreement for Non-Employee Trustees, which is attached as Exhibit 10.4 to the Company's Form 8-K (Commission File No. 001-13561) filed on May 12, 2016, is hereby incorporated by reference as Exhibit 10.12
10.13*
Annual Performance-Based Incentive Plan, which is attached as Exhibit 10.1 to the Company's 8-K (Commission File No. 001-13561) filed on June 2, 2017, is hereby incorporated by reference as Exhibit 10.13
10.14*
Employment Agreement, dated May 13, 2015, by and between the Company and Gregory K. Silvers, which is attached as Exhibit 10.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on May 18, 2015, is hereby incorporated by reference as Exhibit 10.14
10.15*
Employment Agreement, dated May 13, 2015, by and between the Company and Mark A. Peterson, which is attached as Exhibit 10.2 to the Company's Form 8-K (Commission File No. 001-13561) filed on May 18, 2015, is hereby incorporated by reference as Exhibit 10.15
10.16*
Amended and Restated Employment Agreement, effective March 31, 2018, by and between the Company and Morgan G. Earnest II, which is attached as Exhibit 10.1 to the Company's Form 8-K/A (Commission File No. 001-13561) filed on April 6, 2018, is hereby incorporated by reference as Exhibit 10.16
10.17*
Employment Agreement, dated May 13, 2015, by and between the Company and Craig L. Evans, which is attached as Exhibit 10.4 to the Company's Form 8-K (Commission File No. 001-13561) filed on May 18, 2015, is hereby incorporated by reference as Exhibit 10.17
10.19*
Employment Agreement, dated May 13, 2015, by and between the Company and Michael L. Hirons, which is attached as Exhibit 10.6 to the Company's Form 8-K (Commission File No. 001-13561) filed on May 18, 2015, is hereby incorporated by reference as Exhibit 10.19
10.20*
EPR Properties Employee Severance Plan (as amended June 1, 2018), which is attached as Exhibit 10.1 to the Company's Form 10-Q (Commission File No. 001-13561) filed on July 31, 2018, is hereby incorporated by reference as Exhibit 10.2010.14
10.15*
EPR Properties Employee Severance and Retirement Vesting Plan (effective July 31, 2020), which is attached as Exhibit 10.15 to the Company's Form 10-K (Commission File No. 001-13561) filed on February 25, 2020, is hereby incorporated by reference as Exhibit 10.15
10.16*
2020 Long Term Incentive Plan, which is attached as Exhibit 10.1 to the Company's Form 8-K (Commission File No. 001-13561) filed on February 26, 2020 is hereby incorporated by reference as Exhibit 10.16
10.17*
Form of Performance Shares Awards Agreement under the 2020 Long Term Incentive Plan, which is attached as Exhibit 10.2 to the Company's Form 8-K (Commission File No. 001-13561) filed on February 26, 2020, is hereby incorporated by reference as Exhibit 10.17
10.18*
Form of Restricted Shares Award Agreement under the 2020 Long Term Incentive Plan, which is attached as Exhibit 10.3 to the Company's Form 8-K (Commission File No. 001-13561) filed on February 26, 2020, is hereby incorporated by reference as Exhibit 10.18
10.19*
Release Agreement, dated as of December 31, 2020, by and between the Company and Michael L. Hirons is attached hereto as Exhibit 10.19
21
The list of the Company's Subsidiaries is attached hereto as Exhibit 21
22
The list of issuers and guarantor subsidiaries is attached hereto as Exhibit 22
23
Consent of KPMG LLP is attached hereto as Exhibit 23
31.1
Certification of Gregory K. Silvers pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 is attached hereto as Exhibit 31.1
31.2
Certification of Mark A. Peterson pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 is attached hereto as Exhibit 31.2
32.1
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is attached hereto as Exhibit 32.1
32.2
Certification by Chief Financial Officer pursuant to 18 USCU.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is attached hereto as Exhibit 32.2
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema
101.CALInline XBRL Extension Calculation Linkbase
101.DEFInline XBRL Taxonomy Extension Definition Linkbase
101.LABInline XBRL Taxonomy Extension Label Linkbase
101.PREInline XBRL Taxonomy Extension Presentation Linkbase

137

104Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)
* Management contracts or compensatory plans

PLEASE NOTE: Pursuant to the rules and regulations of the Securities and Exchange Commission, we have filed or incorporated by reference the agreements referenced above as exhibits to this Annual Report on Form 10-K. The agreements have been filed to provide investors with information regarding their respective terms. The agreements are not intended to provide any other factual information about the Company or its business or operations. In particular, the assertions embodied in any representations, warranties and covenants contained in the agreements may be subject to qualifications with respect to knowledge and materiality different from those applicable to investors and may be qualified by information in confidential disclosure schedules not included with the exhibits. These disclosure schedules may contain information that modifies, qualifies and creates exceptions to the representations, warranties and covenants set forth in the agreements. Moreover, certain representations, warranties and covenants in the agreements may have been used for the purpose of allocating risk between the parties, rather than establishing matters as facts. In addition, information concerning the subject matter of the representations, warranties and covenants may have changed after the date of the respective agreement, which subsequent information may or may not be fully reflected in the Company's public disclosures. Accordingly, investors should not rely on the representations, warranties and covenants in the agreements as characterizations of the actual state of facts about the Company or its business or operations on the date hereof.

Item 16.Form 10-K Summary
None.

138


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
EPR Properties
Dated:February 28, 201925, 2021By/s/ Gregory K. Silvers
Gregory K. Silvers, President and Chief Executive

Officer (Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature and TitleDate
/s/ Robert J. DrutenFebruary 28, 201925, 2021
Robert J. Druten, Chairman of the Board
/s/ Gregory K. SilversFebruary 28, 201925, 2021
Gregory K. Silvers, President, Chief Executive Officer (Principal Executive Officer) and Trustee
/s/ Mark A. Peterson

February 28, 201925, 2021
Mark A. Peterson, Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
/s/ Tonya L. Mater

February 28, 201925, 2021
Tonya L. Mater, Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)
/s/ Thomas M. BlochFebruary 28, 201925, 2021
Thomas M. Bloch, Trustee
/s/ Barrett BradyFebruary 28, 201925, 2021
Barrett Brady, Trustee
/s/ Peter C. BrownFebruary 28, 201925, 2021
Peter C. Brown, Trustee
/s/ James B. ConnorFebruary 28, 201925, 2021
James B. Connor, Trustee
/s/ Jack A. Newman, Jr.February 28, 201925, 2021
Jack A. Newman, Jr., Trustee
/s/ Virginia E. ShanksFebruary 25, 2021
Virginia E. Shanks, Trustee
/s/ Robin P. SterneckFebruary 28, 201925, 2021
Robin P. Sterneck, Trustee

132139