EPR PROPERTIES (EPR)

Item 2. 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 Quarterly Report on Form 10-Q of EPR Properties (the “Company”, “EPR”, “we” or “us”). The forward-looking statements included in this discussion and elsewhere in this Quarterly Report on Form 10-Q involve risks and uncertainties, including anticipated financial performance, anticipated liquidity and capital resources, 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,” which is incorporated herein by reference. 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 Item 1A - "Risk Factors" in our 2025 Annual Report.

Overview

Business

Our primary long-term business objective is to enhance shareholder value by achieving predictable and increasing Funds From Operations As Adjusted ("FFOAA"), Adjusted Funds From Operations ("AFFO") and dividends per share. FFOAA and AFFO are non-GAAP financial measures and are defined and reconciled below in the section titled "Non-GAAP Financial Measures." Our growth strategy focuses on acquiring or developing experiential properties in which we maintain a depth of knowledge and relationships, and which we believe offer sustained performance through most economic cycles.

Our investment portfolio includes ownership of and long-term mortgages on Experiential and Education 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 believe our management’s knowledge and industry relationships have facilitated opportunities for us to acquire, finance and lease properties. Our strategy has been to structure leases and financings to ensure a positive spread between our cost of capital and the rentals or interest paid by our tenants. To mitigate initial lease-up risks and support a predictable income stream, we typically acquire or develop single-tenant properties that are pre-leased under long-term leases. We have also entered into certain joint ventures. We intend to continue entering into some or all of these types of arrangements in the foreseeable future.

Historically, our primary challenges have been locating suitable properties, negotiating favorable lease or financing terms (on new or existing properties), managing our expanding portfolio and having a cost of capital that allows us to grow our investments in new properties beyond those funded primarily with free cash and disposition proceeds.

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As of June 30, 2026, our total assets were approximately $6.1 billion (after accumulated depreciation of approximately $1.8 billion) with properties located in 43 states and Canada. Our total investments (a non-GAAP financial measure) were approximately $7.5 billion as of June 30, 2026. See "Non-GAAP Financial Measures" for the reconciliation of "Total assets" in the consolidated balance sheet to total investments at June 30, 2026 and December 31, 2025. We group our investments into two reportable segments, Experiential and Education. As of June 30, 2026, our Experiential investments comprised $7.1 billion, or 95%, and our Education investments comprised $0.4 billion, or 5%, of our total investments.

As of June 30, 2026, our Experiential portfolio (excluding property under development, undeveloped land inventory and two joint venture properties) consisted of the following property types (owned or financed):

•148 theatre properties;

•61 eat & play properties (including seven theatres located in entertainment districts);

•35 attraction properties;

•11 ski properties;

•four experiential lodging properties;

•30 fitness & wellness properties;

•one gaming property; and

•one cultural property.

As of June 30, 2026, our wholly-owned Experiential real estate portfolio consisted of approximately 19.5 million square feet, was 99% leased or operated and included $10.0 million in property under development and $20.2 million in undeveloped land inventory.

As of June 30, 2026, our Education portfolio consisted of the following property types (owned or financed):

•46 early childhood education center properties; and

•nine private school properties.

As of June 30, 2026, our wholly-owned Education real estate portfolio consisted of approximately 1.1 million square feet and was 100% leased.

The combined wholly-owned portfolio consisted of 20.6 million square feet and was 99% leased or operated.

Geopolitical and International Trade Environment

Recent geopolitical events and macroeconomic trends, including evolving global armed conflicts and significant changes in U.S. and international trade policies, have produced heightened uncertainty. This uncertainty could weaken economic conditions, contribute to inflation, increase borrowing costs and decrease consumer spending. Global trade uncertainty and supply chain disruptions may impact our business by increasing the cost of construction materials, which in turn may lead to higher development and renovation expenses. This increase in costs may result in reduced yields on development projects and potentially delay or result in cancelled planned projects. Additionally, our tenants and their customers are similarly experiencing these uncertainties, which could negatively affect their financial resources and ability to satisfy their obligations to us.

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Operating Results

Our total revenue, net income available to common shareholders per diluted share and FFOAA per diluted share are detailed below for the three and six months ended June 30, 2026 and 2025 (in millions, except per share information):

The major factors impacting our results for the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025 were as follows:

•The effect of investments and dispositions that occurred in 2026 and 2025 as well as contractual increases in rent and interest related to existing investments;

•The recognition of lower other income and other expense primarily related to having fewer operating properties for the three and six months ended June 30, 2026 versus the three and six months ended June 30, 2025;

•The recognition of higher retirement and severance expense for the six months ended June 30, 2026 versus the six months ended June 30, 2025;

•The increase in the benefit for credit losses, net for the six months ended June 30, 2026 versus the six months ended June 30, 2025;

•The recognition of lower gain on real estate transactions for the three and six months ended June 30, 2026 versus the three and six months ended June 30, 2025; and

•The increase in interest expense for the three and six months ended June 30, 2026 versus the three and six months ended June 30, 2025.

For further detail on items impacting our operating results, see section below titled "Results of 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 "Non-GAAP Financial Measures."

Critical Accounting Policies and Estimates

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 and the reported amounts of revenues and expenses during the reporting period. The most significant assumptions and estimates relate to the valuation of real estate, accounting for real estate acquisitions, assessing the collectability of receivables and the credit 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. A summary of critical accounting policies and estimates is included in our 2025 Annual Report. For the six months ended June 30, 2026, there were no changes to critical accounting policies.

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Recent Developments

Investment Spending

Our investment spending during the six months ended June 30, 2026 and 2025 totaled $492.2 million and $86.3 million, respectively, and is detailed below (in thousands):

The above amounts include $0.6 million and $2.4 million in capitalized interest and $81 thousand and $175 thousand in other general and administrative direct project costs for the six months ended June 30,

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

Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to promote an understanding of our financial condition, results of operations, liquidity and certain other factors that may affect future results. MD&A is provided as a supplement to, and 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.”

A discussion regarding our financial condition and results of operations for fiscal year 2025 compared to fiscal year 2024 is presented below. A discussion regarding our financial condition and results of operations for fiscal year 2024 compared to fiscal year 2023 is incorporated herein by reference and can be found under Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 27, 2025.

Overview

Business

Our primary long-term business objective is to enhance shareholder value by achieving predictable and increasing Funds From Operations As Adjusted ("FFOAA"), Adjusted Funds From Operations ("AFFO") and dividends per share. FFOAA and AFFO are non-GAAP financial measures and are defined and reconciled below in the section titled "Non-GAAP Financial Measures." Our growth strategy focuses on acquiring or developing experiential properties in which we maintain a depth of knowledge and relationships, and which we believe offer sustained performance through most 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 Experiential and Education 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 believe our management's knowledge and industry relationships have facilitated opportunities for us to acquire, finance and lease properties. Our strategy has been to structure leases and financings to ensure a positive spread between our cost of capital and the rentals or interest paid by our tenants. To avoid initial lease-up risks and produce a predictable income stream, we typically acquire or develop single-tenant properties that are pre-leased under long-term leases. We have also entered into certain joint ventures. We intend to continue entering into some or all of these types of arrangements in the foreseeable future.

Historically, our primary challenges have been locating suitable properties, negotiating favorable lease or financing terms (on new or existing properties), managing our expanding portfolio and having a cost of capital that allows us to grow our investments in new properties beyond those funded primarily with free cash and disposition proceeds.

As of December 31, 2025, our total assets were approximately $5.7 billion (after accumulated depreciation of approximately $1.7 billion) with properties located in 43 states and Canada. Our total investments (a non-GAAP financial measure) were approximately $7.0 billion as of December 31, 2025. See "Non-GAAP Financial Measures" for the reconciliation of "Total assets" in the consolidated balance sheet to total investments and the calculation of total investments at December 31, 2025 and 2024. We group our investments into two reportable segments,

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Experiential and Education. As of December 31, 2025, our Experiential investments comprised $6.6 billion, or 94%, and our Education investments comprised $0.4 billion, or 6%, of our total investments.

As of December 31, 2025, our Experiential portfolio (excluding property under development, undeveloped land inventory and two joint venture properties) consisted of the following property types (owned or financed):

•148 theatre properties;

•60 eat & play properties (including seven theatres located in entertainment districts);

•26 attraction properties;

•11 ski properties;

•four experiential lodging properties;

•27 fitness & wellness properties;

•one gaming property; and

•one cultural property.

As of December 31, 2025, our wholly-owned Experiential real estate portfolio consisted of approximately 19.0 million square feet, was 99% leased or operated and included $54.9 million in property under development and $20.2 million in undeveloped land inventory.

As of December 31, 2025, our Education portfolio consisted of the following property types (owned or financed):

•46 early childhood education center properties; and

•nine private school properties.

As of December 31, 2025, our wholly-owned Education real estate portfolio consisted of approximately 1.1 million square feet and was 100% leased.

The combined wholly-owned portfolio consisted of 20.1 million square feet and was 99% leased or operated.

Geopolitical and International Trade Environment

Recent geopolitical events and macroeconomic trends, including evolving global armed conflicts and significant changes in U.S. trade policy, have produced heightened uncertainty. This uncertainty could lead to weakened economic conditions, contribute to inflation and increased borrowing costs and could lead to decreased consumer spending. For example, tariff increases may impact our business by increasing the cost of construction materials, which in turn may lead to higher development and renovation expenses. This increase in costs may result in reduced yields on development projects and potentially delay or result in cancelling planned projects. Additionally, our tenants and their customers are similarly experiencing these uncertainties, which could negatively affect their financial resources and ability to satisfy their obligations to us.

Operating Results

Our total revenue, net income available to common shareholders per diluted share and FFOAA per diluted share are detailed below for the years ended December 31, 2025 and 2024 (dollars in millions, except per share information):

The major factors impacting our results for the year ended December 31, 2025, as compared to the year ended December 31, 2024 were as follows:

•The effect of investments and dispositions that occurred in 2025 and 2024;

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•The recognition of lower other income and other expense primarily related to having fewer operating properties for the year ended December 31, 2025 versus the year ended December 31, 2024;

•The recognition of higher general and administrative expense, retirement and severance expense, transaction costs and income tax expense for the year ended December 31, 2025 versus the year ended December 31, 2024.

•The decrease in provision for credit losses, net, impairment charges and impairment charges on joint ventures for the year ended December 31, 2025 versus the year ended December 31, 2024;

•The recognition of higher gain on sale of real estate and early ground lease termination for the year ended December 31, 2025 versus the year ended December 31, 2024; and

•The recognition of lower equity in loss from joint ventures for the year ended December 31, 2025 versus the year ended December 31, 2024.

For further details on items impacting our operating results, see section below titled "Results of Operations". FFOAA is a non-GAAP financial measure. For the definitions and further details on the calculation of FFOAA and certain other non-GAAP financial measures, see section below titled "Non-GAAP Financial Measures."

Critical Accounting Policies and Estimates

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 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, assessing the collectability of receivables and the credit loss related to mortgage and other notes receivable. Applying these assumptions requires exercising 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 real estate investments. These impairment estimates may have a direct impact on our consolidated financial statements. We assess the carrying value of our real 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, under-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 completing the undiscounted cash flow test, which compares the carrying amount of the real estate investment to the estimated future cash flows (undiscounted and without interest charges), including the residual value of the real estate. If an impairment is indicated, we record a loss for the amount by which the carrying value of the asset exceeds its estimated fair value.

The assumptions used to derive the estimated future cash flows for the undiscounted cash flow test are subjective and include, but are not limited to, capitalization rates, anticipated future market rent and our anticipated hold period. Market rent assumptions used for the estimated future cash flows and the capitalization rate used to estimate the residual value of the real estate can fluctuate based on economic and industry specific factors. Changes in these assumptions could materially impact the result of the undiscounted cash flow test and lead to an impairment loss. If there is a shift in economic conditions, or a change in our property strategy, including a reduction in our anticipated hold period, these changes could materially impact the result of the undiscounted cash flow test and also lead to an impairment loss. Impairment loss is calculated based upon the difference between the fair value and the carrying value of the property. We generally use the income appr

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