Entertainment Properties Trust Reports Record Second Quarter Results

Entertainment Properties Trust (NYSE:EPR) today announced operating results for the second quarter and six months ended June 30, 2007. The Company reported record second quarter revenues, net income and funds from operations (FFO). Total revenue increased 11% to $57.1 million for the second quarter compared to $51.4 million for the same quarter in 2006. Net income available to common shareholders increased 15% to $20.9 million from $18.2 million for the same quarter last year. Net income on a diluted per common share basis increased 15% to $0.78 per share from $0.68 per share in the same quarter last year. Funds from operations (FFO) for the second quarter increased 3% to $26.7 million from $25.9 million compared to the same quarter last year. FFO per diluted common share increased 2% to $0.99 per share from $0.97 per share for the same quarter last year. As discussed below, FFO for the second quarter included a charge of $2.1 million ($0.08 per fully diluted common share) as a result of the redemption of all Series A Preferred shares. For the six months ended June 30, 2007, total revenue increased 11% to $107.4 million compared to $97.1 million for the same period in 2006. Net income available to common shareholders increased 14% to $39.0 million from $34.3 million for the same period last year. Net income on a diluted per common share basis increased 12% to $1.45 from $1.30 for the same period last year. FFO for the six months ended June 30, 2007 increased 7% to $52.9 million from $49.4 million a year ago. FFO per diluted common share increased 5% to $1.97 per share from $1.87 per share for the same period last year. Dividend Information On June 15, 2007, the Company declared a regular quarterly dividend of $0.76 per common share, which was paid on July 16, 2007 to common shareholders of record on June 29, 2007. This dividend represents an increase of 10.5% to an annual dividend rate of $3.04 per common share compared to last year. The Company also declared and paid a second quarter cash dividend of $0.4844 per share on the 7.75% Series B Preferred Shares, a cash dividend of $0.3594 per share on the 5.75% Series C Convertible Preferred Shares and a cash dividend of $0.1844 per share on the 7.375% Series D Preferred Shares. A cash dividend of $0.3892 was paid on the 9.50% Series A Preferred Shares at redemption on May 29, 2007. Capital Markets Activity On April 18, 2007, the Company amended its unsecured revolving credit facility primarily to: expand the types of assets which may be used in calculating the borrowing base, subject to certain limitations; provide a more favorable valuation of megaplex theatres and entertainment-related assets in the calculation of the Company’s borrowing base and leverage ratio; allow unsecured recourse indebtedness beyond the unsecured credit facility; relax certain limitations on permitted investments; and increase the letter of credit subline to $70,000,000. The size, term and pricing of the unsecured revolving credit facility were not impacted by the amendment. During the second quarter, the Company obtained five non-recourse mortgage loans totaling $55.0 million. Each of these mortgages are secured by a theatre property, bear interest at an average rate of 5.81% per year and mature on May 1, 2017. These mortgages require monthly principal and interest payments totaling $348 thousand with final principal payments at maturity totaling $42.5 million. The net proceeds from these loans were used to pay down the Company’s unsecured revolving credit facility. On May 25, 2007, the Company issued 4.6 million 7.375% Series D Preferred Shares in a registered public offering for net proceeds of approximately $111.1 million, after expenses. On or after May 25, 2012, the Company may, at its option, redeem the Series D Preferred Shares in whole or in part. The Series D Preferred Shares generally have no stated maturity, will not be subject to any sinking fund or mandatory redemption, and are not convertible into any of the Company’s other securities. The net proceeds from this offering were used to redeem the Company’s 9.50% Series A Preferred Shares and to pay down the Company’s unsecured revolving credit facility. On May 29, 2007, the Company completed the redemption of all 2.3 million outstanding 9.50% Series A Preferred Shares. The shares were redeemed at a redemption price of $25.39 per share which included the $25.00 per share liquidation preference and a prorated quarterly dividend. In conjunction with the redemption, the Company recognized both a non-cash charge representing the original issuance costs that were paid in 2002 and also other redemption-related expenses. The aggregate reduction to net income available to common shareholders and FFO was approximately $2.1 million ($0.08 per fully diluted common share) for the three and six months ended June 30, 2007. Investment Activity On April 4, 2007, the Company entered into two secured first mortgage loan agreements totaling $73.5 million with Peak Resorts, Inc. ("Peak”), the operator of two resorts previously financed by the Company. The Company advanced $48.5 million during April of 2007 under these agreements. The loans are secured by two ski resorts located in Vermont and New Hampshire. Mount Snow is approximately 2,378 acres and is located in both West Dover and Wilmington, Vermont. Mount Attitash is approximately 1,250 acres and is located in Bartlett, New Hampshire. The loans have a maturity date of April 3, 2027 and the unpaid principal balance initially bears interest at 10%. Additionally, on April 4, 2007, the Company entered into a third secured first mortgage loan agreement for $25.0 million with Peak for the further development of Mount Snow. The loan is secured by approximately 696 acres of development land. The Company advanced the full amount of the loan during April of 2007. The loan has a maturity date of April 2, 2010 at which time the unpaid principal balance and all accrued interest is due. The unpaid principal balance bears interest at 10%. On April 30, 2007, the Company purchased a 35-acre vineyard and winery facility in Napa Valley, California, and simultaneously leased this property to Rb Wine Associates, LLC. The initial acquisition price for the property was approximately $5.5 million and it is leased under a long-term triple-net lease. The Company has committed to fund additional investments in this winery and expects the total size of this investment to be approximately $12.5 million when complete. On May 8, 2007, the Company acquired 66.67% of the voting interests in two entities which own City Center at White Plains, a 390-thousand-square-foot entertainment retail center in White Plains, New York that is anchored by a 15-screen megaplex theatre operated by National Amusements. The project had existing debt of approximately $120 million and the Company invested approximately $31 million to complete the transaction. The operating agreements provide for the Company to receive an annual cash preferred return of 10% of invested capital. The results for the period from inception of the investment to June 30, 2007 have been consolidated in the Company’s financial statements. During the quarter ended June 30, 2007, the Company advanced an additional $47.8 million under its secured mortgage loan agreement for the development of a water-park-anchored entertainment village. The secured property is approximately 368 acres of development land located in Kansas City, Kansas. The carrying value of this mortgage note receivable at June 30, 2007 was $84.3 million, including related accrued interest, and the loan is guaranteed by the Schlitterbahn New Braunfels Group. Also during the quarter ended June 30, 2007, the Company completed development of a megaplex theatre property located in Panama City, Florida. The Grand 16 Theatre at Pier Park is operated by Southern Theatres and was completed for a total development cost (including land and building) of approximately $17.6 million. This theatre is leased under a long-term triple-net lease. As of June 30, 2007, the Company had three theatre development projects under construction for which it has agreed to finance the development costs. These theatres are expected to have a total of 44 screens and their development costs (including land) are expected to be approximately $35.3 million. For the six months ended June 30, 2007, the Company’s investment spending totaled $244.1 million. ENTERTAINMENT PROPERTIES TRUST Consolidated Statements of Income (Dollars in thousands except per share data) (Unaudited)   Three Months EndedJune 30, Six Months EndedJune 30, 2007   2006   2007   2006   Rental revenue $ 45,687 $ 44,702 $ 88,555 $ 84,080 Tenant reimbursements 4,281 3,491 7,917 6,940 Other income 493 819 1,274 1,925 Mortgage financing interest 6,627   2,355   9,649   4,179   Total revenue 57,088 51,367 107,395 97,124   Property operating expense 5,489 4,742 10,050 9,463 Other expense 936 969 1,542 2,007 General and administrative expense 2,828 5,295 6,060 7,777 Costs associated with loan refinancing - - - 673 Interest expense, net 14,632 11,706 25,584 22,945 Depreciation and amortization 9,126   7,772   17,388   15,237     Income before income from joint ventures, gain on sale of land and discontinued operations 24,077 20,883 46,771 39,022   Gain on sale of land - - - 345 Equity in income from joint ventures 199   192   397   376     Income from continuing operations $ 24,276 $ 21,075 $ 47,168 $ 39,743   Discontinued operations: Income from discontinued operations 759 63 777 435 Gain on sale of real estate 3,240   -   3,240   -     Net income 28,275 21,138 51,185 40,178   Preferred dividend requirements (5,234 ) (2,916 ) (10,090 ) (5,831 ) Series A preferred share redemption costs (2,101 ) -   (2,101 ) -   Net income available to common shareholders $ 20,940   $ 18,222   $ 38,994   $ 34,347     Per share data: Basic earnings per share data: Income from continuing operations available to common shareholders $ 0.64 $ 0.69 $ 1.33 $ 1.30 Income from discontinued operations 0.15   0.00   0.15   0.02   Net income available to common shareholders $ 0.79   $ 0.69   $ 1.48   $ 1.32     Diluted earnings per share data: Income from continuing operations available to common shareholders $ 0.63 $ 0.68 $ 1.30 $ 1.29 Income from discontinued operations 0.15   0.00   0.15   0.01   Net income available to common shareholders $ 0.78   $ 0.68   $ 1.45   $ 1.30   ENTERTAINMENT PROPERTIES TRUST Reconciliation of Net Income Available to Common Shareholders to Funds From Operations (A) (Dollars in thousands except per share data)   Three Months EndedJune 30, Six Months EndedJune 30, 2007   2006   2007   2006   Net income available to common shareholders $ 20,940 $ 18,222 $ 38,994 $ 34,347 Subtract: Gain on sale of real estate from discontinued operations (3,240 ) - (3,240 ) - Add: Real estate depreciation and amortization 8,933 7,602 17,018 14,898 Add: Allocated share of joint venture depreciation 63   61   123   121   FFO available to common shareholders 26,696   25,885   52,895   49,366     FFO per common share: Basic $ 1.01 $ 0.98 $ 2.01 $ 1.90 Diluted 0.99 0.97 1.97 1.87   Shares used for computation (in thousands): Basic 26,418 26,285 26,351 25,989 Diluted 26,914 26,666 26,866 26,380   Other financial information: Straight-lined rental revenue $ 1,096 $ 1,004 $ 2,051 $ 1,839 Dividends per common share $ 0.7600 $ 0.6875 $ 1.5200 $ 1.3750 FFO payout ratio(a) 77 % 71 % 77 % 73 %   (a) FFO payout ratio is calculated by dividing dividends per common share by FFO per diluted common share. (A) 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. FFO is a widely used measure of the operating performance of real estate companies and is provided here as a supplemental measure to Generally Accepted Accounting Principles (GAAP) net income available to common shareholders and earnings per share. FFO, as defined under the revised NAREIT definition and presented by us, is net income available to common shareholders, computed in accordance with GAAP, excluding gains and losses from sales of depreciable operating properties, 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. FFO is a non-GAAP financial measure. FFO does not represent cash flows from operations as defined by GAAP and is not indicative that cash flows are adequate to fund all cash needs and is not to be considered an alternative 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 the same way so comparisons with other REITs may not be meaningful. ENTERTAINMENT PROPERTIES TRUST Condensed Consolidated Balance Sheets (dollars in thousands)   As of As of June 30, 2007 December 31, 2006 (unaudited) Assets Rental properties, net $ 1,583,217 $ 1,395,903 Property under development 24,904 19,272 Mortgage notes and related accrued interest receivable 253,145 76,093 Investment in joint ventures 2,131 2,182 Cash and cash equivalents 8,937 9,414 Restricted cash 11,687 7,365 Intangible assets, net 17,003 9,366 Deferred financing costs, net 10,210 10,491 Accounts and notes receivable 38,455 30,043 Other assets 14,418 11,150 Total assets $ 1,964,107 $ 1,571,279   Liabilities and Shareholders’ Equity Accounts payable and accrued liabilities $ 12,830 $ 16,480 Dividends payable 24,606 21,314 Unearned rents and interest 5,100 1,024 Long-term debt 980,084 675,305 Total liabilities 1,022,620 714,123   Minority interests 19,584 4,474 Shareholders' equity 921,903 852,682 Total liabilities and shareholders' equity $ 1,964,107 $ 1,571,279 About Entertainment Properties Trust Entertainment Properties Trust is a self-administered real estate investment trust formed to capitalize on opportunities to develop, acquire or finance destination entertainment and entertainment-related properties, including megaplex movie theatres, entertainment retail centers and other destination recreational and specialty properties. Since November of 1997, EPR has acquired or developed more than $1.7 billion of properties. The Company's common shares of beneficial interest trade on the New York Stock Exchange under the ticker symbol EPR. Entertainment Properties Trust Company contact: Jon Weis, 30 Pershing Road, Suite 201, Kansas City, Missouri 64108; 888-EPR-REIT; fax: 816-472-5794. Safe Harbor Statement With the exception of historical information, this press release contains forward-looking statements within the meaning of the securities laws, such as those pertaining to our acquisition or disposition of properties, our capital resources and future expenditures for development projects. The Company's actual financial condition, results of operations, funds from operations, or business may vary materially from those contemplated by such forward-looking statements and involve various risks and uncertainties. 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," or other comparable terms, or by discussions of strategy, plans or intentions. Forward-looking statements necessarily are dependent on assumptions, data or methods that may be incorrect or imprecise. You should consider the risks described in the "Risk Factors" section of our most recent annual report on Form 10-K and, to the extent applicable, our quarterly reports on Form 10-Q, in evaluating any forward-looking statements included in this press release. Given these uncertainties, you should not place undue reliance on these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements included in this press release whether as a result of new information, future events or otherwise. In light of the factors referred to above, the future events discussed in this press release may not occur and actual results, performance or achievements could differ materially from those anticipated or implied in the forward-looking statements.