Wells starts EPR Properties at Underweight on theater exposure

Wells Fargo initiated coverage of EPR Properties with an Underweight rating and $40 price target. The analyst says EPR’s relatively high cost of capital will limit its growth despite the Regal resolution. The company’s experiential assets may also be impacted by a slowdown in consumer spending activity, the analyst tells investors in a research note. EPR is heavily exposed to theaters, making up approximately 40% of total portfolio cash flows, the firm points out. It believes EPR’s strategy to wind down its theater portfolio in a tough rate environment will impede funds from operations growth potential despite the recent Regal lease resolution and AMC capital raise.