J.P Morgan Gives Color On Entertainment Properties Trust Following Earnings Report

Entertainment Properties Trust EPR reported 4Q FFO that was in line with Bloomberg consensus and a penny above J.P Morgan's number. There were three items occurring post 4Q that stood out: the weakness in the winery/vineyard business is prompting more rent cuts and the potential sale of the assets; the company is under contract to sell Toronto Dundas Square, with better-than-expected execution at a low 6s cap rate; and it raised its dividend more and sooner than expected – an 8% increase. The rent reductions in the wine business result in about $0.10 coming off the top of the previous guidance range, and since most estimates were toward the top of the range, they will likely have to come in a bit. While downward revisions are less than optimal, it wouldn't be the worst thing for EPR to take its lumps and move on from what has been its weakest segment for several quarters. The good news is that the rest of the business appears to be performing well, and the company's deal pipeline appears to be coming along as expected. J.P Morgan maintains its Overweight rating, as it believes the stock remains cheap compared to the overall REIT space. J.P Morgan has a $51 PT and Overweight rating on EPR EPR closed Monday at $47.67