EPR Properties (EPR) Cash Flow Statement

The gap between net income and FFO has been consistently wide, averaging around $40M per quarter over the past year. This indicates that depreciation is a major non-cash expense, and investors should focus on FFO as the primary earnings metric. The 2024Q4 anomaly, where net income was negative but FFO positive, further highlights the distortion.

The dividend payout ratio based on FFO has been consistently below 70% over the last five quarters, indicating that EPR generates sufficient cash to cover its dividend with room to spare. This retained cash can be used for reinvestment or debt reduction, supporting the sustainability of the dividend.

The negative OCF in 2026Q2 is a red flag, as it implies that cash collections lagged accrual-based earnings. However, the prior quarter showed OCF exceeding FFO, indicating volatility likely due to tenant receivable timing or prepaid expenses. Investors should monitor whether this pattern persists, as it could signal collection issues.

Such a dramatic swing in OCF without a corresponding change in FFO suggests significant non-cash adjustments, possibly from straight-line rent accruals or changes in working capital. This warrants a closer look at the balance sheet to see if receivables are growing, which could indicate collection risk.

The absence of capex is unusual for a REIT, but it may indicate that the company is in a maintenance phase or that acquisitions are being accounted for separately. With FFO covering dividends, EPR does not appear to need ATM issuances or debt to fund distributions, which is a positive sign for balance sheet stability.