Why EPR Properties Is Up 30%+

EPR properties appears to have soared in value on news of a successful coronavirus vaccine.

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By. Jacob

Edited: 2020-11-11 10:53

My guess is that EPR properties is simply (over)-reacting to the 9 November news of Pfizer's coronavirus vaccine; but let us be realistic here, the virus is most likely not going away any time soon — this might be something we will have to live with for a while.

EPR is one of the stocks that I own, and before the increase in stock price, it was down 60% for me — so I really prefer not to sell the stock at this point. Even though I suspect it might pull back a bit, once people learn the difficulties in distributing a vaccine, I am just not willing to sell right now.

If you are confident, I guess you could sell the stock and re-buy if it pulls back — but you also risk loosing out on the up-side. If you wanted to make a balanced trade, you could sell a part of your shares, this way you could just re-invest in something else if it does not pull back. My position is probably too small for that. I only own 38 shares.

Predicting the direction it will go from here is, of course, difficult. But, with theaters opening back up and rent collection rate slowly increasing, I am starting to see some signs of recovery. I also think dividends will eventually resume, is is just a matter of time.

A down for dividend focused investors is that EPR has suspended their dividend, and currently there is no sign that it will return anytime soon, or even, at what level it will return if it does. Quoting their 8-K filing from 11/4/2020:

The monthly cash dividend to common shareholders was suspended following the common share dividend paid on May 15, 2020 to shareholders of record as of April 30, 2020. The Company is restricted from paying dividends on its common shares during the covenant relief period, subject to certain limited exceptions, and there can be no assurances as to the Company's ability to reinstitute cash dividend payments to common shareholders or the timing thereof.

The Board declared its regular quarterly dividends to preferred shareholders of $0.359375 per share on its 5.75% Series C cumulative convertible preferred shares, $0.5625 per share on its 9.00% Series E cumulative convertible preferred shares and $0.359375 per share on its 5.75% Series G cumulative redeemable preferred shares.

EPR SEC Filings - eprkc.com

What we might see happen, is that EPR will opt for irregular distributions, just enough to maintain their REIT status. To a dividend investor, everything counts, and even a more irregular distribution might encourage some of us to keep the stock in our portfolios.

The vaccine is said to be 90% effective, so the main problem is probably going to lie in distributing the vaccine. It has been reported that the vaccine needs to be kept at a temperature of -75 °C which might complicate things somewhat.