David Brain - President & CEO Gregory Silvers - EVP & COO Mark Peterson - SVP & CFO.

Craig Melman - KeyBanc Capital Markets Dan Altscher - FBR Capital Markets Nick Joseph – Citi Anthony Paolone – JPMorgan Rich Moore - RBC Capital Markets.

Good day, ladies and gentlemen, and welcome to the Q2 2014 EPR Properties' Earnings Conference Call. My name is Whitney, and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session.

(Operator Instructions) As a reminder, this call is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. David Brain, President and Chief Executive Officer. Please proceed..

Thank you very much, welcome all. Thank you for joining us.

I'll start with our opening preface, which is, as we begin this afternoon, I'll inform you that this conference call may include forward-looking statements defined in the Private Securities Litigation Reform Act of '95, identified by such words as will be, intend, continue, believe, may, expect, hope, anticipate, or other comparable terms.

The company's actual financial conditions, results of operations may vary materially from those contemplated by such forward-looking statements.

A discussion of the factors that could cause actual results to differ materially from those forward-looking statements is contained in the company's SEC filings, including the company's report on Form 10-K for the year ending December 31, 2013. Again, good afternoon. Thank you for joining us. This is the earnings call for the second quarter of 2014.

This is David Brain, the Company's CEO. And as usual with me to add comments this afternoon are Greg Silvers, the Company's Chief Operating Officer..

Good afternoon..

And Mark Peterson, our Chief Financial Officer..

Good afternoon..

And I will mention this as I usually do that there are slides available via our website at eprkc.com to follow along, which we'll make reference to from time-to-time as we go through this. But I'll start with as usual, the headlines for EPR Properties for the second quarter of 2014 they are, first, record quarter results in line with guidance.

Second, key tenant industries and portfolio properties performance remain very healthy despite media focus on early summer box office slump. Third, new investment volumes surging ahead of guidance and 2014 portfolio growth guidance increased. Fourth, company performance and balance sheet strength recognized by S&P bond upgrade to investment grade.

And our last headline today positive momentum for dormant land inventory. It's good to join you and report of the second quarter for 2014. I'll dive right into our first headline, which is as I said record quarter results in line with guidance.

This quarter we again recorded record quarterly revenue, this time of $92 million 11% ahead of the same time last year and our reported FFO as adjusted of $52 million is 12% ahead of the prior year.

As mentioned in our headlines, we are revising our investment guidance for the year and I'll expand on this point in a moment, but first I just want to point out that the reported second quarter results for EPR are very healthy and very much in keeping with our expectations.

Our second headline this afternoon as usual, deals with some of our key tenant industries performance. Usually it is resoundingly positive this quarter less so in one of our investment segments. It is key tenant industries and portfolio properties performance remain very healthy despite media focus on early summer box office slump.

And outside of movie theatres, tenant revenues remains strong and positive as we related to you quarter-after-quarter. Our movie theatre portfolio is still very healthy with strong ramp coverage statistics, but has experienced a bit of a drop in current revenue performance as early summer box office got off to a slow start.

At the end of the first quarter, first calendar quarter box office is running about 6% ahead of prior year but by the end of the second quarter it was running about 1% behind. The good news is that our tenant client rent coverage is very healthy even in the event of such a dip.

There is not much we have to offer you as explanation on this point except for the quality of films released of late.

With box office records set both of the last two years and in two-thirds of the last 15 years, it's certainly not the norm but this has happened before and we want to convey to you that expectations are for total 2014 to still be within 2% of last year's record resulting in a very healthy portfolio.

You know whenever there is a small or temporary decline in box office receipts we usually see expressions of concern in the media about some type of systemic change that is wholly inconsistent with any review of any authoritative date set of duration.

Now our third headline this afternoon new investment volume surging ahead of guidance and 2014 portfolio growth guidance increase reflects the strong and healthy long term trends in our key investment categories.

Our investment outlays for the second quarter of the year totaled approximately $250 million and year-to-date we're now around $320 million of investments which is ahead of our earlier expectation and leads us to increase our guidance range for the whole of 2014.

With the transaction volume achieved through the end of the quarter and with the depth of opportunities and negotiations we have at hand, we believe it is prudent to expand our investment guidance for the year to $550 million to $600 million.

Now due to the limited calendar year income statement impact of late year transactions and the build-to-suit nature of the vast majority of our investments, we are at this time not adjusting our earnings guidance for 2014. I want to elaborate on the vast majority transactions we pursue which differentiate us and comprise our pipeline.

They are non-speculative, build-to-suit generally single tenant investments, negotiated directly with the tenant client, often a repeat customer with economic contribution well clear of our cost of capital. These investments are made in categories where we have a depth of knowledge and a breath of experience.

They are typically not purchases of option to properties. I frequently included in our quarterly headlines referenced to our strengthening balance sheet position along with our outstanding portfolio performance statistics and our fourth headline is supportive of those themes.

It is company performance and balance sheet strength recognized by S&P bond upgrade to investment grade. Just after the quarter ended early July, Standard & Poor's Ratings Service raised EPR's corporate credit rating to BB Plus and our unsecured debt issuance to investment grade at BBB Minus.

EPR already enjoys investment grade ratings from both Moody's and Fitch. So this upgrade was important in that it makes our unsecured debt offerings all investment grade, which we expect lowers our cost of capital. We are greatly pleased with this recognition of our company's plan, progress and performance.

Our last headline this afternoon positive momentum for dormant land inventory reflects two pieces of news for portfolio undeveloped land elements. The first news item announced after the quarter end in fact just yesterday, is the U.S. Soccer, the governing body of soccer in all it forms in the U.S.

is relocating its national training and coaching development center to a portion of dormant land inventory in Kansas City, Kansas, adjacent to the Schlitterbahn Water Park. U.S.

Soccer plans to make an investment of more than $70 million in a 100,000 square foot facility, featuring eight lighted professional smart fields, eight youth fields, and indoor pavilion includes specialized facilities tailored towards sport science, health and wellness video and analytics.

We're excited about this announcement that we believe will be the catalyst for monetizing our remaining investment and approximately 200 acres at that site. The second news item is the application made for casino to be located at our Adelaar property formerly known as the Concord site in Sullivan County, New York.

This topic, current status and outlook is complicated. It's certainly not fully under our control and nothing is really finalized but it merits comment particularly by what we know and what we do not know about the amount, timing and returns on our current or any potential incremental EPR investment in connection with the application.

At the very end of the second quarter on June 30, Empire Resorts Incorporated submitted an application to the New York State Gaming Facility Location Board for casino to be located on our property.

Their application reflects multiple investment scenarios based on various license award scenarios because New York contemplates awarding multiple casino gaming licenses in 2014 some of which will and others will not be competitive with our property site.

The Empire application which contemplates doing business at our site as the Montreign Resort Casino at the top end reflects a total investment of approximately $1 billion.

At the largest of these investment scenarios, the $1 billion project consist of a casino, hotel conference center complex, a water park hotel, a retail village, and substantial golf course improvements. In this scenario Empire doing business as Montreign, reflects a commitment of approximately $630 million of capital investment.

It could be misunderstood that the balance of $370 million would all be incremental new investment by EPR. We want to let you know this is not what we expect.

The total investment not explicitly funded by Empire includes land value which we already own and currently carry at nearly $200 million in our financial statements and substantial elements of investment that we expect will be funded by others for public utility infrastructure, joint venture or co-developer investment and FF&E amounts funded by our expected tenants.

There are numerous license award scenarios, potential investment scenarios and our dialog with Empire and the NYS Gaming Commission has only begun. Regarding timing, it appears that the NYS Gaming Commission will require casino operations to commence within two years of the license award, which is expected to be made by the end of the year.

There is no way at this time to determine with great precession our potential investment amounts timings and returns. Now if a license is awarded to Empire Montreign at Adelaar, we do expect EPR will make some incremental investment at the site for summer all of the project elements mentioned above.

In all cases we expect additional rents will be paid to us on our incremental investments that constitute yields at least at the level we typically experience and report to you. In all of this it is our objective to make more than normal returns on incremental investments it is to make a return on our currently dormant land investment.

Despite its history, the Concord Adelaar property now represents an opportunity for increased shareholder returns. With that, I'll turn it over to Greg, Mark will follow with financial go-through and then we'll go to your questions..

Thank you, David. In the second quarter of 2014 we continue to execute on our investment strategy delivering over $250 million of spending during the quarter and bringing our year-to-date investment spending up to approximately $320 million.

The quarter's spending included investments in all of our primary asset segments but was punctuated by the closing of an 11 theatre portfolio for a purchase price of approximately $118 million. On today’s call I would like to spend a few minutes talking about the performance of each of our segments as well as detailing our second quarter investments.

In the Entertainment segment as we anticipated the weaker summer term schedule relative to last year has created a difficult year-over-year comparison for our operators with box office down about 7% year-to-date.

However the later part of the summer schedule along with a promising holiday season have industry pundits hopeful that we can recover from this summer's lackluster film offerings. Currently the forecast remains for the year to finish down approximately 2% below last year's record box office numbers.

As David indicated in his comments, while these numbers are down, we must remember that we’re coming off two consecutive record years and looking ahead the 2015 film sight looks incredibly strong. Additionally, our overall rent coverage of our theater portfolio continues to be strong at 1.8 times through the second quarter.

For the quarter, investment spending in our entertainment segment was approximately $133 million comprised mainly of the 11 theater portfolio which is leased to Regal Cinemas along with investments in six build-to-suit theaters and redevelopment of one existing theatre.

As we’ve told you before, we are continuing to see the emergence and acceptance of the high amenity format and this trend continues to create a solid pipeline of potential opportunities for build-to-suit and standing inventory. In our Recreation segment, tenant performance remained strong.

Our TopGolf investments continue to perform at a high level with portfolio coverage at three times or greater. In our waterpark investments I am sure many of you have seen the media coverage and the many YouTube videos of Schlitterbahn’s world's tallest water slide.

For the record we invite anyone on the call today to experience the thrill of this ride provided you’re ready to ascend 17 stories and take the plunge. Notwithstanding a mile this summer, this type of exciting new ride has Schlitterbahn’s revenues ahead of last year's point -- at this last year's point.

Also as we discussed in our last call, our ski portfolio completed the season at a coverage level of 1.7 times.

During the quarter our investment spending in the recreation segment was approximately $51 million primarily related to 11 build-to-suit TopGolf facilities as well as spending on the water park hotel located at the Camelback Mountain Resort.

With regard to our Education segment, we continue to grow our portfolio while increasing our operator and geographic diversity. The public charter school category continues to see demand outstrip supply as waiting list continue to expand and now stand at over one million.

With this type of demand combined with our expertise in the category we see increasing opportunities in the education sector and believe that EPR has established its role as a leader in financing and delivering quality real estate solutions that supplies this growing demand.

For the quarter, investment spending in the education segment totaled approximately $66 million relating to the build-to-suit construction of 18 public charter schools, three private schools and six early childhood education centers.

Our investment pipeline remains robust and we continue to have strong confidence in our ability to grow this segment with quality transactions. As we discussed in our last call, during the quarter, we also completed the sale of four public charter schools leased to affiliates of Imagine schools for net proceeds of $46.1 million.

Our overall occupancy rate remains strong at 99%. We have a truly differentiated investment approach focused on specialty categories as well as build-to-suit investments that require deep expertise and relationships. As I’ve mentioned in my comments today, we remain confident about our growing investment pipeline.

Reflecting that confidence we’re increasing our 2014 spending guidance to a range of $550 million to $600 million a nearly 10% increase at the midpoint. This increase has driven across -- by opportunities across all of our investment segments. With that, I’ll turn it over to Mark..

Thank you Greg. I’d like to remind everyone on the call that our quarterly investor supplemental can be downloaded from our website. Now, turning to the first slide, FFO for the first quarter increased to $50.4 million from $40.2 million in the prior year. FFO per share was $0.94 this quarter compared to $0.85 in the prior year.

FFO as adjusted for the quarter increased to $52 million versus $46.4 million in the prior year and was $0.97 per share for the quarter versus $0.98 in the prior year.

Before I get into the details should be noted upfront that as expected our results for the quarter were impacted by the sale of the Imagine schools in early April as well as the use of lower average leverage versus the prior year by over 200 basis points. Now let me walk through the key line item variances for the quarter versus the prior year.

Our total revenue increased 11% compared to the prior year to another record quarterly amount of $91.8 million. Within the revenue category, rental revenue increased by $9.8 million versus the prior year to $69.9 million resulted primarily from new investments.

This increase was partially offset by the impact of the weakened Canadian dollar exchange rate versus the prior year of over 6% which reduced rental revenue at our Canadian properties on a comparable basis by approximately $0.5 million.

Percentage rents for the quarter, included in rental revenue were $190,000 versus $460,000 in the -- $468,000 in the prior year.

The decrease was due to $400,000 in percentage rent collected in 2013 related to our portion of vineyard winery property that was subsequently sold in that same year and that was offset by an increase in percentage rents of prior year from theater tenants.

Mortgage and other financing income was $17.4 million for the quarter, down approximately $835,000 from last year. This increase is due to the sales of the four public charter schools discussed previously. As we continue to look at capital recycling opportunities across our portfolio.

Note that the gain recognized on the sale of these schools of $220,000 has been excluded from FFO calculations. The decrease in financing income is a result of the sale of the schools was partially offset by the impact of additional real estate lending activities.

On the expense side our property operating expense decreased by $451,000 versus the prior year due to lower bad debt and other non-recoverable expenses at our multi-tenant properties as well as the impact of the weakened Canadian dollar exchange rate I discussed earlier.

G&A expense increased by $1 million versus last year to $7.1 million for the quarter, due primarily to higher payroll related expenses including stock grant amortization, as we continue to support our growth. Our net interest expense for the quarter increased by $555,000 to $20.6 million.

This increase resulted from an increase in our outstanding borrowings during the quarter, and was partially offset by a decrease in our weighted average interest rates. Finally, income tax expense for the quarter relates to the Canadian tax law change that I’ve discussed on previous calls.

$842,000 of this expense is the non-cash deferred income tax expense that was excluded from FFO as adjusted. The remainder is current tax expense. Now, turning to next slide, I would like to review some of the company's key credit ratios.

As you can see on the slide, our coverage ratios are strong with fixed charge coverage at 2.8x, debt service coverage at 3.1x and interest coverage at 3.6x. Our debt to adjusted EBITDA was 5.3x for the second quarter annualized and our debt to gross assets ratio was 42% at June 30th.

As you can tell by these metrics, our balance sheet is in a great position to fund our expected growth. Let's turn to next slide. I'll provide a capital markets and liquidity update. At quarter end, we had total outstanding debt of $1.7 billion.

All, but about $139 million of this debt is either fixed rate debt or debt that has been fixed through interest rate swaps with a blending coupon of approximately 5.4%. We had $79 million outstanding at quarter end on our line of credit and we had $13.6 million of cash on hand. We are in excellent shape with respect to debt maturities.

As of June 30th, we have no scheduled balloon maturities in 2014 and less than $100 million of such maturities in each over the next two years thereafter. Turning to the next slide, we are very pleased by the announcement by S&P earlier this month raising both our corporate and unsecured debt credit ratings.

Importantly by rating our unsecured debt BBB Minus, S&P joins Moody’s and Fitch in assigning investment grade ratings to such debt. S&P’s reports cited our strength in financial measures and solid rent coverage as well as further diversification of our tenant base as support for their upgrade.

Going forward, the upgrade allows us to access a set of dead investors who could not previously invest in split rated credits and should serve to reduce our cost of capital as David mentioned.

Turning to next slide, as Greg mentioned we are increasing our investment spending guidance for 2014 to a range of $550 million to $600 million from a range of $500 million to $550 million. This increase relates primarily to build-to-suit projects, which will not go into service until 2015.

We are also confirming our previous guidance for FFO’s adjusted per share of $4 to $4.10 With that, I’ll turn it over to David for his closing remarks..

Great, thank you Mark. Thanks Greg. Now, before we go to your questions I just want to point out something new that may answer some of your questions now or in the future. Today we’re announcing a new resource available via our website; the EPR Insight Center.

Now because we’re an investor in industries less than traditional for REITs, industries of entertainment, recreation and education and often an emerging new real estate models or generations of properties such as Megaplex theaters or luxury dine-in theaters, metro urban ski areas, charter public schools or technology overlay golf practice facilities, we often get a lot of questions about our portfolio properties and the dynamics of the industries in which they participate.

The insight center is an adjunct to our normal company website that will attempt to address some of these questions. While our normal website focuses on the company itself, the insight center will focus on the industries and generations of properties and trends within them that are the focus of our investments.

We now have a slide up that is a screenshot of our insight center. I invite you and encourage you to take a look at it. At the insight center we use not only narrative but pictures and videos to illustrate the real estate and concepts that comprise the value to support our portfolio.

With that, I will turn it over to questions and operator you there to open the line up?.

(Operator Instructions) Your first question comes from the line of Craig Melman with KeyBanc Capital Markets. Please proceed..

Hi guys, Mark maybe I can start with you, I am just – it looks like you have plenty of liquidity to be able to fund the remaining development spend [metrics] (ph) to be above that $200 million to $250 million for this year.

Just curious though, what kind of a focus on being in investment grade credit here your thoughts long term about where why are you willing to let leverage go before you would kind of look to do more equities through the drip or something else?.

Well, I think you hit it on the head that we have a lot of flexibility here with $456 million still available on my line of credit which could fund like as you said if I wanted to even off the line the remaining spend for this year and even the carry over of things that are in process into 2015. So, name of the game is flexibility.

We have in our plan to kind of maintain that leverage similar to where we are today around 41% or so and so we do kind of plan debt and equity.

However, we can be opportunistic in that regard and given that debt rates are so strong and our spreads have dropped so much and particularly with the announcement of the S&P upgrade, we have the flexibility to do either, equity or debt going forward. But our plan, our guidance includes kind of that same leverage that we have today of about 41%..

So, is there any capital raises in guidance?.

Yeah, if you think about it, we’re at 41% today. So going forward to fund the 255 you can think of that as roughly 60/40. But you don’t have to -- we don’t want to have a gun to our head I guess is what I am saying with the flexibility on the line of credit, the ability we could take leverage a bit higher. We funded all that with debt.

I think our leverage would somewhat finished at 45%, 46% which we’re not uncomfortable with. The other thing that kind of can come into play is obviously when you look at our portfolio for asset dispositions if we see something that makes sense that maybe another way to fund the capital spend going forward..

Hi Craig, this is David. I think Mark's nailed that we could have a issuance of either debt or equity for the end of the year. We’ve got enough volume. We'll enough drawn on our line to probably merit but we also could just sit tight. So we have that flexibility..

Okay. That’s helpful. Then David, your comments on Adelaar were helpful.

I guess, is there any way you could just put goalpost around what you think your total spend could be there?.

I don’t know, there are just a variety of scenarios but I think in some level of likelihood and standard deviation, I think it’s probably in the $100 million to $200 million incremental spend on a project if in the war of a license something like that..

Okay. And then you had said that it would be, it sounded like maybe towards the lower end of the 8% to 10% yield, do you guys target on developments. Was that a fair kind of indication or was I reading your comments wrong..

No. I didn’t say lower end at all. Yet to be determined, it really just depend on the mix of investments and what we’re doing, but our expectation is probably for the all -- for the income we'll have relative to the capital we'll deploye.

We expect the yield actually to be higher than normal because we expect to get some return on the lane investment we already have made..

Okay. Have you guys – I know there’s a lot of competition and now there’s talk of New Jersey maybe doing something in Jersey City, there’s a lot of gambling in a lot of states.

People are trying to get the revenue but have you guys ever marketed for sale of the land just to see if there’s a bid out there for?.

No. We’ve been in an agreement for some time that we’re not going to sell it otherwise. That we’re pursuing this alternative with Empire. We’ve been in this agreement for quite a while..

Okay.

Let's say Empire doesn’t get the gaming license, what would then be the game plan? Would you guys look to keep this and have Empire build it out with the license they have and make the best of it? Or would you guys maybe look to monetize it at that point to recycle into other investments?.

I think either of those. Craig at this time, I think we’re playing this out towards the word of the license and I think after that, we’d have to see. It would depend -- we have quite a history now for couple of years and working with Empire and we’d have to term with them and what our alternatives look like..

Okay. Thank you..

Thanks..

Your next question comes from the line of Dan Altscher with FBR. Please proceed..

Thanks. Good afternoon and I appreciate taking my call and definitely interested to ride the waterslide, but I don’t know if I can make it up 17 stories before my legs give out, so I’ll have to see.

On Adelaar, increasing the size of the project from a billion, I think from the original 750, can you just talk about what Empire is with the revised plan included, maybe the initial one did not include?.

I think it’s a scale of all the elements. It’s really what it amounts to and I think it’s probably the hotel and the gaming floor increase and conference center expansion is kind of just an expansion of all the elements..

Okay. Got it, that’s pretty simple. Maybe the 17 bids that came across to New York.

Can you talk about how many are actually though in the cat scale region and maybe a little bit of color on some of the other competitors that are out there versus your plan?.

Yeah, Dan, I don’t have all that but there are eight bids in our zone that are directly competitive, there has been discussions of two awards in the zone, but that’s not certain either. There are I believe proposals of projects that from $1.5 billion down to several hundred million.

But I really just direct you to other sources that are publicized articles about that. There have been several New York media sources that reported a lot on the whole spectrum of bids. I don’t have that to give you in a lot of detail here..

Okay. No, that’s fine.

And then just a quick one for Mark, given the ratings upgrade now investment greater across of three, can you give us a little bit of flavor as to what you think your unsecured cost of debt would be now across maybe a couple of tenants?.

Yeah, since the announcement if you look on a relative basis let's say O or NNN. I think our bond spreads have traded in about 20 basis points and it's since the beginning of the year close to 80 basis points. So, it keeps coming down.

I think today if you look at our bonds and curve adjust them, they are trading about 190 basis points to 200 basis points over the treasury. So, that would imply to 250 treasury something like a 4.5% issuance cost on debt.

If you think about it, it’s over 90 basis points or above 90 basis points less than we issued, 80 basis points to 90 basis points less than we issued our last unsecured offering at..

Yeah. No that's great.

And just to confirm there’s no ability to prepay those existing notes there?.

You could tender for them if you want it, but there’s no ability to prepay..

Right. Okay. Thanks so much..

Sure..

Next question comes from the line of Nick Joseph with Citi Group. Pleas proceed..

Great, thanks. Clear FFO guidance for the second half of the year is considerably higher than the first half.

So can you walk us through how it’s going to ramp up from $0.97 this quarter to an assumed $1.07 for the back half of the year per quarter?.

Yeah, I really think it’s about what goes in service because that’s what drives earnings and there’s a lot more going in service in the back half of the year than there is in the first half of the year.

In fact if you look at page 20 of our supplemental, it kind of lays out what’s going in service for things that are in process today and those – that’s when it starts earning.

It's full cap rate and if you think about the timing, these schools generally open for the school year in late August or early September and that’s when we start earning that cap rate. So, that’s why earnings are a bit back weighted versus the first half of the year..

Thanks.

And then what was the cap rate on the theater acquisitions this quarter?.

The cap rate on the 11 theater portfolio was nine initial cap yield that is about [985] (ph) straight line yield and the build-to-suits are in and around the nine cap area as well, maybe slightly higher..

David it's [Michael] (ph), just remind me how much have you spent on Concord this past quarter on everything that happened, what’s your running tally in terms of additional cost to sort of see this process through?.

We’re spending about $1 million to $2 million a quarter roughly our balance in the land is $199 million..

Is that an increase with all the license fees and I would have thought this past quarter with everything that happened would have been a little bit higher?.

Those are paid by Empire. They already…..

So you have no other than the cost, you don’t have to reimburse them anything for….

No..

So that won’t be like a sort of capital contribution when you contribute all this to a venture in terms of cost that they had put in?.

I don’t contemplate that, we’re going to be ground lessor..

And then I guess and as you contemplate the additional capital that you have put in, I recognize the range could be wide.

You expect all that to be a net lease investment?.

Sure..

Okay. Thank you..

Your next question comes from the line of Anthony Paolone with JPMorgan. Please proceed..

All right. Thanks. So, I’ll just start with couple other casino questions.

Can you refresh my memory so, if -- how many acres do you own out there?.

About 1,600 acres..

And so if you, if the venture were to get one of the license awards, how much of the 1,500 acres actually is used for the casino?.

The casino proper, I think we – about 200 acres for the casino and the golf courses are additional so that it could take to a total of 400 acres to 500 acres..

Okay.

And so -- and just try and think through it if this is awarded and you start to get on this path and maybe make these investments into some of ancillary stuff, is this really just the beginning of starting to monetize that land as that area would seemingly just pick up and all the ancillary things will start to come along with it or would all that land just get leased and that would be it..

No. This what we’re speaking about today does not account for all of the land. There would be substantial additional land to be sold or leased and yes Tony I think this would be a catalyst for the realizing of that value in bulk or in pieces..

Okay. Thanks and then on the spend for the rest of the year I guess If I look at page 20 and I don’t know if I'm doing my math right, but it seems like the spend that compared to your total year guidance in terms of what’s left, there is still I don’t know maybe $50 million, $75 million is that by acquisitions or is….

Yeah I'll take that schedule implies, you’re about right, $320 million year-to-date. You add the $150 million in build-to-suit another $60 million in mortgage spending gets you to about $530 million and our range is $550 million to $600 million.

That -- just things that I closed and already were started as of June 30, obviously we'll close and have closed and we’ll start other projects and yes, it’s primarily build-to-suit that’s taking our guidance from $500 million to $550 million, to $550 million to $600 million.

That’s why there is limited earnings impact or virtually no earnings impact because we are capitalizing interest but it bodes well for 2015..

Okay.

But in that -- in your spending guidance and your investment guidance though, there is nothing speculative in there in terms of acquisitions, everything is pretty much teed up?.

Not in our guidance, it's mostly build-to-suit and yes, it's pretty well teed up or how I would describe it..

Okay. Thanks. And then just one last question remind me, I think you went over this quarter with adding back the deferred tax item and I apologize for just not recalling how it all works.

But what’s the rational for adding that back on a go-forward basis?.

With the change in tax law on Canada, we became a tax payer and as a result of becoming a tax payer we actually recognized a big deferred tax asset, like $14 million asset at the end of the year. So we booked a big deferred tax, non-cash earnings which we excluded that from FFO.

The reversal of the deferred tax piece which is not in cash as well, we exclude from FFO as adjusted. We didn’t recognize the benefit as that turns about, we’re not -- we’re adding back the expense. We do have true income tax expense and that in cash and that's what sticks in FFO as suggested.

But the deferred is really a plus reversal and kind of non event..

But the cash tax is paid or do come out of FFO..

Yeah. And that’s about – the cash is about $5,000 per quarter..

Okay. Got it. Thank you..

Sure..

Your next question comes from the line of Rich Moore with RBC Capital Markets. Please proceed..

Hi guys, good afternoon.

So when you do the -- when you do this deal with Empire, I just want to go back to if I could, you put in a couple $100 million and then you’re not a partner in any ways is that right David? At the end of it, you just sign a lease and maybe get some percentage rents or something like that but there is no gambling portion to what your income is per se, right?.

We are a ground lessor Rich. The money we would spend would be for some of the improvements of entire complex, I noted there is more – the water park hotel, the golf course improvements, the retail village, those types of things. Those are more than nature of things that we would be investing in.

The spend for the casino itself is Empire spend and we will be a ground lessor to them. And we will have both a base rent and a participating rent piece but we will of course not be in any way involved in the operations of the casino..

Okay.

And then those other pieces as someone else was asking, those will be different, are you putting water park there, put something else to be someone else that will be the tenant not Empire or something?.

Yeah those will be separate tenants triple-net..

Triple-net right got you. Okay. Good. Got you. Then, tell me if this is correct.

You guys added charter school this quarter is that right, so one operating charter school build-to-suit?.

I think this quickly opens one, I think we have 18 under construction..

And then three golf -- is that right? Three golfs, one charter and three golfs..

I think it’s actually two top golf that came online, we have 11 under construction. We actually opened the three would go subsequent to the end of the quarter. We added another one that opened up but I think technically in the quarter there were two..

Okay.

And then you sold -- did you sell one family entertainment center looks like, is that right?.

No, we may have reclassified one, but we didn’t sell one. .

Okay. So you….

We had a little land held for development that related to a theater deal that we sold basically at pat for $2.4 –.

But that was just land. Okay, so that family entertainment center, what is that now, you just moved that to..

We probably just moved it to retail as it was part of an overall -- if it was part of an overall retail setting but we were classifying it differently we just moved it to retail when it's part of an overall center..

Okay. Got you. And then on the golfs that are -- on the top golfs I don't know, any thoughts on how they are doing any early -- assume they are operational at this point.

is that right?.

The ones that have opened up again continue to open up exceedingly strong and are outperforming the pro forma. It’s been that story on almost every location..

Great. Thank you, guys..

Thank you..

There are no further questions in queue at this time..

Well that’s usually about it. We appreciate all for dialing in and we thank you for your time and interest and we look forward to talking to you as you please until next quarter. We'll see you then..

Thank you..

Thank you..

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day..