Brian Moriarty - Vice President of Communications Gregory Silvers - President and Chief Executive Officer Mark Peterson - Chief Financial Officer Jerry Earnest - Chief Investment Officer.

Anthony Paolone - JPMorgan Craig Mailman - KeyBanc Capital Richard Moore - RBC Capital Markets.

Good afternoon, ladies and gentlemen, and welcome to the First Quarter 2016 EPR Properties Earnings Conference Call. Participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the conference over to your host, Mr. Brian Moriarty, Vice President of Communications..

Thank you, operator. Thank you for joining us today. I'll start to call by informing you that this call may include forward-looking statements as defined by the Private Securities Litigation Act of 1995, identified by such words as will be, intend, continue, believe, may, expect, hope, anticipate, or other comparable terms.

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

A discussion of these factors that could cause results to differ materially from those forward-looking statements are contained in the company's SEC filings, including the company's reports on Form 10-K and 10-Q. Now, I'll turn the call over to company President and CEO, Gregory Silvers..

Thank you, Brian, and good afternoon to everyone. I'd like to remind everyone that slides are available to follow along via our Web site at www.eprkc.com. With me on the call today are the company’s CFO Mark Peterson..

Good afternoon..

And CIO Jerry Earnest..

Good afternoon..

I'll start with our quarterly headlines and then pass the call to Jerry to discuss the business in greater detail. Our first headline, top line and earnings growth highlight business strength. As compared to the same quarter of the previous year, we achieved 19% growth in revenue and 15% growth in FFO as adjusted per share results.

This established a strong momentum for us as we start the year. Next, solid investments spending across segments. This highlights the consistent opportunities illustrated in each of our primary invested segments, along with the durability of each of our tenant segments. Jerry will have more to say about this in his comments.

Our third headline is Montreign gaming license activated at Adelaar. The gaming license became effective in March upon the deposit of bonds with the New York State Gaming Commission and payment by Montreign of its $51 million licensing fee to the gaming commission.

We are excited to have met these key milestones as we move forward in creating value with the Adelaar property. Construction is well underway on the casino resort property and you can view and monitor the extend of the progress by going to www.montreign.com and clicking construction cam icon.

Our fourth headline is recognition of the experience economy. Much has been written lately about the recognition of a demographic shift from an economy of stuff to an economy of experience. All we can say is welcome.

Our tenants and operators provide many of the most innovative congregate experiences available whether it’s enhanced theaters, Topgolf, ski properties, waterpark adventure lodges or education facilities. We are beginning to see an increased awareness to the resiliency and dependability of these types of properties.

As more people, businesses and investors recognize these demographic shifts, we expect greater opportunities for EPR to deploy capital and for our investors to realize the value of these investments. Our last headline is well positioned with strong balance sheet.

As Mark will discuss, we’re at the lower end of our target leverage range on a net debt to adjusted EBITDA basis and our balance sheet provides a strong foundation for our anticipated investment spending.

With a solid balance sheet, flexible access to capital and a deep investment pipeline, we feel that we’re well positioned to deliver the results that you value. With that, I'll turn it over to Jerry to discuss our investments and rejoin you for questions later..

Thank you, Greg. We began the year with strong investment spending of a $145.1 million in the first quarter. The quarter spending pace and composition reflects our discipline balance in opportunity across our three primary investment segments.

In the entertainment segment, the theater exhibition business started the first quarter with strong performance. Box Office revenues were up 7.8% year-to-date over last year. However as we indicated on our previous earnings call, we do not expect such outperformers to continue during the full year of 2016.

As of today, we still expect the box office to be relatively flat with the year overall, reflecting more of a transition year when compared with the outstanding movie schedule in 2015. With much of the franchise content being released in two year cycles, we expect robust box office revenues in 2017.

Subsequent to quarter end we received a payoff of the $44 million mortgage note associated with North Carolina Music Factory. During the quarter, we advanced approximately $22 million pursuance of the contractual terms of the note and mortgage. However, we’ve made it clear that our underwriting would not allow us to advance beyond that level.

Our borrower had significant plans to expand the project into a mixed used development to include office and hospitality. Given that such a development does not fit within our established business strategy, we permitted the borrower to repay the existing debt.

Subsequent to quarter close, given the success of the existing project and the high level of interest in the future development, the borrower entered into a new loan and fully repaid our outstanding balance.

For the quarter, investment spending in our entertainment segment was a total of $47.7 million, consisting primarily of investments in three build-to-suit theaters, redevelopment of three existing theaters, investment in one entertainment retail center and the acquisition of one family entertainment center.

We remained the largest landlord for the three big exhibitors in the U.S., AMC, Cinemark and Regal. Our purchase built-to-suit and conversion of the existing theaters to the expanded amenity format remains in area of undeniable investment opportunity.

The current investment environment for megaplex theaters, particularly with expanded amenity format remains a strong contributor to our investment spending pipeline. In our recreation segment, our Topgolf properties continue to exhibit the strong consume preference and reliable performance.

At the end of the quarter, we had 19 Topgolf properties and service, and additional seven Topgolf properties remain under construction. Lease coverage is strong exceeding three times. Despite the difficulties posed by this year’s ski season, we’re happy to report that each of our tenants is fully funded their off season reserves.

As we discussed in our last call, we anticipate that our ski portfolio’s coverage would be approximately 1.2 times, reflecting a seasonally warm weather of the past winter season. And we believe that the coverage for the trailing 12 months ended April 30, 2016 will be around 1.2.

Additionally Peak Resorts has funded approximately $12 million of improvements for the Mount Snow Resort, and anticipates reimbursement for these improvements via the EB5 program. The moneys related to these – for this reimbursement are currently in an escrow account pending final approvals.

Peak has fully funded their off season reserve to EPR, however, they are exploring amenities for additional liquidity should the release of EB5 funds continue to be delayed. As one of those alternatives we were approached by Peak to consider a secured term loan should they needed.

We indicated that any loan request considered by EPR will be a maximum of $10 million and also require a suspension of all dividends to common shareholders of Peak until the full repayment of the loan among other conditions. Peak continues to explore their alternatives and we do not have any agreement to advance additional moneys at this time.

Recreation spending totaled $51.4 million during the quarter, which consisted primarily the loans secured by the Hunter Mount Resort and the build-to-suit construction of 12 Topgolf entertainment facilities, five of which has been placed in service.

In our education segment, all three of our education property types which includes public charter schools, early childhood education centers and private schools continues to stay in strong growth with enrollment meeting or exceeding our underwriting.

As we’ve stated previously, we believe that our extensive operator relationships combined with our build-to-suit program provides us with a competitive advantage in building a high quality portfolio of education facilities.

During the first quarter we invested $45.8 million in the development or expansion of 19 public charter schools, three private schools and 14 early education – early childhood education centers. One early childhood education center was placed in service during the quarter.

As mentioned on our previous earnings call, during the first quarter, one charter school with the loan balance $19.3 million was paid off by the borrower. As Mark will discuss further, in addition to the loan balance we received a prepayment of $3.6 million. This charter school was previously in our 2016 guidance for investment dispositions.

The Adelaar casino and resort project located in Sullivan County, New York remains on track with its approvals, two significant milestones were achieved during the quarter. As we previously reported, Empire Resorts completed its equity rights offering and raised approximately $290 million of proceeds.

Further during the first quarter, Montreign, the new casino subsidiary of Empire Resorts was awarded the gaming facility license from the New York State Gaming Commission after the payment of the $51 million gaming licensing fee.

The construction of the casino has begun and we continue to make progress on the project infrastructure for the Adelaar property and anticipate that tax exempt bonds will be issued during the second quarter of 2016. Our overall property occupancy remains strong at 99%.

I want to reconfirm our investment guidance for 2016 at $600 million to $650 million based on our strong investment spending in pipeline. We also remain on track with approximately $75 million to $175 million in asset dispositions and capital recycling for 2016.

With that, I'll turn it over to Mark for a discussion of the financials and I'll rejoin you for questions..

Thank you, Jerry. I'd like to remind everyone on the call that our quarterly investor supplemental can be downloaded from our Web site. We called our last quarter we introduced new schedules in our supplemental to facilitate calculations of net asset value.

Note that this quarter as part of the schedule found on page 26, we added a bit more detail related to other NAV components from our balance sheet. We hope you find this additional information useful. Now, turning to the first slide. FFO for the first quarter increased to $73.8 million from $32.1 million in the prior year.

FFO per share was $1.17 this quarter compared to $0.56 in the prior quarter. FFO as adjusted for the quarter increased to $74.2 million versus $59 million in the prior year and was $1.18 per share for the quarter versus $1.03 per share in the prior year, an increase of 15%.

Now, let me walk through the key line item variances for the quarter versus the prior year. Our total revenue increased 19% compared to the prior year to another record quarterly amount of $118.8 million.

Within the revenue category, rental revenue increased by $17 million versus the prior year to $93.4 million and resulted primarily from new investments. Percentage rents for the quarter included in rental revenue were $610,000 million versus $270,000 in the prior year.

The increase was primarily due to $368,000 in percentage rents received related to one of our private schools. Tenant reimbursements decreased by $438,000 for the quarter due primarily to the impact of a weaker Canadian dollar exchange rate versus the prior year.

Other income increased by $660,000 for the quarter versus last year and was due to favorable settlements of foreign currency swap contracts as well as an insurance recovery gain of approximately $500,000. Mortgage and other financing income was $19.9 million for the quarter, an increase of approximately $2.1 million versus prior year.

The increase was primarily due to the anticipated $3.6 million prepayment fee we received in conjunction with the full prepayment of a $19.3 million mortgage note receivable related to a public charter school.

Partially offsetting this increase was a drop in mortgage financing income related to camelback hotel and indoor waterpark, as the mortgage was rolled into the lease on the adjacent ski hill and outdoor waterpark in the third quarter last year at the tenant’s option.

Therefore, rental revenue increased and mortgage financing income decreased related to camelback versus the prior year. Now on the expense side, our property operating expense decreased by $876,000 versus the prior year due to lower bad debt expense and the impact of a weaker Canadian dollar exchange rate versus the prior year.

G&A expense increased to $9.2 million for the quarter compared to $7.7 million in the prior year due primarily to an increase in our payroll and benefit costs, including additional personnel to support our growing asset base, and an increase in amortization of share based awards.

Cost associated with loan refinancing or payoffs was $552,000 for the quarter and primarily related to the fees associated with the repayment of a secured fixed rate mortgage loan payables during the quarter with annual interest rate of 7.37%. Our net interest expense for the quarter increased by about $4.7 million to $23.3 million.

This increase resulted from an increase in average borrowings as well as a decrease in interest cost capitalized primarily in connection with the Adelaar project.

Capitalized interest related to Adelaar was $430,000 this quarter compared to $2.1 million in the prior year, as the portion of the project leased to Empire Resorts was placed in service during the first quarter.

Additionally, the hedge rate on $300 million of our $350 million unsecured term loan increased to an average of 3.61% from an average of 2.6%. Note that the hedge rate will decrease back down to an average of 2.94% in July 2017. These increases were partially offset by a lower weighted average interest rate.

Transaction costs decreased to $444,000 from $1.6 million in the prior year due a decrease in cost associated with potential and terminated transactions. Finally, income tax benefit of $144,000 for the quarter relates primarily to our Canadian owned properties and taxable REIT subsidiaries.

Current income tax expense for the quarter was $458,000 and is the amount included is a reduction of FFO as adjusted for the quarter. In the prior year, income tax expense of $8.4 million was recognized based primarily on an open examination by the Canadian Revenue Agency on our Canadian Trust.

This examination was completed favorably during the second quarter of 2015 and the expense related to the examination was reversed at that time. Now, turning to the next slide, I will review some of our – the company’s key credit ratios.

As you can see, our coverage ratios for the quarter continue to get stronger with fixed charge coverage at 3.3 times, debt service coverage at 3.7 times, and interest coverage was 4 times.

We increased our monthly common dividend by nearly 6% in the first quarter to an annualized dividend of $384 million in 2016 on our FFO as adjusted payout ratio was 81%.

I would also like to point out that we are moving to using net debt to adjusted EBITDA as the primary metric we monitor to manage leverage, as we feel this is more relevant for this purpose than debt to grow these assets.

As defined in our supplemental, net debt to adjusted EBITDA was 4.81 times at quarter end and we expect to maintain this ratio within a range of 4.6 times to 5.6 times going forward.

Now because adjusted EBITDA in this calculation is not fully include the current run rate for projects put in service during the quarter in other items, and net debt includes the debt provided for build-to-suit projects under development that do not contribute any current EBITDA.

We also monitor our ratio adjusted for these items entitled adjusted net debt to annualize adjusted EBITDA. This ratio eliminates the penalty that build-to-suit projects inherently caused due to the timing in the net debt to adjusted EBITDA ratio.

While this ratio was not much lower than net debt to adjusted EBITDA this quarter at 4.76 times, we will continue provide this ratio on a supplemental in the future as this difference is averaged around 30 basis points lower over the last couple of years.

The level of this additional ratio along with the timing and size of our equity and debt offerings may cause us to temporarily operate outside of our stated range for net debt to adjusted EBITDA of 4.6 to 5.6 times. As you can tell by these metrics our balance sheet continues to be in great shape.

Now let’s turn to the next slide for capital markets and liquidity update. At quarter-end, we had total outstanding debt of $2 billion. About 85% of this debt is either fixed rate debt or debt that has been fixed through interest rate swaps with a blended coupon of approximately 5.3%.

We had $217 million outstanding at quarter-end on our $650 million line of credit and we had $11 million of unrestricted cash on hand. We are in excellent shape with respect to debt maturities. As of today, we have scheduled balloon maturities of only $62 million for the remainder of 2016 and $158 million in 2017.

Turning to the next slide, during the quarter, we prepaid in full one secured mortgage notes payable for $4.6 million with an annual interest rate of 7.37% as I mentioned earlier. A secured debt as a percentage of total debt continues to decrease and now stands at less than 14%.

During the first quarter, we took advantage of the timing of our inclusion in the S&P Midcap 400 index and issued 2.25 million common shares and registered public offering for net proceeds of a $125 million. The proceeds from this offering we used to pay down a lot of credit.

Additionally, subsequent to quarter-end, we issued 258,000 common shares under our Direct Stock Purchase Plan or DSPP for net proceeds of $16.9 million. Also as Jerry indicated, last week we received prepayment in full of the $44.4 million mortgage note receivable related to the North Carolina Music Factory.

Accordingly, we continue to be well positioned to fund our strong investment pipeline. Turning to the next slide, we are confirming our guidance for 2016 FFO as adjusted per share of $4.70 to $4.80, and our guidance for investment spending of $600 million to $650 million. Guidance for 2016 is detailed on page 28 of the supplemental.

Note that our guidance for termination fees related to public charter school buyouts is unchanged for the year, but as far as timing, I did want to point out that for the second quarter we expect this number to total $2.2 million. This amount relates to a public charter school sale for net proceeds of $12 million that is already occurred in April.

I would also like to point out that in our guidance this quarter we broke out the effect of the conversion of the 5.75% Series C convertible preferred shares to get to FFO from net income as the conversion is dilutive to the per share results for FFO and FFO adjusted for 2016. Now, with that, I’ll turn it back over to Greg for his closing remarks..

Thank you, Mark. The first quarter of 2016 was a continuation of our commitment to smart, discipline growth. Additionally, we’re actively managing our portfolio to not only lower risk for appropriate, but also to recycle capital and establish market place value on certain assets.

These efforts will further enhance the consistency and reliability that is valued by our shareholders. As you heard today, our underlying segments were performing and growing. Our balance sheet and access to capital is strong and our investment opportunities are solid.

These pillars form the foundation for our enthusiasm for the balance of the year and beyond. With that, I’ll open it up for questions..

[Operator Instructions] Your first question comes from Tony Paolone from JPMorgan. Your line is open..

Thank you.

Greg, you mentioned in your opening comments that the investment pipeline is pretty deep and I was wondering if you could just put a little bit more detail around that in the past it has been pretty good at kind of walking at the next 12 months’ worth of activity pretty early on in the year, and just wondering what’s on the horizon as you look at the pipeline?.

Yeah, I would tell you that I think we feel that we’re solidly in the upper 80%, 90% of what our pipeline relative to kind of known where we’re at right now.

But the thing that’s interesting to us is, right now we’re seeing some real acquisition opportunities, especially as Jerry referenced in the theater area where we’re seeing these conversions, the high amenity and our willingness to understand that space and move forward with operators in there, there is really quite a bit of opportunity there.

And likewise in the education space as Jerry referenced, the growth in that area is very strong. So in those two areas I would say are the primary kind of drivers..

Okay.

And on the theaters side, are these theaters that have been either converted already or built or do you built to some type, yes?.

I would say it’s actually the hybrid of that. It’s a former theater that’s getting bought and then converted to the new amenity. So the location is solid, it was a former traditional theater with not the luxury seating and expanded food and beverage that go along with that, and then doing the conversion, buying the theater and then converting it.

So we’re seeing – if you listen to all of the other major exhibitors they’ve got major, major capital deployment plans to further this. So as they go out and look at their theaters and they’re looking for someone to do some capital along with their capital to do that conversion, a lot of landlords are not looking to do that.

So if there is an opportunity to buy out the existing landlord has come in and put some capital along with the operator capital, we’re seeing some really strong opportunities in that area..

Okay, great.

And in terms of on the sales side, can you give a sense as to how much you guys have in the market right now for sale and how that’s coming along?.

Yeah, I think we’ve got – I think it’s pretty well known, we’ve got - we’ve talked about max exposure so we have [indiscernible] assets in the market and we’ve taken to Topgolf to the market as well primarily.

I think those will have better color on those as we move into the second quarter, those just kind of went out toward the end of the first quarter and so beginning to – the interest will become more finalized as we get into that, but those are the two kind of primarily areas that we’re seeking disposition on..

Okay.

And then last question on the note that you got repaid on the North Carolina loan you made, can you give us a sense as to what the IRR was on that investment?.

Yeah, that was about a 9, 9.5 on that and then since that it was – it really came down to Tony, again they had an opportunity to expand their business to do something that really isn’t our business.

So when they got into wanting to put an office tower, some hospitality that was more – not kind of recreational in it, like we’ve done in the past we made a decision that this is not kind of our business but these are people who have done entertainment before and done – and so we wanted to be, to the extent we could accommodating because we think there maybe opportunities with the group in the future.

So we presented the ability for them to pay us off and they did, actually rather quickly, I mean it spokes to the opportunity set that they have with regard to this other properties. And hopefully as they do this project and other projects that there might be opportunities to redeploy capital with them again..

Okay, thank you..

Thank you..

Your next question comes from the line of Craig Mailman from KeyBanc Capital. Your line is open..

Hey guys.

Just wanted to follow-up on the theaters, some of those conversion opportunities, are those something your existing tenants coming to you with that investment or is it the existing landlord knowing that you guys are big in this space and coming to you directly?.

We’ve had some of both, Craig.

I mean I would tell you that it’s a lot primarily driven by our operators because as I said, we were very close to them as a group and spend a lot of time with them but we have had the situation where an actual landlord sees it as a time to monetize and get out because one of the requirements that we have when we actually invest with an operator is to extend the term.

And they’re not really – with an existing landlord they’re not willing to extend the term unless they can do this conversion, if they don’t want to put the money in then they’ll add an impasse and so we get from both of those people who are at that impasse we get opportunities with.

And if it’s location that we believe in and an operator that we think and can execute on and we have faith in and we have good success with proceeding..

And any of these opportunities kind of breaking off from the potential AMC [indiscernible] or is that too early to see opportunities come from that deal?.

It’s really kind of early for that, as they’ve indicated that they are – they hope to deal with that in the fourth quarter of this year is what their anticipated closing. So I think there is not really been anything that is developed from that specifically yet, but we’re hopeful that that kind of activity will spur additional opportunities..

Okay.

And then in the $600 million to $650 million, just to clarify the 80%, 90% that’s what you guys think you have visibility on of the call it $625 million at midpoint?.

Yeah. 60%, and Craig about 60% of that was already started and in process at the end of the first quarter..

Okay.

How much of these theater acquisitions or education acquisitions are in that $625 million?.

Well there is some, we always kind of have an idea of some of that kind of a 10% factor in there of opportunistic type things.

And so could it be bigger than that, it could be, but that’s – it’s – when we are setting our kind of plan we generally, as you’ve seen before Craig, we have a strong 75%, 80% of that either in process or identified waiting to begin or already under construction.

We have some that we think is going to start construction but the timing on that, and then we have generally a little plug for opportunistic things that will develop during the year but that’s usually 10% or so..

Okay. And then just one last one on Peak, you covered just kind of lower end of the range, you guys like to see there and now they’re coming to you for potentially some bridge financing.

Is this tenant as you guys look at the credit there and watch or is it just potential near term liquidity to get the EB5 money?.

Well, I think it’s really a kind of a liquidity issue in the sense that if you think about what was described they spent $12 million of their cash in an improvement on our property remember, I mean this was – that $12 million has been in Mount Snow.

They also have – they paid us back $75 million roughly last year on property, so they have a substantial amount of assets and when we look at it, they had a one-two cover, I think this is an area that I think as they begin to plan, they’re looking for contingency just in case, there is something here.

So I think we don’t look at it in terms of bridge, in the sense this may – this could be capital that’s just deployed for a greater period in just a short time.

So they fully funded their reserves, we think they’re a good company, it’s just that there were – they’ve made some capital improvements this year and anticipation of getting their money much faster than they have. And so in that sense we think it’s prudent to – in the sense they’re improving our property to think about what role we could play..

Got you. Thanks..

Thank you..

Your next question comes from the line of Richard Moore from RBC Capital Markets. Your line is open..

Hey guys, good afternoon..

Hey Rich..

The first thing, I’m curious on the drop in investment spending a drop that’s in progress of a $112 million that was all Adelaar, is that right?.

The drop – property under development, yeah we put a $154 million in service for Adelaar..

Okay, I got you.

Okay, and then you guys bought one family entertainment center in the quarter, right?.

Yes..

What is that again exactly?.

It’s a [indiscernible] concept and so we have one – it’s a part of – they bought, we had one under that they opened and we bought and there is an opportunity for us to grow with them as they have other development opportunities..

Oh good, what all was in there exactly?.

They actually – it’s a carding with a food and beverage overlay. The facility that we bought was in Atlanta, very successful, and they’ve got a proven balance sheet with some quality backing and again – when we think of FECs we look at, it’s an activity oriented and in a food and beverage overlay.

And there are different activities whether that’s bowling or to a certain degree activities that – carding other activities that can be a driver for that additional food and beverage overlay and there is several operators who are doing extremely very good jobs out there with high coverages and we are kind of making investment, not investments in the operator but making real estate investments with several of these at this time..

Okay.

And then is there a cap rate sort of associated with that?.

It was a near – I’m looking right now, but I think it was a little right at 9..

9, okay. Okay, good thank you. And then I’m a little curious, I mean maybe I’m not exactly understanding how you guys do this, but like I was looking at the number of Topgolfs you have in the portfolio is the same this quarter as it was last quarter, I think it’s 19.

You had 16 under development last quarter and this quarter you have 11 under development, I mean did we lose quite somewhere or do I just not understand what you guys did?.

Five came into service this quarter. We also – yeah is that the number, we had five – if you remember from Jerry’s comments, five came in service. Now what we also had is, we added some new more in under development.

So what you’re catching in the quarter is, new under development replacing those that came in service, so that’s the number, it’s not that we’re off our numbers we had more that came under development, but we also placed five in service in the quarter..

Well, I mean in fact the press release says you have 19 complexes today and you had 19 – in the beginning part it says portfolio update and then there was 19 last quarter.

And so would there be 24 then in service right now or is that?.

I think we had – I think what it was raised we have spending on in service assets..

Oh okay..

The 19 – and then to confuse it even more, we had one property that was underground lease that we put in service but then now it’s going to be a full build out.

So you tell me how to classify that one, we’re treating that now with the build-to-suit but – so the property counts get a little confusing when you’re spending, additional spending things already in service because there are some tail spending on that.

And then you have the situation where a ground lease turns into a build-to-suit, so there is a little bit of reconciliation, I’m glad I do that offline..

We have 19..

Yeah, 19 is the right number, yeah..

19 that are full opened. As Mark said, we had one project where we were just doing the ground, we were going to be a ground lease on those, so we showed that in service since we’re not going to make any improvements, Topgolf has come back to us and said, yes we’d like you to do the improvements on there, we’ve agreed to do that under our program.

And so that was one that shows it was in service but now it’s going to be also have construction spending..

If you look at the lease schedule, maturity schedule, you’ll see one more lease in there that’s that ground lease, but Jerry we don’t put the – we don’t change the 19 because now it’s back under construction, so I know that’s confusing but that’s the story on that..

So Mark, you’re saying if you have 16, if you’re spending 16 that does mean 16 new projects?.

That’s right..

Okay, I got you, I’m with you.

Okay, then on that North Carolina loan that got paid off, was there a prepayment fee with that as well?.

There was not..

There was not, okay..

There was not..

Okay, and then I think the last thing from me is, could you explain me, well I missed it, you guys were going pretty fast today that was good but did you explain why interest expense jump so much?.

Yeah, it’s the combination of really a several things, less capitalized interest because we put Adelaar in service.

A course increase borrowings associated with the investment growth, and then thirdly the hedge rate on our term loan popped up this quarter and then it goes back down in early 2017, just basically on the timing of the way the hedges were put in place..

Okay, great.

Yeah, and there was one more thing, did you saw some charter schools in the quarter besides the one or is that…?.

We had a payoff of a charter school loan that came with a prepayment fee, I mean that fee was $3.6 million, the gross proceeds on the mortgage note was $19.3 million..

Okay, but no additional sales in charter schools?.

No..

No, we did have one subsequent in the quarter that’s the one I talked about in guidance for next quarter, that’s for $12 million and there is a termination fee associated with that but it’s in our guidance and everything but that happen subsequent to the end of quarter for $12 million..

Okay, all right great. Thank you guys..

Thank you, Rich..

I’m showing no further question at this time. I would now like to turn the conference back to Gregory Silvers..

Well, thank everyone for joining us today. We appreciate your interest. If you have any further questions, please don’t hesitate to reach out to us and we look forward to talking to you next quarter. Thank you..

Thank you..

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect..