The mix of properties owned by EPR Properties (NYSE: EPR) may seem a bit quirky on the surface: not many REITs invest in schools, movie theatres, Top Golf sites and ski resorts. But to EPR’s President and CEO Greg Silvers, it makes perfect sense.
“We think of it as almost ‘social infrastructure’ for people to create experiences with their friends, family and colleagues as well as places to get an education,” says Silvers.
EPR has $6.8 billion in investments in 400 locations in 43 states, the District of Columbia and Canada. Their 25 ski properties, most of which are in New England, represent 10 percent of the company’s portfolio, are 100 percent occupied and include 16,000 acres of skiable land.
Focus on Drive-To, Not Fly-To Resorts
While skiers may rave about their exploits on the slopes of Park City or Aspen, Silvers says most only get to “destination” resorts once or twice a year.
“Our decision to invest in daily accessible resorts within a three-hour drive of major metro areas is because we know that skiers will visit those resorts four to six times per year,” says Silvers. “Local resorts are more resilient to economic shocks because people may still do a day trip or a weekend trip to a ski resort even when they won’t fly to a long-distance resort.”
From January 2017 through January 2018, Silvers says EPR’s New England ski resorts had more than 1 million admissions. Nationally, EPR’s ski resorts had 1.96 million admissions.
“We focus on family-oriented demographics, in particular older millennials with young families who are beginning to be old enough to ski and baby boomers who want to create memories with their kids and grandkids,” says Silvers.
EPR’s ski resorts all have snowmaking capability so that when the temperature is right, people can always ski, says Silvers. The resorts have access to water to convert to snow in an environmentally-friendly way.
“We’re good stewards of our shareholders’ capital and of the properties we own,” says Silvers.
EPR’s resorts also benefit their communities with employment opportunities.
“Ski resorts are generally the economic driver of the area and increase employment overall,” says Silvers.
Summer and Shoulder Seasons on the Slopes
Increasingly, ski resorts are expanding their economic impact on the surrounding region year-round, says Brian Moriarty, vice president of corporate communications for EPR.
“The National Ski Area Association says that some resorts get as much as 40 percent of their revenue during the summer season,” says Moriarty. “All of our ski areas are transitioning into year-round resorts. The natural terrain lends itself to outdoor activities.”
Zip lines, mountain coasters and mountain biking are popular summer and shoulder season activities at ski resorts. Some resorts are adding summer concert series, culinary events and wedding facilities, says Silvers.
“We like to cross-fertilize opportunities to make our tenants stronger, so we’re connecting live performance venues and water park operators with our ski resorts,” says Silvers. “I like to call it creating ‘emotional ownership’ for our customers so they can say that’s where we ski, that’s where we go to concerts and that’s where we go to enjoy the outdoors in the spring, summer and fall.”
Regional Economic Impact
While investors may have heard more about big-name ski resort owners such as Vail Resorts , Silvers says EPRs regional operators take great pride in their work.
“They’re highly vested in the performance of their property and in what local people think about it because they’re of the community themselves,” says Silvers. “We’ve had great success identifying high quality operators in regional markets that are well-known and valued by their community.”
EPR upgrades existing ski resorts with higher quality food and beverage service and other improvements that enhance the customer experience.
“Building loyalty with a season pass for local ski operators and tying the pass into a network of ski resorts makes it more convenient to ski more often and drives underlying cash flow of the properties,” says Silvers.
Since ski mountains can’t be built, EPR’s growth in that property sector must be opportunistic. Many family-owned resorts have been in operation for 35 to 50 years, which provides EPR with an abundance of data to predict revenue streams. Since the company sold a few resort properties last year, they’re looking to acquire more to keep ski resorts in their mix of leisure and entertainment properties.