Barron's Streetwise - Roller Coasters, REITs, and Rotten Tomatoes

Episode Date: September 4, 2026

A real estate analyst explains why he upgraded an odd operator yielding 6%. A box office expert talks IMAX and Avengers. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

investors are looking for some more safety, some predictable cash flows, they'll turn to REITS. And the other aspect is, you know, these are businesses that are coming out of the pandemic that are now finally stabilizing. Supplies come down a lot. And so from the operating and fundamental standpoint of REITs, they're starting to grow again. Hello and welcome to the Barron Streetwise podcast. I'm Jack Howe, and the voice you just heard is UplRana. Analyst with key bank capital markets covering REITs real estate investment trusts. They've been on a tear this year.

We'll talk about which REITs OOPL still likes, including a weird one. And later, we'll hear from Wed Bush analyst Alicia Reese about the box office and her favorite movie stocks. Let's get into it. Listening in is our audio producer Emily Sumlin. Hi, Emily. Hi, Jack. I was away last week, a little. end of summer getaway, as you know.

I don't think, I think we pulled it off. I don't think listeners knew. You were sorely missed here at Barron's. I think we've, I think we fooled them. I experienced some sheer terror. I experienced two minutes of absolute white knuckle terror while I was away. And, you know, common sources of fear, right? Spiders, snakes, heights, none of those.

Clowns, that actually ranks pretty high on the list, wasn't clowns. It was maintenance CAPX is probably how I would describe it. And it happened at a place called Great Escape. Do you know what that is? In an amusement park? It is. It's in the north of New York State. It's up towards the Adirondacks near Lake George.

And it is, I would say, an aging and strange amusement park. Great Escape is a 72-year-old amusement park with a 99-year-old roller coaster. know that sounds like it's not possible, but there was one up in Canada and that place closed and they took it apart and they brought it down and they put it back together. It's been, this amusement park has been through all kinds of transitions over the years. It started as a little nursery rhyme place and they grew it gradually to attract older people and it was taken over for a while by six flags. And I knew before going that it had been sold by six flags. I didn't look into who bought it or what the terms of the deal were, and I should have.

Because I got on this coaster, I saw the year, 1927, get a little quick math, right? Little on the spot math, no help from my calculator watch, 99 years. And as the thing was taken off, I just looked at like the, it looked like, it just looked, I saw a lot of, like, lumber. There's a lot of wood. And the sight lines were not, like, totally straight on some of these wood pieces. Like, the thing is showing its age. I'm sure that it's perfectly safe, but as the coaster got going, what went through my mind was,

I bet you this was a private equity deal. And if private equity is buying, they're going to try to manage this thing for the cash flow. And if they're managing it for the cash flow, the first thing they're going to do is they're going to pull back on maintenance cap X. And the more I kept saying the phrase maintenance cap X, the more panicked I became. And I became convinced that this thing was going to fly off the tracks. I survived, but I was terrified. Is it one of those wooden roller coasters that rattles your brain out of your skull? It was a rattling one.

It turns out, by the way, that my worst fears, I mean, I survived and my worst fears were not close to the actual story. This was not a private equity deal. This was bought by a reek that we're going to talk about in a moment. It's a company called EPR Properties, and it is a known buyer of strange things. strange meaning they don't fit into like normal reed categories like hotels and apartment buildings and offices and stuff like that they buy entertainment properties and it's a reed yielding more than six percent and it's a reed that has outperformed the stock market this year and it turns out the

entire reed category has done that and by the way my concerns about the maintenance cap x in particular when i looked into the terms of this deal the company put up a lot of money for cap-x, they're going to do some improvements, they're going to do, you know, plenty of maintenance. So I think that the park is in good hands. I'm not going to tell you that it was the busiest amusement park I've ever seen, but part of the proposition when this company comes buying is that if you can buy at attractive enough prices, even places that are not top performers can earn good returns. We're going to hear that in a moment when we get to our conversation with Uppel. He talks about the returns being pulled from this deal being well over the cost of financing for the company,

and that's sort of the game that EPR is in. We're going to hear from him about this REIT in particular and some other ones that he likes. Are you a roller coaster person? I am, even though it's been so long since I've been on one. One of the few things this city, I mean, I guess Coney Island, but I feel like they're... Oh, they've got a terrifying one, too. I'd just say, they probably rattle with the best of them. But I like a more modern coaster, if I'm honest.

Right. Smoother, right? Mm-hmm. I like the immersive ones. I like an inside. I like a theme. I like an experience. No water.

Yeah. I don't want to get wet on the roller coaster at any point. I'm not about it. Funny you should say that because they had some kind of log flume there where I haven't seen this before. You can, if you're standing on the side of it, you can pay to, you could put a dollar each. in these water cannons and blast the people. And we didn't realize until the kids had already been on it. And so we told them, go back on.

We want to get some pictures for cherished family memories. And then my wife and I commandeered the numbers two through six cannons and just let them have it. Just sacked them. You got more than one cannon per person. Oh, yeah. We took them over. We were hitting buttons with both hands. I'm sure that was very cathartic.

Yeah, that was nice. EPR doesn't just buy amusement parks. It's best known for buying movie theaters, which that doesn't really reach out and grab people as the sort of best thing to go into right now, but they're doing maybe better than you think. We'll come to that later when we start talking about the box office results. What do you say we get to our conversation about Reets?

I just want to point out the strange thing about Reets doing well this year is that's not what you would expect, because bonds have been doing poorly. We're going to have more to say about that in coming episodes. But as we have been talking about, yields have been rising. Prices have been falling. Bonds aren't doing well. And usually when that happens, other stuff that's out there that people buy for income,

what you would call bond proxies, including REITs, those do poorly too. But that's not happening so far this year. So I wanted to learn, in additional learning what I could about EPR and what it's up to, I wanted to learn more about can this rally for REITs continue? What do we think will happen next and which reits are the most attractive now? So let's jump into part of my conversation with Uppel. Talk to me about this company and about what you, what led you to upgrade the stock. Yeah, so I think you characterize it pretty well.

It is a niche within a niche. And so EPR is an experiential net lease reet. And so they're a reet that owns experiential properties. I think movie theaters, six flags, amusement parks, top golf, golf courses, ski resorts, things like that. And so what led us to upgrade the stock is, you know, this company has been through a lot, the last six years, call it, you know, post-pandemic. And I think at this time, the stock is starting to get to a point where things are starting to work well in their favor in terms of the box office recovering, some tenant credit concerns,

they're starting to fade, they're starting to return back to growth. both your investment activity for the company is starting to accelerate. And we still see a value proposition for the company. And another piece of this is also the dividend. The dividend is also really strong, six and a half percent almost a dividend yield. So really healthy, juicy dividend yield for investors as well. Do I have it right that this company specializes in triple net leases and tell us what that means? Correct.

Yeah. Triple net lease is a structure of a lease where the underlying tenant is responsible for the property taxes, the insurance, and the maintenance of the property. So this provides EPR and other net lease rates predictable cash flow. And so it gives them an opportunity to remove some of the uncertainties around some of the property taxes, insurance, and any kind of maintenance is required for that property. And even a bigger example for Six Flags is they recently purchased this year seven properties. from Six Flags for $315 million. You know, they paid 8.5% cap rate on that portfolio. And so it really depends what are their borrowing costs, you know, the cost of capital.

And then, you know, what are they purchasing the property for? So when we look at the valuation, you know, if we were to, you know, do a weighted average cost of capital on their, on EPR, if you want to say 7% is their cost of capital and they're purchasing this portfolio for 8.5% cap rate, you're collecting that 1.5% spread. And so 1.5% on $315 million is a lot of money. And so that's sort of the value proposition for EPR. People will hear, okay, 1.5%, that doesn't sound like such a huge percentage, but I take it that that compares favorably with what other REITs are able to do. Is that right? When you look at other REITs that you cover?

particularly the net lease rates, right? They are spread collector, right? They borrow money or issue equity, and they go out and deploy that capital accretively. And so when you look at a spread investing, if you're purchasing properties with a spread of 150 basis points, you know, that's really strong. And, you know, once you get to the 100 base points, that's still fine. It's still relatively healthy. But once you get sub 100 basis points, you know, it starts to get a little uncertain in terms of is that worth the money? And it's still fine. It's still relatively healthy. But once you get sub 100 basis points, you know, it starts to get a little uncertain in terms of is that worth risk of deploying capital out of 50 base points or 75 base points. But when you're in that 100 to 150 base points range, that's really strong investment spreads. And that goes right to the bottom line for earnings growth. And so that's a really strong proposition for a company like EPR and other net lease rates who spread invest. Do you think that it's the case? I've suspected about EPR that because it doesn't fit neatly into any particular reed category, that maybe two things are true. Maybe it's a buyer for certain types of properties where there are not a lot of natural buyers. So maybe there's not such aggressive bidding out there when Six Flags wants to

unload some theme parks. And the second thing is maybe the ownership of the stock, maybe it's not as aggressively owned as some other reits where people say, oh, I get that. That's an apartment reet. Or this is a health care reet. Or this is a warehouse. When they look at this one, they say, I don't really know what to do with that. So maybe that has kept the stock more attractively priced. What do you think of those two theories of mine? Yeah, I think that's absolutely correct. I think, for example, the six flags I mentioned earlier, that transaction, six flags had

approached DPR. And in most cases, when they're transacting, they're one of the first few that are called for transactions of this size or these kinds of categories. And so that competition level is very small. And then in terms of being able to find these kinds of deals, you know, the company goes to these trade shows that these operators tend to be at. And so they're talking to operators or talking to other investors, there's potential tenants, and they're trying to find ways to also deploy capital towards them and build up their pipeline of future activity. And so when you're talking about a pipeline right now, they're looking at an active pipeline about $1 billion. And their total addressable market could be upwards of $100 billion.

And so there's still certainly a big ramp for them to go in terms of activity in the future. That's meaningful growth for a company of this size, right? Yeah. And from a size perspective, they have a $7.5 billion of investments. And so when you're talking about a pipeline of $1 billion and then a total addressable market of $100 billion, that's certainly a big pool for them to continue to invest into. And like you mentioned, they're one of the first few that get called, and the competition is very small. And so it's certainly a big ramp up for them to continue to grow in the future. Reets are having a good year.

This reet in particular is having a good year. But when I look at the group, you know, a lot of the group is doing well right now. And it seems unusual to me because this is a moment where people are talking about rising bond yields. And usually at a moment like that, you always think of the bond proxies, the other high dividend investments that are out there. They, you know, might be struggling. But REITs have done well this year. Why do you think that is? What do you think has attracted investors to REITs right now?

In terms of safety, right? Investors are looking for some more safety, some predictable cash flows. They'll turn to REITs. And the other aspect is, you know, these are businesses that are coming out of the pandemic that are now finally stabilizing. Supplies come down a lot. And so from the operating and fundamental standpoint of REITs, they're starting to to grow again. And although the rates are still trickling higher, that's still looking for

either a safety aspect, but also the fundamentals still improving from that standpoint. Tell me about something that you look for when you're trying to decide which REITs investors ought to be buying. What's a sign or two that tells you that you've got a strong contender? And tell me also about one or two things where you say, no, I wouldn't even consider a REIT that's showing these types of signs. Yeah, I think one of the most important parts would be the balance sheet. You know, is it healthy? Is it in a good spot?

Is it flexible? Or is it enough liquidity? You know, where's the leverage levels at relative to historical levels? You know, that's probably a starting point. And does it allow them the capacity to invest externally? And so when you look at the net lease rates, in particular, EPR, right? You know, if they are able to have the capacity on the balance sheet, they have the capacity to continue to certainly grow and deploy capital, you know, that's certainly a good thing to

have. And then when you look at the fundamentals of the business and the underlying tenants and operators, that's also another factor to consider on what your REITs to be invested in. And so when you start to see some of those things inflect, that's probably where I'd start to look to. Anything I've neglected to ask you on the subject of either EPR or REITS in general that you think is important for investors to know now? Yeah, I'd probably point. to maybe for for EPR the underlying tenants you know they do have exposure to the theater

business it's the biggest exposure they have and like you mentioned earlier they are improving the the box office this year is up almost 20 percent year over a year cumulatively you know these consumers are are starting to be more resilient and it's been surprising over the last few years just given what's been thrown at them but um you know it's a consumer discretionary REAPR is. And so when you see the consumer is still holding up well in the face of tariffs and inflation and all kinds of things. So it's pretty surprising.

Opal, thanks. I've learned a lot here. Thanks for taking the time to talk with me about this. Yeah, thank you so much for having me. Thank you, Opel. Let's take a quick break and then we're going to come back. I know you're excited about this, Emily. We're going to talk about movies. You are a movie lover. you've got your rotten tomatoes fired up and ready to go. I might need a couple of scores. I promise not to throw any of them until we come back.

We'll be back after this quick break. Do you want to tell people? Maybe you don't. You can cut this if you want to. Do you want to share with the world what Rebecca, our colleague Rebecca, said to you, what she told you recently? Well, Rebecca began the conversation the way everyone wants a conversation to start, which is, can I say something that might offend you?

And I said, sure. And she told me that I look like the main girl from obsession to her. Yeah. And you know what? I'm too afraid to see it. So I had to Google it. But I'll take it. But only pre-splattered blood.

After that, I think the resemblance is non-existent. There are parts of that movie where this is a lovely woman. And there are parts of that movie where she is not. I think Rebecca meant that the good parts. I'm sure because, yeah, it's, that movie's, by the way, I don't know who this actress is. I don't know if she's famous. She deserves some kind of award for this performance. I was like blown away by how crazy she could get, like, and turn it on and off.

Oh, I know, Jack. You know how I know is because when I go see a rated R movie, like The Odyssey, they decide to show every horror trailer back to back to back. And I as a weenie cannot leave and have to just white knuckle it through all of them. So I'm familiar. You don't watch scary movies. My imagination is just too vivid because you might have enjoyed that scene. That scene's going to live with me every time I turn the lights off in my apartment for the next three years. Don't start with that one.

That's not one to start. I need something a little softer. I'll do a Casper the Friendly Ghost. Yeah. You know. What's the one Nightmare Before Christmas? Yes. Jack the Pumpkin.

That's a good one. I like a thriller. But if you're going to jump. scare me, then I need my money back. I heard a review once of the haunted house ride at Disney World, and they said it's as scary as a whoopee cushion. That's what you're looking for. Oh, my gosh. Yeah, honestly, you hit a full whoopee cushion at the wrong time and see, that could really, that could get your heart palpitations going. I think if I was on my last

straw and I sat on a really full whoopie cushion, I might even cry. Well, I saw some Hollywood press about a couple of movies that are out, small movies. These are not movies that are going to make or break anyone's investment case on anything, but they were interesting to me. And one of them is called The Dog Stars. Give me a rotten tomatoes, Emily, if you would please, on The Dog Stars. That's a Disney movie with a certifiable movie stars. You're looking at 39% on the Tomato Meter, which earns you.

you a green splat on the rotten tomatoes website. That's not where you want to be. You don't want to be there. Okay, so the dog stars opened to $8 million domestically. And that's over 3,300 theaters. It opened wide, as I believe that they say in show business. And it had a production budget, not the cost this movie, but I had a production budget of more than $80 million.

You're not making your money back. I don't think on that movie, right? People are describing that as a bomb. Yes? I would imagine so if people were describing it to me at all. Right. Of course, that's what they're doing. No one's ever heard of it.

And there was no conversation about it. I shouldn't guess about what Disney did with this movie. But I'll just say if there was a tremendous marketing push behind this movie, I wasn't aware of it. And there was another movie that opened. And this one, I keep forgetting the title. The Anvil that drops on the Roadrunner. Help me out, Emily.

Coyote versus Acme That's the one And this was It's the It's one of those Where there's live actors And there's cartoon characters It's a Roger Rabbit type of deal

And I saw this one at the theater And I briefly I saw it had great reviews What's the Rotten Tomatoes on that one? 96% Which earns it a certified fresh rating I started reading about what happened

With this movie I mean it all depends on what you paid And the original studio behind this movie, this was a Warner Brothers movie, and they spent too much. And they held on it for many years. And at one point, it might not have even opened, but then they sold it. And they sold it to someone who, it was a buyer who paid $50 million for it. And then they immediately sold the foreign rights for $20 million. So now they only have to make $30 million.

This company might make money on this movie, especially because the reviews are wonderful. Who knows how long this thing will stick around. So it all depends on what you pay. So you're telling me they didn't run into a wall that was painted like a tunnel? No. And nobody, they lit the fuse on their rocket roller skates. Not yet, but we'll see what happens. More to the point of the meaningful box office dollars and what's going on this year.

I think it's a pretty good year. We're going to hear about that in a moment. But there is an Avengers movie coming in December. And that's big news because when the box office peaked, it was just before COVID. And also just before COVID, we had a couple of Avengers movies like the two big ones that had the culmination of that Disney, Marvel, whatever, whatever universe thing, that string of box office smash hits. And those were enormous earners. So now we have a new Avengers movie coming this year and another one slated for next year. it just seems like we might be headed for better days for movies and movie stocks.

So I wanted to reach out to an analyst who knows all about that. I called Alicia Reese. She's over at Wedbush. I want to be here part of that conversation now. I guess I'll start with the overall state of the box office. How are things? How are we doing relative to the peak and where do you think we're headed? For Q3, we're doing great.

I'd say Q2. we're up 11% Q1, we were up 25%. We're looking up probably around 25%, give or take, for the third quarter. And the fourth quarter has really easy comp. So, you know, it's likely we're going to be up well into the double digits, perhaps, in the 20% plus. So let's call it potentially 20% for the year.

Wow. That gets us to over $10 billion for the year in North American box office, relative to peak box office in 2018 of 11.9 billion. Okay. 2019, the last, you know, year before the pandemic, it was 11.4 billion almost. Those were peak, you know, Marvel, Infinity War and endgame years. Speaking of Disney, that really drove box office to its heights.

And then, of course, the pandemic took the steam out of this. in many other industries. But since, you know, we've really come back a long way and really rivaling those days. The consumer is different, but the market is still, you know, rearing to go. So the peak, that was the Avengers, the Avengers days, the final two movies, the Infinity War and the end game and they had the guy, the Thanos and with the stones and he snapped his fingers and half the people disappeared. And then everybody came together.

I remember it. So now, and now we have another one of those coming up in December. I don't know, not the same guys, but another Avengers movie in December. How, is this going to get us back to these monster box office halls? What's the outlook for Doomsday, do you think? Well, I think Doomsday is, is looking better than I think many of us had originally expected. The previous so far looking good, the excitement around the title. is looking a lot stronger than many Marvel titles have looked in recent years.

Disney did make some, you know, missteps during the pandemic on putting too much out across Marvel properties on its streaming service on Disney Plus. And in many ways, diluted the brand and diluted the story a bit. It got a little, it went down several rabbit holes at once. think. There were, there were so many superheroes. I didn't even know the names of a lot of them. I thought maybe I would get called in to be a Disney superhero at one point. It seemed like everybody was. Many of us did. So, so now they're doing, they're doing less and they're doing bigger things. Is that it? They're more focused again, I would say. They're bringing back some of, you know, some favorite

faces. But it seems like in a more meaningful way, I think the only misstep that they seem to have made so far is not securing a date with IMAX and going head to head with Dune 3. Now with Spider-Man going head-to-head with Odyssey, it's actually worked out pretty well. IMAX has gotten a piece of it, but hasn't terribly missed Spider-Man because Odyssey has played so well for them globally. When you say securing a date with IMAX, what do you mean by that? You have to get your movie on enough IMAX screens to make the best. big money? Is that what we're talking about?

Right. So that's been the case in the past, yes. But right now, we're in a new era where IMAX dedicates screens to only those films that have filmed with IMAX cameras. If they've filmed with IMAX cameras, they automatically get at least two weeks exclusively on IMAX screens, at least in most of its markets. For Odyssey and many other films, it might vary market to market because your release date might be different in one market to the next. So in China and Japan, Odyssey released a bit later so they were able to secure, you know, Spider-Man on IMAX in those markets and then release Odyssey on IMAX later. But for Spider-Man coming out initially in North America in markets, Odyssey was already locked up. Dune 3 will be locked up.

and so Avengers will not be able to play on IMAX screens. A lot of us, you know, analysts were concerned about this, but given how well Spider-Man's done, I think it might be okay. And I think IMAX is just fine, but I think for many of the movies coming out, it really helps boost marketing, and it helps boost, you know, foot traffic to these movies. It's become a must-have.

But some, you know, so I think next year, what we're going to see is a lot more careful calendar planning amongst the theaters. Trends are good at the box office, but we're still nowhere near the peak, and especially inflation adjusted, right? It could take many years. Inflation adjusted, who knows if we'll get back to the peak. But is this still an environment where these companies can make money? What do you like under your coverage right now? The attendance to movie theaters is, not meaningfully higher now, but the box office has risen substantially because people organically are willing to pay more when they go to the movie theaters. The theaters didn't raise

ticket price very much directly, but people want to go see things on premium screens and iMacs or large screens or specialty screens like D-Box where your seat moves along with the movie. Because of that, you know, you just get significantly more box office per title. Also, people are willing to spend significantly more on concessions than they ever used to pre-pandemic. And unfortunately, the cost of those concessions are, of course, higher now. And, you know, the share of ticket is pretty similar, I'd say, between the studios and the theaters. So overall, the margins are expanding. Some of the movie theaters like AMC went into quite a bit of debt

and had to deal with that and have had to really focus on repaying that debt in one way or another for them largely renegotiating debt and also issuing shares, which hasn't been great for the shareholders. But they're finally coming back to a place where their EBITDA is surpassing the interest expense. and so they're starting to grow and be able to service their debt by their earnings. Cinemark's been there for a while, as has Marcus. Marcus was the first of the theater group to reinstate its dividend. Sinemark followed suit, and they both reinstated their dividend at a lower rate than they had been paying pre-pandemic,

but they're still reinstating their dividends and increasing those annually is what we anticipate. AMC is a ways off from doing that, but we do expect them to all get back to that place where it's, we're going to get back to a place where it's a slow growth, you know, older industry, dividend-paying stocks. What's your favorite stock? What's your favorite stock among these companies? IMAX and Cinemark. IMAX has been on our best ideas list for quite a while for the last couple of years with the

global expansion on top of market share gains in existing markets and the film for IMAX optionality that gave them some really nice margin expansion. This story is really played out quite nicely. And there's still plenty of international growth left. So they're not really in the same category as the theaters just because of, you know, they don't own any theaters. They're an asset-like company. They, you know, licensed to theaters or partners with theaters and studios.

And, you know, it's just an interesting place to be within that space because of the global growth. Super helpful, Alicia. Nice speaking with you. Thank you. Likewise. Thank you so much. Thank you, Alicia. Our resident cinephile has a theory, has an Avengers theory. Hit us, Emily. Well, if everyone will recall the insane popularity of Barbenheimer a few years ago, where people had to go see both Barbie, and Oppenheimer, sometimes in the same day, because they had the same release dates. I think everyone's saying Disney's making a mistake releasing at the same time as Dune, I think they're trying to make another moment like that, a Dune Day, if you will.

I think you could have had an obsession roadrunner. That would have been a contrast, right? Tunes Day. Tuesday. Tuesday. Tunes Day. That's it for us. I want to thank Opel and I want to thank Alicia for all their great information.

And thank you all for listening. You can subscribe to the podcast on Spotify, YouTube, Apple. You could write a review. Writers says scary but not too scary movie that would be just right for Emily, if you would. And if you don't think I look like the girl in obsession, that's okay. You do not have to say it to me or to us. I've got to rewatch it. But it's definitely a compliment.

But you should definitely accomplish it. Don't worry. If you have a conflicting opinion, you are allowed your nuance, but please keep it. I mean, there's a moment where she smashes through the window and I don't want to ruin it. But that's not the one that you look like. You look like her in the beginning of the movie. And also, I'm just going to cut you off real quick. When there is specific language for so many questions that you know that I love specific language.

First of all, go ahead. Yes. Handed directly to us from our very charitable legal team. Please use that in the future. You do this one. You do it the first time and then I'll try to get on it after this. What should we say? Folks, if you have a question about investing you'd like played and answered,

go ahead and send it in. It could be in a future episode. Just tape it on the voice memo app on your phone and send it to jack.h.haw at barons.com. It may be played on the show. May cause wheezing or mild rash. See your doctor if it persists for more than a week. And thanks for listening.

We'll see you next week.