MW This REIT could get a boost from a box-office rebound at AMC
By James Rogers
Movie-theater chain and original meme stock AMC expects a box-office boost from a slate of major releases in 2025
Real-estate investment trust EPR Properties is set to reap the benefits of an anticipated box-office rebound at movie-theater chain AMC Entertainment Holdings Inc. in 2025, according to Truist Securities.
In a note released Thursday, Truist analyst Ki Bin Kim wrote that the management of EPR Properties' $(EPR)$ believes that 3% to 4% adjusted funds from operations per share is achievable in 2025-26. Much of this is supported by a $6 million rent escalation at AMC $(AMC)$ that is expected in mid-2025, the analyst added.
Kim pointed to expectations for a $9.4 billion box office in 2025. Due to increased spending on food and beverages, theater-operator margins are expected to be at healthy levels, he added.
Related: AMC reports better-than-expected third-quarter results amid improving box office
Earlier this year, analyst firm Roth MKM said that domestic box-office figures could hit $9.4 billion in 2025, an increase over expectations for 2024, according to the Hollywood Reporter.
Through Nov. 17, domestic box office was $7.079 billion in 2024, down 11.1% compared with the same period last year, according to data from Comscore.
"Should the $9.4 [billion] box office come to fruition, theatre rent coverage levels should increase to 1.8/1.85x from the 1.5x levels, which is back to 2019 levels," Truist's Kim wrote in the note.
Related: These stocks could bask in the 'Glicked' glow as 'Gladiator II' and 'Wicked' open
EPR Properties shares are up 0.4% Friday. The stock is down 7.2% in 2024, compared with the S&P 500 index's SPX gain of 25.2%.
"It is AMC's belief that the 2025 domestic industry box office should easily surpass that of 2024, with bankable titles hitting our theaters next year," AMC Chief Executive Officer Adam Aron said during the conference call to discuss the company's third-quarter results earlier this month. In particular, Aron cited as "just some of the big movies coming next year" Paramount Pictures' $(PARA)$ "Mission: Impossible 8"; "Jurassic World 4" from Comcast's Universal Pictures $(CMCSA)$; and, from Walt Disney Co. $(DIS)$, the latest "Captain America," movie, "Snow White," the new "Thunderbolts" and "Avatar 3."
Aron also pointed to an "impressive [fourth-quarter] 2024 movie slate" that includes Universal Pictures' "Wicked," and Disney's "Mufasa: The Lion King" and "Moana 2." Based on the successful Broadway show, "Wicked" hits theaters Friday, as does director Ridley Scott's eagerly anticipated "Gladiator II." The debut of the two movies on the same day has been dubbed "Glicked," in a nod to summer 2023's "Barbenheimer" phenomenon.
Related: AMC touts theater investment plan but faces balancing act, Wedbush says
"Moana 2," which is the sequel to the 2016 animated blockbuster, opens Nov. 27, and "Mufasa: The Lion King," hits theaters Dec. 20.
Shares of AMC are up 1.5% Friday. The stock is down 25.7% in 2024.
-James Rogers
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November 22, 2024 10:46 ET (15:46 GMT)
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