Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 02, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 1-37538 | |
Entity Registrant Name | Four Corners Property Trust, Inc. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 47-4456296 | |
Entity Address, Address Line One | 591 Redwood Highway, | |
Entity Address, Address Line Two | Suite 3215, | |
Entity Address, City or Town | Mill Valley, | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94941 | |
City Area Code | 415 | |
Local Phone Number | 965-8030 | |
Title of 12(b) Security | Common Stock, $0.0001 par value per share | |
Trading Symbol | FCPT | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 90,565,846 | |
Entity Central Index Key | 0001650132 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Real estate investments: | ||
Land | $ 1,187,742 | $ 1,115,827 |
Buildings, equipment and improvements | 1,641,941 | 1,539,875 |
Total real estate investments | 2,829,683 | 2,655,702 |
Less: Accumulated depreciation | (722,241) | (706,702) |
Total real estate investments, net | 2,107,442 | 1,949,000 |
Intangible lease assets, net | 114,298 | 106,206 |
Total real estate investments and intangible lease assets, net | 2,221,740 | 2,055,206 |
Real estate held for sale | 0 | 7,522 |
Cash and cash equivalents | 11,197 | 26,296 |
Straight-line rent adjustment | 62,891 | 61,027 |
Derivative assets | 27,668 | 35,276 |
Deferred tax assets | 1,037 | 988 |
Other assets | 13,448 | 12,272 |
Total Assets | 2,337,981 | 2,198,587 |
Liabilities: | ||
Term loan and revolving credit facility, net of deferred financing costs | 439,940 | 424,134 |
Senior unsecured notes, net of deferred financing costs | 571,665 | 571,343 |
Dividends payable | 30,724 | 29,064 |
Rent received in advance | 13,240 | 11,710 |
Derivative liabilities | 0 | 9 |
Other liabilities | 27,271 | 24,017 |
Total liabilities | 1,082,840 | 1,060,277 |
Equity: | ||
Preferred stock, par value 0.0001 per share; 25,000,000 authorized, zero shares issued and outstanding | 0 | 0 |
Common stock, par value 0.0001 per share; 500,000,000 shares authorized, 90,565,846 and 85,637,293 shares issued and outstanding, respectively | 9 | 9 |
Additional paid-in capital | 1,233,775 | 1,104,522 |
Retained earnings (accumulated deficit) | (12,602) | 576 |
Accumulated other comprehensive income | 31,757 | 30,944 |
Noncontrolling interest | 2,202 | 2,259 |
Total equity | 1,255,141 | 1,138,310 |
Total Liabilities and Equity | $ 2,337,981 | $ 2,198,587 |
CONSOLIDATED BALANCE SHEETS (PA
CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in usd per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 90,565,846 | 85,637,293 |
Common stock, shares outstanding (in shares) | 90,565,846 | 85,637,293 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Revenues: | ||||
Rental revenue | $ 52,843 | $ 47,904 | $ 105,040 | $ 94,807 |
Restaurant revenue | 7,845 | 7,521 | 15,600 | 15,015 |
Total revenues | 60,688 | 55,425 | 120,640 | 109,822 |
Operating expenses: | ||||
General and administrative | 5,600 | 4,698 | 11,655 | 9,967 |
Depreciation and amortization | 11,817 | 10,128 | 23,993 | 19,832 |
Total operating expenses | 27,290 | 23,865 | 55,983 | 47,570 |
Interest expense | (10,051) | (9,031) | (19,969) | (17,406) |
Other income | 226 | 29 | 526 | 86 |
Realized gain on sale | 173 | 5,756 | 1,735 | 5,756 |
Income tax expense | (91) | (144) | (139) | (232) |
Net income | 23,655 | 28,170 | 46,810 | 50,456 |
Net income attributable to noncontrolling interest | (30) | (40) | (61) | (71) |
Net Income Available to Common Shareholders | $ 23,625 | $ 28,130 | $ 46,749 | $ 50,385 |
Basic net income per share (in usd per share) | $ 0.27 | $ 0.35 | $ 0.54 | $ 0.63 |
Diluted net income per share (in usd per share) | $ 0.27 | $ 0.35 | $ 0.54 | $ 0.63 |
Weighted average number of common shares outstanding: | ||||
Basic (in shares) | 87,366,335 | 80,294,804 | 86,604,202 | 80,245,247 |
Diluted (in shares) | 87,556,011 | 80,494,443 | 86,825,150 | 80,446,167 |
Dividends declared per common share (in usd per share) | $ 0.3400 | $ 0.3325 | $ 0.6800 | $ 0.6650 |
Revenue from Contract with Customer, Product and Service [Extensible Enumeration] | Restaurant Revenue [Member] | Restaurant Revenue [Member] | Restaurant Revenue [Member] | Restaurant Revenue [Member] |
Property | ||||
Operating expenses: | ||||
Expenses | $ 2,676 | $ 1,987 | $ 5,843 | $ 3,836 |
Restaurant | ||||
Revenues: | ||||
Restaurant revenue | 7,845 | 7,521 | 15,600 | 15,015 |
Operating expenses: | ||||
Expenses | $ 7,197 | $ 7,052 | $ 14,492 | $ 13,935 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 23,655 | $ 28,170 | $ 46,810 | $ 50,456 |
Other comprehensive income (loss): | ||||
Effective portion of change in fair value of derivative instruments | 11,005 | 8,254 | 5,412 | 22,000 |
Reclassification adjustment of derivative instruments included in net income | (2,562) | 1,142 | (4,639) | 2,804 |
Other comprehensive income (loss) | 8,443 | 9,396 | 773 | 24,804 |
Comprehensive income | 32,098 | 37,566 | 47,583 | 75,260 |
Less: comprehensive income attributable to noncontrolling interest | ||||
Net income attributable to noncontrolling interest | 30 | 40 | 61 | 71 |
Other comprehensive (loss) income attributable to noncontrolling interest | (29) | 14 | (40) | 35 |
Comprehensive income attributable to noncontrolling interest | 1 | 54 | 21 | 106 |
Comprehensive Income Attributable to Common Shareholders | $ 32,097 | $ 37,512 | $ 47,562 | $ 75,154 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interest |
Beginning balance (in shares) at Dec. 31, 2021 | 80,279,217 | |||||
Beginning balance at Dec. 31, 2021 | $ 963,892 | $ 8 | $ 958,737 | $ 12,753 | $ (9,824) | $ 2,218 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 50,456 | 50,385 | 71 | |||
Other comprehensive income (loss) | 24,804 | 24,769 | 35 | |||
ATM proceeds, net of issuance costs (in shares) | 173,424 | |||||
ATM proceeds, net of issuance costs | 4,354 | 4,354 | ||||
Dividends and distributions to equity holders | (53,474) | (53,398) | (76) | |||
Stock-based compensation, net (in shares) | 91,345 | |||||
Stock-based compensation, net | 1,516 | 1,516 | ||||
Ending balance (in shares) at Jun. 30, 2022 | 80,543,986 | |||||
Ending balance at Jun. 30, 2022 | 991,548 | $ 8 | 964,607 | 9,740 | 14,945 | 2,248 |
Beginning balance (in shares) at Mar. 31, 2022 | 80,363,738 | |||||
Beginning balance at Mar. 31, 2022 | 975,380 | $ 8 | 959,237 | 8,340 | 5,563 | 2,232 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 28,170 | 28,130 | 40 | |||
Other comprehensive income (loss) | 9,396 | 9,382 | 14 | |||
ATM proceeds, net of issuance costs (in shares) | 173,424 | |||||
ATM proceeds, net of issuance costs | 4,354 | 4,354 | ||||
Dividends and distributions to equity holders | (26,768) | (26,730) | (38) | |||
Stock-based compensation, net (in shares) | 6,824 | |||||
Stock-based compensation, net | 1,016 | 1,016 | ||||
Ending balance (in shares) at Jun. 30, 2022 | 80,543,986 | |||||
Ending balance at Jun. 30, 2022 | $ 991,548 | $ 8 | 964,607 | 9,740 | 14,945 | 2,248 |
Beginning balance (in shares) at Dec. 31, 2022 | 85,637,293 | 85,637,293 | ||||
Beginning balance at Dec. 31, 2022 | $ 1,138,310 | $ 9 | 1,104,522 | 576 | 30,944 | 2,259 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 46,810 | 46,749 | 61 | |||
Other comprehensive income (loss) | 773 | 813 | (40) | |||
ATM proceeds, net of issuance costs (in shares) | 4,787,970 | |||||
ATM proceeds, net of issuance costs | 128,184 | 128,184 | ||||
Dividends and distributions to equity holders | (60,005) | (59,927) | (78) | |||
Stock-based compensation, net (in shares) | 140,583 | |||||
Stock-based compensation, net | $ 1,069 | 1,069 | ||||
Ending balance (in shares) at Jun. 30, 2023 | 90,565,846 | 90,565,846 | ||||
Ending balance at Jun. 30, 2023 | $ 1,255,141 | $ 9 | 1,233,775 | (12,602) | 31,757 | 2,202 |
Beginning balance (in shares) at Mar. 31, 2023 | 86,088,900 | |||||
Beginning balance at Mar. 31, 2023 | 1,132,967 | $ 9 | 1,112,936 | (5,503) | 23,285 | 2,240 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 23,655 | 23,625 | 30 | |||
Other comprehensive income (loss) | 8,443 | 8,472 | (29) | |||
ATM proceeds, net of issuance costs (in shares) | 4,463,788 | |||||
ATM proceeds, net of issuance costs | 119,279 | 119,279 | ||||
Dividends and distributions to equity holders | (30,763) | (30,724) | (39) | |||
Stock-based compensation, net (in shares) | 13,158 | |||||
Stock-based compensation, net | $ 1,560 | 1,560 | ||||
Ending balance (in shares) at Jun. 30, 2023 | 90,565,846 | 90,565,846 | ||||
Ending balance at Jun. 30, 2023 | $ 1,255,141 | $ 9 | $ 1,233,775 | $ (12,602) | $ 31,757 | $ 2,202 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Cash flows - operating activities | ||
Net income | $ 46,810 | $ 50,456 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization | 23,993 | 19,832 |
Realized gain on sale | (1,735) | (5,756) |
Non-cash revenue adjustments | 984 | 1,057 |
Amortization of financing costs | 1,128 | 964 |
Stock-based compensation expense | 3,326 | 2,533 |
Deferred income taxes | (48) | 61 |
Changes in assets and liabilities: | ||
Derivative assets and liabilities | 8,372 | 320 |
Straight-line rent adjustment | (2,639) | (3,292) |
Rent received in advance | 1,530 | (572) |
Other assets and liabilities | 3,853 | (412) |
Net cash provided by operating activities | 85,574 | 65,191 |
Cash flows - investing activities | ||
Purchases of real estate investments | (194,970) | (99,408) |
Proceeds from sale of real estate investments | 13,464 | 12,293 |
Advance refunds on acquisition of operating real estate | (1,750) | (637) |
Net cash used in investing activities | (183,256) | (87,752) |
Cash flows - financing activities | ||
Net proceeds from ATM equity issuance | 128,184 | 4,354 |
Proceeds from issuance of senior notes | 0 | 125,000 |
Payment of deferred financing costs | 0 | (1,062) |
Proceeds from revolving credit facility | 15,000 | 28,000 |
Repayment of revolving credit facility | 0 | (64,000) |
Payment of dividends to shareholders | (58,266) | (53,324) |
Distributions to non-controlling interests | (78) | (76) |
Employee shares withheld for taxes | (2,257) | (1,017) |
Net cash provided by financing activities | 82,583 | 37,875 |
Net increase in cash and cash equivalents, including restricted cash | (15,099) | 15,314 |
Cash and cash equivalents, including restricted cash, at beginning of period | 26,296 | 6,300 |
Cash and cash equivalents, including restricted cash, at end of period | 11,197 | 21,614 |
Supplemental disclosures: | ||
Interest paid | 23,261 | 12,327 |
Income taxes paid | 343 | 312 |
Operating lease payments received (lessor) | 98,764 | 89,378 |
Operating lease payments remitted (lessee) | 452 | 457 |
Non-cash activities: | ||
Dividends declared but not paid | 30,724 | 26,730 |
Change in fair value of derivative instruments | $ (7,599) | $ 24,484 |
ORGANIZATION
ORGANIZATION | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION Four Corners Property Trust, Inc. (together with its consolidated subsidiaries, “FCPT”) is an independent, publicly traded, self-administered company, primarily engaged in the ownership, acquisition and leasing of restaurant and retail properties. Substantially all of our business is conducted through Four Corners Operating Partnership, LP (“FCPT OP”), a Delaware limited partnership of which we are the initial and substantial limited partner. Our wholly owned subsidiary, Four Corners GP, LLC (“FCPT GP”), is its sole general partner. Any references to “the Company,” “we,” “us,” or “our” refer to FCPT as an independent, publicly traded, self-administered company. FCPT was incorporated as a Maryland corporation on July 2, 2015 as a wholly owned indirect subsidiary of Darden Restaurants, Inc., (together with its consolidated subsidiaries “Darden”), for the purpose of owning, acquiring and leasing properties on a triple-net basis, for use in the restaurant and other retail industries. On November 9, 2015, Darden completed a spin-off of FCPT whereby Darden contributed to us 100% of the equity interest in entities that owned 418 properties in which Darden operates restaurants, representing five of their brands, and six LongHorn Steakhouse restaurants located in the San Antonio, Texas area (the “Kerrow Restaurant Operating Business”) along with the underlying properties or interests therein associated with the Kerrow Restaurant Operating Business. In exchange, we issued to Darden all of our common stock and paid to Darden $315.0 million in cash. Subsequently, Darden distributed all of our outstanding shares of common stock pro rata to holders of Darden common stock whereby each Darden shareholder received one share of our common stock for every three shares of Darden common stock held at the close of business on the record date, which was November 2, 2015, as well as cash in lieu of any fractional shares of our common stock which they would have otherwise received. We believe that we have been organized and have operated in conformity with the requirements for qualification and taxation as a real estate investment trust (a “REIT”) for federal income tax purposes commencing with our taxable year ended December 31, 2016, and we intend to continue to operate in a manner that will enable us to maintain our qualification as a REIT. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our REIT taxable income to our shareholders, subject to certain adjustments and excluding any net capital gain. As a REIT, we will not be subject to federal corporate income tax on that portion of net income that is distributed to our shareholders. However, FCPT’s taxable REIT subsidiaries (“TRS”) will generally be subject to federal, state, and local income taxes. We made our REIT election upon the filing of our 2016 tax return. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Basis of Presentation The accompanying consolidated financial statements (the “Consolidated Financial Statements”) include the accounts of Four Corners Property Trust, Inc. and its consolidated subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Consolidated Financial Statements reflect all adjustments which are, in the opinion of management, necessary to a fair presentation of the results for the interim periods presented. These adjustments are considered to be of a normal, recurring nature. Reclassifications Certain amounts previously reported under specific financial statement captions have been reclassified to be consistent with the current period presentation. As of June 30, 2023, we have conformed the prior presentation of the Long-term debt, net of deferred financing costs to the current format for comparability purposes. Use of Estimates The preparation of these Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The estimates and assumptions used in the accompanying Consolidated Financial Statements are based on management’s evaluation of the relevant facts and circumstances. Actual results may differ from the estimates and assumptions used in preparing the accompanying Consolidated Financial Statements, and such differences could be material. Real Estate Investments, Net Real estate investments, net are recorded at cost less accumulated depreciation. Building components are depreciated over estimated useful lives ranging from seven using the straight-line method. Leasehold improvements, which are reflected on our Consolidated Balance Sheets as a component of buildings, equipment, and improvements, net are amortized over the lesser of the non-cancelable lease term or the estimated useful lives of the related assets using the straight-line method. Equipment is depreciated over estimated useful lives ranging from two also using the straight-line method. Real estate development and construction costs for newly constructed restaurant and retail locations are capitalized in the period in which they are incurred. Gains and losses on the disposal of land, buildings, and equipment are included in realized gain on sale, net, in our accompanying Consolidated Statements of Income (“Income Statements”). Our accounting policies regarding land, buildings, equipment, and improvements, include our judgments regarding the estimated useful lives of these assets, the residual values to which the assets are depreciated or amortized, the determination of what constitutes a reasonably assured lease term, and the determination as to what constitutes enhancing the value of or increasing the life of existing assets. These judgments and estimates may produce materially different amounts of reported depreciation and amortization expense if different assumptions were used. As discussed further below, these judgments may also impact our need to recognize an impairment charge on the carrying amount of these assets as the cash flows associated with the assets are realized, or as our expectations of estimated future cash flows change. Acquisition of Real Estate The Company evaluates acquisitions to determine whether transactions should be accounted for as asset acquisitions or business combinations in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2017-01. The Company has determined the land, building, site improvements, and in-places leases (if any) of assets acquired were each single assets as the building and property improvements are attached to the land and cannot be physically removed and used separately from the land without incurring significant costs or reducing their fair value. Additionally, the Company has not acquired a substantive process used to generate outputs. As substantially all of the fair value of the gross assets acquired are concentrated in a single identifiable asset and there were no processes acquired, the acquisitions do not qualify as a business and are accounted for as asset acquisitions. Related transaction costs are generally capitalized and amortized over the useful life of the acquired assets. The Company allocates the purchase price (including acquisition and closing costs) of real estate acquisitions to land, building, and improvements based on their relative fair values. The determination of the building fair value is on an ‘as-if-vacant’ basis. Value is allocated to acquired lease intangibles (if any) based on the costs avoided and revenue recognized by acquiring the property subject to lease and avoiding an otherwise ‘dark period’. In making estimates of fair values for this purpose, the Company uses a third-party specialist that obtains various information about each property, as well as the pre-acquisition due diligence of the Company and prior leasing activities at the site. Lease Intangibles Lease intangibles, if any, acquired in conjunction with the purchase of real estate represent the value of in-place leases and above- or below-market leases. For real estate acquired subject to existing lease agreements, acquired lease intangibles are valued based on the Company’s estimates of costs related to tenant acquisition and the asset carrying costs, including lost revenue, that would be incurred during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. Above-market and below-market lease intangibles are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to the leases at the time of acquisition of the real estate and the Company’s estimate of current market lease rates for the property, measured over a period equal to the remaining initial term of the lease. In-place lease intangibles are amortized on a straight-line basis over the remaining initial term of the related lease and included in depreciation and amortization expense. Above-market lease intangibles are amortized over the remaining initial terms of the respective leases as a decrease in rental revenue. Below-market lease intangibles are generally amortized as an increase to rental revenue over the remaining initial term of the respective leases, but may be amortized over the renewal periods if the Company believes it is likely the tenant will exercise the renewal option. Should a lease terminate early, the unamortized portion of any related lease intangible is immediately recognized as an impairment loss included in depreciation and amortization expense. To date, the Company has not had significant early terminations. Finance ground lease assets are also included in lease intangible assets, net on the Consolidated Balance Sheets. See Leases below for additional information. Impairment of Long-Lived Assets Land, buildings and equipment and certain other assets, including definite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such events and changes may include macroeconomic conditions, including those caused by global pandemics, which may result in property operational disruption and indicate that the carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future undiscounted net cash flows expected to be generated by the assets. Identifiable cash flows are measured at the lowest level for which they are largely independent of the cash flows of other groups of assets and liabilities, generally at the restaurant and retail level. If these assets are determined to be impaired, the amount of impairment recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. Fair value is generally determined by appraisals or sales prices of comparable assets. The judgments we make related to the expected useful lives of long-lived assets and our ability to realize undiscounted cash flows in excess of the carrying amounts of these assets are affected by factors such as the ongoing maintenance and improvements of the assets, changes in economic conditions, changes in usage or operating performance, desirability of the restaurant and retail sites and other factors, such as our ability to sell our assets held for sale. As we assess the ongoing expected cash flows and carrying amounts of our long-lived assets, significant adverse changes in these factors could cause us to realize a material impairment loss. Exit or disposal activities include the cost of disposing of the assets and are generally expensed as incurred. Upon disposal of the assets, any gain or loss is recorded in the same caption within our Income Statements as the original impairment. Provisions for impairment are included in depreciation and amortization expense in the accompanying Income Statements. We did not record impairment expense during the six months ended June 30, 2023 or 2022. Real Estate Held for Sale Real estate is classified as held for sale when the sale is probable, will be completed within one year, purchase agreements are executed, the buyer has a significant deposit at risk, and no financing contingencies exist which could prevent the transaction from being completed in a timely manner. Restaurant and retail sites and certain other assets to be disposed of are included in assets held for sale when the likelihood of disposing of these assets within one year is probable. Assets whose disposal is not probable within one year remain in land, buildings, equipment and improvements until their disposal within one year is probable. Disposals of assets that have a major effect on our operations and financial results or that represent a strategic shift in our operating businesses meet the requirements to be reported as discontinued operations. Real estate held for sale is reported at the lower of carrying amount or fair value, less estimated costs to sell. No properties were held for sale at June 30, 2023, and two properties were held for sale at December 31, 2022. Cash, Cash Equivalents, and Restricted Cash We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents can consist of cash and money market accounts. Restricted cash consists of 1031 tax deferred real estate exchange proceeds and is included in Other assets in our Consolidated Balance Sheets. The following table provides a reconciliation of cash, cash equivalents, and restricted cash in our Consolidated Balance Sheets to the total amount shown in our Consolidated Statements of Cash Flows: June 30, December 31, (In thousands) 2023 2022 Cash and cash equivalents $ 11,197 $ 26,296 Restricted cash (included in Other assets) — — Total Cash, Cash Equivalents, and Restricted Cash $ 11,197 $ 26,296 Debt The Company’s debt consists of non-amortizing term loans, a revolving credit facility and senior, unsecured, fixed rate notes (collectively referred to as “Debt”). Debt is carried at unpaid principal balance, net of deferred financing costs. All of our debt is currently unsecured and interest is paid monthly on our non-amortizing term loans and revolving credit facility and semi-annually on our senior fixed rate notes. Deferred Financing Costs Financing costs related to debt are deferred and amortized over the remaining life of the debt using the effective interest method. These costs are presented as a direct deduction from their related liabilities in the Consolidated Balance Sheets. See Note 6 - Debt, Net of Deferred Financing Costs for additional information. Derivative Instruments and Hedging Activities We enter into derivative instruments for risk management purposes only, including derivatives designated as hedging instruments as required by FASB ASC Topic 815, Derivatives and Hedging, and those utilized as economic hedges. Our use of derivative instruments is currently limited to interest rate hedges. These instruments are generally structured as hedges of the variability of cash flows related to forecasted transactions (cash flow hedges). We do not enter into derivative instruments for trading or speculative purposes, where changes in the cash flows of the derivative are not expected to offset changes in cash flows of the hedged item. All derivatives are recognized on the balance sheet at fair value. For those derivative instruments for which we intend to elect hedge accounting, at the time the derivative contract is entered into, we document all relationships between hedging instruments and hedged items, as well as our risk-management objective and strategy for undertaking the various hedge transactions. This process includes linking all derivatives designated as cash flow hedges to specific assets and liabilities on the consolidated balance sheet or to specific forecasted transactions. We also formally assess, both at the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items. To the extent our derivatives are effective in offsetting the variability of the hedged cash flows, and otherwise meet the cash flow hedge accounting criteria in accordance with United States generally accepted accounting principles (“U.S. GAAP”), changes in the derivatives’ fair value are not included in current earnings but are included in accumulated other comprehensive income, net of tax. These changes in fair value will be reclassified into earnings at the time of the forecasted transaction. Ineffectiveness measured in the hedging relationship is recorded in earnings in the period in which it occurs. See Note 7 - Derivative Financial Instruments for additional information. Other Assets and Liabilities Other assets primarily consist of right of use operating lease assets, pre-acquisition costs, restricted cash, prepaid assets, food and beverage inventories for use by our Kerrow operating subsidiary, escrow deposits, and accounts receivable. Other liabilities primarily consist of accrued compensation, accrued interest expense, accrued operating expenses, intangible lease liabilities, and operating lease liabilities. See Note 8 - Supplemental Detail for Certain Components of Consolidated Balance Sheets for additional information. Leases Effective January 1, 2019, the Company adopted FASB Accounting Standards Codification 842, Leases, including effective amendments (“ASC 842”). All significant lease arrangements are generally recognized at lease commencement. For leases where the Company is the lessee upon adoption of ASC 842, operating or finance lease right-of-use (“ROU”) assets and lease liabilities are recognized at commencement based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset during the reasonably certain lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. As part of certain real estate investment transactions, the Company may enter into long-term ground leases as a lessee. The Company recognizes a ground lease (or right-of-use) asset and related lease liability for each of these ground leases. Ground lease assets and lease liabilities are recognized based on the present value of the lease payments. The Company uses its estimated incremental borrowing rate, which is the estimated rate at which the Company could borrow on a collateralized basis with similar payments over a similar term, in determining the present value of the lease payments. For leases where the Company is the lessor, we determine the classification upon commencement. At June 30, 2023, all such leases are classified as operating leases. These operating leases may contain both lease and non-lease components. The Company accounts for lease and non-lease components as a single component. See Note 5 - Leases for additional information. Revenue Recognition Rental Revenue For those net leases that provide for periodic and determinable increases in base rent, base rental revenue is recognized on a straight-line basis over the applicable lease term when collectability is probable. Recognizing rental revenue on a straight-line basis generally results in recognized revenues during the first half of a lease term exceeding the cash amounts contractually due from our tenants, creating a deferred rent receivable. In certain circumstances, the Company may offer tenant allowance funds in exchange for increasing rent, extending the term, and including annual sales reporting among other items. These tenant allowance funds are classified as lease incentives upon payment and are amortized as a reduction to revenue over the lease term. Lease incentives are included in intangible lease assets, net, on our Consolidated Balance Sheets. The Company did not pay any lease incentives to tenants during the six months ended June 30, 2023. During the year ended December 31, 2022, the Company paid lease incentives of $0.1 million to tenants. We assess the collectability of our lease receivables, including deferred rents receivable, on several factors, including payment history, the financial strength of the tenant and any guarantors, historical operations and operating trends of the property, and current economic conditions. If our evaluation of these factors indicates it is not probable that we will be able to recover substantially all of the receivable, we derecognize the deferred rent receivable asset and record that revenue as a reduction in rental revenue. If we determine the lease receivable will not be collected due to a credit concern, we reduce the recorded revenue for the period and related accounts receivable. For those leases that provide for periodic increases in base rent only if certain revenue parameters or other substantive contingencies are met, the increased rental revenue is recognized as the related parameters or contingencies are met, rather than on a straight-line basis over the applicable lease term. Costs paid by the lessor and reimbursed by the lessees are included in variable lease payments and presented on a gross basis within rental revenue. Sales taxes collected from lessees and remitted to governmental authorities are presented on a net basis within rental revenue. Restaurant Revenue Restaurant revenue represents food, beverage, and other products sold and is presented net of the following discounts: coupons, employee meals, complimentary meals and gift cards. Revenue from restaurant sales, whether received in cash or by credit card, is recognized when food and beverage products are sold. At June 30, 2023 and December 31, 2022, credit card receivables, included in other assets, totaled $194 thousand and $195 thousand, respectively. We recognize sales from our gift cards when the gift card is redeemed by the customer. Sales taxes collected from customers and remitted to governmental authorities are presented on a net basis within restaurant revenue on our Consolidated Income Statements. Restaurant Expenses Restaurant expenses include restaurant labor, general and administrative expenses, rent expense, and food and beverage costs. Food and beverage costs include inventory, warehousing, related purchasing and distribution costs. Vendor allowances received in connection with the purchase of a vendor’s products are recognized as a reduction of the related food and beverage costs as earned. Realized Gain on Sale The Company recognizes gain on sale of real estate in accordance with FASB ASU No. 2017-05, “Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.” The Company evaluates each transaction to determine if control of the asset, as well as other specified criteria, has been transferred to the buyer to determine proper timing of revenue recognition, as well as transaction price allocation. During the three months ended June 30, 2023, the Company sold one property, which resulted in a realized gain of $173 thousand. During the six months ended June 30, 2023, the Company sold four properties, which resulted in a realized gain of $1.7 million. During the three and six months ended June 30, 2022, the Company sold three properties, which resulted in a realized gain of $5.8 million. Income Taxes We believe that we have been organized and have operated in conformity with the requirements for qualification and taxation as a REIT commencing with our taxable year ended December 31, 2016, and we intend to continue to operate in a manner that will enable us to maintain our qualification as a REIT. So long as we qualify as a REIT, we generally will not be subject to federal income tax on our net income that we distribute currently to our shareholders. To maintain our qualification as a REIT, we are required under the Code to distribute at least 90% of our REIT taxable income (without regard to the deduction for dividends paid and excluding net capital gains) to our shareholders and meet certain other requirements. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate rates. Even if we qualify as a REIT, we may also be subject to certain state, local and franchise taxes. Under certain circumstances, federal income and excise taxes may be due on our undistributed taxable income. The Kerrow Restaurant Operating Business is a TRS and is taxed as a C corporation. See Note 9 - Income Taxes for additional information. Earnings Per Share Basic earnings per share (“EPS”) are computed by dividing net income allocated to common shareholders by the weighted-average number of common shares outstanding for the reporting period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. No effect is shown for any securities that are anti-dilutive. Net income allocated to common shareholders represents net income less income allocated to participating securities and non-controlling interests. None of the Company’s equity awards are participating securities. See Note 10 - Equity for additional information. Noncontrolling Interest Noncontrolling interest represents the aggregate limited partnership interests in FCPT OP held by third parties. In accordance with GAAP, the noncontrolling interest of FCPT OP is shown as a component of equity on our Consolidated Balance Sheets, and the portion of income allocable to third parties is shown as net income attributable to noncontrolling interests in our Income Statements and Consolidated Statements of Comprehensive Income (Loss) (“Comprehensive Income Statement”). The Company follows the guidance issued by the FASB regarding the classification and measurement of redeemable securities. At FCPT OP’s option, it may satisfy this redemption with cash or by exchanging non-registered shares of FCPT common stock on a one-for-one basis. Accordingly, the Company has determined that the common OP units meet the requirements to be classified as permanent equity. A reconciliation of equity attributable to noncontrolling interest is disclosed in our Consolidated Statements of Changes in Equity. See Note 10 - Equity for additional information. Stock-Based Compensation The Company’s stock-based compensation plan provides for the grant of restricted stock awards (“RSAs”), deferred stock units (“DSUs”), performance-based awards, including performance stock units (“PSUs”), dividend equivalents (“DEUs”), restricted stock units (“RSUs”), and other types of awards to eligible participants. DEUs are earned during the vesting period and received upon vesting of award. Upon forfeiture of an award, DEUs earned during the vesting period are also forfeited. We classify stock-based payment awards either as equity awards or liability awards based upon cash settlement options. Equity classified awards are measured based on the fair value on the date of grant. Liability classified awards are remeasured to fair value each reporting period. We recognize costs resulting from the Company’s stock-based compensation awards on a straight-line basis over their vesting periods, which range between one See Note 11 - Stock-Based Compensation for additional information. Fair Value of Financial Instruments We use a fair value approach to value certain assets and liabilities. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. We use a fair value hierarchy, which distinguishes between assumptions based on market data (observable inputs) and an entity's own assumptions (unobservable inputs). The hierarchy consists of three levels: • Level 1 - Quoted market prices in active markets for identical assets or liabilities; • Level 2 - Inputs other than level one inputs that are either directly or indirectly observable; and • Level 3 - Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use. Application of New Accounting Standards We consider the applicability and impact of all ASUs issued by the FASB. ASUs not yet adopted were assessed and determined to be either not applicable or are expected to have minimal impact to our consolidated result of operations, financial position and cash flows. |
CONCENTRATION OF CREDIT RISK
CONCENTRATION OF CREDIT RISK | 6 Months Ended |
Jun. 30, 2023 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATION OF CREDIT RISK | CONCENTRATION OF CREDIT RISK Our tenant base and the restaurant and retail brands operating our properties are highly concentrated. With respect to our tenant base, Darden leases represent approximately 51.2% of the scheduled base rents from the properties we own. As our revenues predominately consist of rental payments, we are dependent on Darden for a significant portion of our leasing revenues. The audited and unaudited financial statements for Darden are included in its filings with the SEC, which can be found on the SEC’s internet website at www.sec.gov. Reference to Darden’s filings with the SEC is solely for the information of investors. We do not intend this website to be an active link or to otherwise incorporate the information contained on such website (including Darden’s filings with the SEC) into this report or our other filings with the SEC. We also are subject to concentration risk in terms of the restaurant and retail brands that operate our properties. As of June 30, 2023, we ha d 313 O live Garden branded locations in our portfolio, which comprise approximately 28.5% of our leased properties and approximately 38.2% of the revenues received under leases. Longhorn Steakhouse branded restaurants comprise approximately 10.5% of our leased properties and approximately 10.8% of the revenues received under leases as of June 30, 2023. Our properties, including the Kerrow Restaurant Operating Business, are located in 47 states, with concentrations of 10% or greater of total rental revenue in one state: Texas (approximately 10.2% ). We are exposed to credit risk with respect to cash held at various financial institutions, access to our credit facility, and amounts due or payable under our derivative contracts. At June 30, 2023, our exposure to risk related to amounts due to us on |
REAL ESTATE INVESTMENTS, NET AN
REAL ESTATE INVESTMENTS, NET AND INTANGIBLE ASSETS AND LIABILITIES, NET | 6 Months Ended |
Jun. 30, 2023 | |
Real Estate [Abstract] | |
REAL ESTATE INVESTMENTS, NET AND INTANGIBLE ASSETS AND LIABILITIES, NET | REAL ESTATE INVESTMENTS, NET AND INTANGIBLE ASSETS AND LIABILITIES, NET Real Estate Investments, Net Real estate investments, net, which consist of land, buildings and improvements leased to others subject to net operating leases and those utilized in the operations of Kerrow Restaurant Operating Business are summarized as follows: June 30, December 31, (In thousands) 2023 2022 Land $ 1,187,742 $ 1,115,827 Buildings and improvements 1,506,157 1,404,198 Equipment 135,784 135,677 Total gross real estate investments 2,829,683 2,655,702 Less: Accumulated depreciation (722,241) (706,702) Total real estate investments, net 2,107,442 1,949,000 Intangible lease assets, net 114,298 106,206 Total Real Estate Investments and Intangible Lease Assets, Net $ 2,221,740 $ 2,055,206 During the six months ended June 30, 2023, the Company invested $195.0 million , including transaction costs, in 59 properties located in twenty-four states, and allocated the investment as follows: $70.7 million to land, $105.1 million to buildings and improvements, and $19.2 million to intangible assets. There was no contingent consideration associated with these acquisitions. These properties ar e 100% o ccupied under net leases, with a weighted average remaining lease term of 12.1 years as of June 30, 2023. During the six months ended June 30, 2023, the Company sol d four properties with a combined net book value o f $11.0 million for a realized gain of $1.7 million. During the six months ended June 30, 2023, the Company exercised its option to purchase one of the properties where the Company was the lessee under the ground lease. This lease was previously accounted for as a finance lease. This purchase resulted in an increase in land and corresponding decrease in finance lease right-of-use assets of $2.3 million. During the six months ended June 30, 2022, the Company invested $99.4 million, including transaction costs, in 44 properties located in twenty-two states, and allocated the investment as follows: $51.2 million to land, $39.7 million to buildings and improvements, and $8.5 million to intangible assets. There was no contingent consideration associated with these acquisitions. These properties were 100% occupied under net leases, with a weighted average remaining lease term of 6.5 years as of June 30, 2022. During the six months ended June 30, 2022, the Company sold three properties with a combined net book value of $6.3 million for a realized gain of $5.8 million. Intangible Lease Assets and Liabilities, Net Acquired in-place lease intangibles are amortized over the remaining lease term as depreciation and amortization expense. Above-market and below-market leases are amortized over the initial term of the respective leases as an adjustment to rental revenue. Lease incentives are amortized over the initial term of the respective leases as an adjustment to rental revenue. Intangible lease liabilities are included in Other liabilities in our Consolidated Balance Sheets. The following tables detail intangible lease assets and liabilities. June 30, December 31, (In thousands) 2023 2022 Acquired in-place lease intangibles $ 124,619 $ 109,371 Above-market leases 13,821 13,821 Finance leases - right of use asset (1) 14,040 16,201 Lease incentives 7,241 6,989 Tenant improvements intangibles 3,605 — Direct lease costs 271 153 Total 163,597 146,535 Less: Accumulated amortization (49,299) (40,329) Intangible Lease Assets, Net $ 114,298 $ 106,206 (1) See Note 5 - Leases for additional information on finance leases - right of use assets. June 30, December 31, (In thousands) 2023 2022 Below-market leases $ 2,610 $ 2,610 Less: Accumulated amortization (1,287) (1,158) Intangible Lease Liabilities, Net $ 1,323 $ 1,452 The value of acquired in-place leases amortized and included in depreciation and amortization expense was $4.0 million and $3.2 million for the three months ended June 30, 2023 and 2022, respectively, and $7.9 million and $6.1 million for the six months ended June 30, 2023 and 2022, respectively . The value of above-market and below-market leases amortized as an adjustment to revenue was $338 thousand and $388 thousand for the three months ended June 30, 2023 and 2022, respectively, and $692 thousand and $778 thousand for the six months ended June 30, 2023 and 2022, respectively . For the three months ended June 30, 2023 and 2022, lease incentive amortization was $146 thousand and $136 thousand , respectively, and $281 thousand and $271 thousand for the six months ended June 30, 2023 and 2022, respectively . At June 30, 2023 , the total weighted average amortization period remaining for our intangible lease assets and liabilities wa s 8.4 years, a nd the individual weighted average amortization period remaining for acquired in-place lease intangibles, above-market leases, below-market leases, lease incentives, and tenant improvement intangible w as 8.0 years, 6.8 years, 10.1 years, 12.3 years, and 15.7 years, respectively. Amortization of Lease Intangibles The following table presents the estimated impact during the next five years and thereafter related to the amortization of in-place lease intangibles, and above-market and below-market lease intangibles for properties held for investment at June 30, 2023. (In thousands) June 30, 2023 (six months) $ 8,747 2024 16,152 2025 13,835 2026 12,060 2027 9,692 Thereafter 32,425 Total Future Amortization $ 92,911 |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
LEASES | LEASES Operating Leases as Lessee As a lessee we record ROU assets and lease liabilities for the two ground leases at our Kerrow Restaurant Operating Business and a corporate office space, both of which qualified as operating leases. In calculating the lease obligations under both the ground leases and office lease, we used discount rates estimated to be equal to what the Company would have to pay to borrow on a collateralized basis over a similar term, for an amount equal to the lease payments, in a similar economic environment. Operating Lease Liability As of June 30, 2023, maturities of operating lease liabilities were as follows: (In thousands) June 30, 2023 (six months) $ 355 2024 718 2025 470 2026 310 2027 319 Thereafter 4,753 Total Payments 6,925 Less: Interest (2,029) Operating Lease Liability $ 4,896 The weighted-average discount rate for operating leases at June 30, 2023 w as 4.28%. The weighted-average remaining lease term was 15.9 years. Rental expense w as $217 thousand and $218 thousand for the three months ended June 30, 2023 and 2022, respectively. Rental expense w as $457 thousand and $453 thousand for the six months ended June 30, 2023 and 2022, respectively. Operating Leases as Lessor Our leases consist primarily of single-tenant, net leases, in which the tenants are responsible for making payments to third parties for operating expenses such as property taxes, insurance, and other costs associated with the properties leased to them. In leases where costs are paid by the Company and reimbursed by lessees, such payments are considered variable lease payments and recognized in rental revenue. The following table shows the components of rental revenue for the three and six months ended June 30, 2023 and 2022. Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2023 2022 2023 2022 Lease revenue - operating leases $ 50,593 $ 46,147 $ 100,267 $ 91,490 Variable lease revenue (tenant reimbursements) 2,250 1,757 4,773 3,317 Total Rental Revenue $ 52,843 $ 47,904 $ 105,040 $ 94,807 Future Minimum Lease Payments to be Received The following table presents the scheduled minimum future contractual rent to be received under the remaining non-cancelable term of the operating leases. The table presents future minimum lease payments due during the initial lease term only as lease renewal periods are exercisable at the option of the lessee. (In thousands) June 30, 2023 (six months) $ 103,914 2024 208,905 2025 207,401 2026 205,748 2027 197,622 Thereafter 914,913 Total Future Minimum Lease Payments $ 1,838,503 Ground Leases as Lessee As of June 30, 2023 and December 31, 2022, the Company had finance ground lease assets aggregating $14.0 million and $16.2 million, respectively . These assets are included in intangible lease assets, net in the Consolidated Balance Sheets. The Company did not recognize a lease liability as no payments are due in the future under the leases. The Company’s ground lease assets have remaining lease terms rangin g from 61 years to 96 years, w ith options to extend certain of the lease terms for additional ninety-nine year terms, and the option to purchase the assets. The weighted average remaining non-cancelable lease term for the ground leases wa s 90.6 years |
LEASES | LEASES Operating Leases as Lessee As a lessee we record ROU assets and lease liabilities for the two ground leases at our Kerrow Restaurant Operating Business and a corporate office space, both of which qualified as operating leases. In calculating the lease obligations under both the ground leases and office lease, we used discount rates estimated to be equal to what the Company would have to pay to borrow on a collateralized basis over a similar term, for an amount equal to the lease payments, in a similar economic environment. Operating Lease Liability As of June 30, 2023, maturities of operating lease liabilities were as follows: (In thousands) June 30, 2023 (six months) $ 355 2024 718 2025 470 2026 310 2027 319 Thereafter 4,753 Total Payments 6,925 Less: Interest (2,029) Operating Lease Liability $ 4,896 The weighted-average discount rate for operating leases at June 30, 2023 w as 4.28%. The weighted-average remaining lease term was 15.9 years. Rental expense w as $217 thousand and $218 thousand for the three months ended June 30, 2023 and 2022, respectively. Rental expense w as $457 thousand and $453 thousand for the six months ended June 30, 2023 and 2022, respectively. Operating Leases as Lessor Our leases consist primarily of single-tenant, net leases, in which the tenants are responsible for making payments to third parties for operating expenses such as property taxes, insurance, and other costs associated with the properties leased to them. In leases where costs are paid by the Company and reimbursed by lessees, such payments are considered variable lease payments and recognized in rental revenue. The following table shows the components of rental revenue for the three and six months ended June 30, 2023 and 2022. Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2023 2022 2023 2022 Lease revenue - operating leases $ 50,593 $ 46,147 $ 100,267 $ 91,490 Variable lease revenue (tenant reimbursements) 2,250 1,757 4,773 3,317 Total Rental Revenue $ 52,843 $ 47,904 $ 105,040 $ 94,807 Future Minimum Lease Payments to be Received The following table presents the scheduled minimum future contractual rent to be received under the remaining non-cancelable term of the operating leases. The table presents future minimum lease payments due during the initial lease term only as lease renewal periods are exercisable at the option of the lessee. (In thousands) June 30, 2023 (six months) $ 103,914 2024 208,905 2025 207,401 2026 205,748 2027 197,622 Thereafter 914,913 Total Future Minimum Lease Payments $ 1,838,503 Ground Leases as Lessee As of June 30, 2023 and December 31, 2022, the Company had finance ground lease assets aggregating $14.0 million and $16.2 million, respectively . These assets are included in intangible lease assets, net in the Consolidated Balance Sheets. The Company did not recognize a lease liability as no payments are due in the future under the leases. The Company’s ground lease assets have remaining lease terms rangin g from 61 years to 96 years, w ith options to extend certain of the lease terms for additional ninety-nine year terms, and the option to purchase the assets. The weighted average remaining non-cancelable lease term for the ground leases wa s 90.6 years |
DEBT, NET OF DEFERRED FINANCING
DEBT, NET OF DEFERRED FINANCING COSTS | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
DEBT, NET OF DEFERRED FINANCING COSTS | DEBT, NET OF DEFERRED FINANCING COSTS At June 30, 2023 and December 31, 2022, our debt consisted of (1) $430 million of non-amortizing term loans and (2) $575 million of senior, unsecured, fixed rate notes. At June 30, 2023 and December 31, 2022, we had outstanding borrowings of $15 million and $0 million, respectively, under the revolving credit facility, and there were no outstanding letters of credit. At June 30, 2023, we had $235 million of borrowing capacity under the revolving credit facility. The revolving credit facility will mature on November 9, 2025 with a six month extension option. The weighted average interest rate on the term loans before consideration of the interest rate hedge described in Note 7 - Derivative Financial Instruments was 6.13% and 5.10% at June 30, 2023 and December 31, 2022, respectively. The weighted average interest rate on the revolving credit facility was 6.00% at June 30, 2023. The following table presents the Term Loan balances as of June 30, 2023 and December 31, 2022. Outstanding Balance Maturity Interest June 30, December 31, (Dollars in thousands) Date Rate 2023 2022 Term Loans: Term loan due 2025 Nov 2025 6.15% (a) 150,000 150,000 Term loan due 2026 Nov 2026 6.15% (a) 100,000 100,000 Term loan due 2027 Jan 2027 6.10% (a) 90,000 90,000 Term loan due 2028 Jan 2028 6.10% (a) 90,000 90,000 Total Term Loans $ 430,000 $ 430,000 (a) Loan is a variable‑rate loan which resets at Daily Simple SOFR + the applicable credit spread of 0.95% to 1.00% at June 30, 2023. Note Purchase Agreement The following table presents the senior unsecured fixed rate notes balance as of June 30, 2023 and December 31, 2022. Outstanding Balance Maturity Interest June 30, December 31, (Dollars in thousands) Date Rate 2023 2022 Notes Payable: Senior unsecured fixed rate note, issued June 2017 Jun 2024 4.68 % $ 50,000 $ 50,000 Senior unsecured fixed rate note, issued December 2018 Dec 2026 4.63 % 50,000 50,000 Senior unsecured fixed rate note, issued June 2017 Jun 2027 4.93 % 75,000 75,000 Senior unsecured fixed rate note, issued December 2018 Dec 2028 4.76 % 50,000 50,000 Senior unsecured fixed rate note, issued April 2021 Apr 2029 2.74 % 50,000 50,000 Senior unsecured fixed rate note, issued March 2020 Jun 2029 3.15 % 50,000 50,000 Senior unsecured fixed rate note, issued March 2020 Apr 2030 3.20 % 75,000 75,000 Senior unsecured fixed rate note, issued March 2022 Mar 2031 3.09 % 50,000 50,000 Senior unsecured fixed rate note, issued April 2021 Apr 2031 2.99 % 50,000 50,000 Senior unsecured fixed rate note, issued March 2022 Mar 2032 3.11 % 75,000 75,000 Total Notes $ 575,000 $ 575,000 Debt Maturities The following presents scheduled principal payments related to the Company’s debt as of June 30, 2023. (In thousands) June 30, Remainder of 2023 $ — 2024 50,000 2025 150,000 2026 150,000 2027 165,000 Thereafter 490,000 Total Scheduled Principal Payments $ 1,005,000 Deferred Financing Costs At June 30, 2023 and December 31, 2022, term loan and revolving credit facility net unamortized deferred financing costs were approximately $5.1 million and $5.9 million, respectively. During the three months ended June 30, 2023 and 2022, amortization of deferred financing costs was $403 thousand and $335 thousand, respectively. During the six months ended June 30, 2023 and 2022, amortization of deferred financing costs was $805 thousand and $670 thousand, respectively. At June 30, 2023 and December 31, 2022, senior unsecured notes net unamortized deferred financing costs were approximately $3.3 million and $3.7 million, respectively. During both the three months ended June 30, 2023 and 2022, amortization of deferred financing costs was $161 thousand, respectively. During the six months ended June 30, 2023 and 2022, amortization of deferred financing costs was $323 thousand and $294 thousand, respectively. The Company was in compliance with all debt covenants at June 30, 2023 and December 31, 2022. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 6 Months Ended |
Jun. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS Risk Management Objective of Using Derivatives We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposures to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of our debt funding and the use of derivative financial instruments. Specifically, we enter into derivative financial instruments to manage exposures that arise from business activities that result in our receipt or payment of future cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash payments principally related to our borrowings. Cash Flow Hedges of Interest Rate Risk Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish these objectives, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The change in the fair value of derivatives designated and that qualify as cash flow hedges is recorded on our consolidated balance sheet in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the six months ended June 30, 2023 and 2022, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. As of June 30, 2023, $350 million of our variable-rate debt is hedged by swaps with notional values totaling $350 million. As of December 31, 2022, $325 million of our variable-rate debt was hedged by swaps with notional values totaling $325 million. During the six months ended June 30, 2023, we entered into one interest rate swap to hedge the interest rate variability associated with the term loan portion of our credit facility. Product Fixed Rate Notional Amount Index Effective Date Maturity Date Swap 2.19 % $ 100,000 Daily Simple SOFR + 10 bps 10/25/2022 11/09/2023 Swap 1.88 % 150,000 Daily Simple SOFR + 10 bps 11/09/2022 11/09/2024 Swap 0.44 % 50,000 Daily Simple SOFR + 10 bps 10/25/2022 11/09/2025 Swap 2.70 % 25,000 Daily Simple SOFR + 10 bps 11/09/2022 11/09/2025 Swap (1) 0.82 % 50,000 Daily Simple SOFR + 10 bps 11/09/2023 11/09/2025 Swap 4.12 % 25,000 Daily Simple SOFR + 10 bps 03/09/2023 11/09/2026 Swap 3.65 % 25,000 Daily Simple SOFR + 10 bps 11/09/2023 11/09/2026 Swap 2.25 % 25,000 1m Term SOFR 11/10/2025 11/09/2028 Swap 1.48 % 50,000 Daily Simple SOFR + 10 bps 11/10/2025 11/09/2027 Swap 1.54 % 50,000 Daily Simple SOFR + 10 bps 11/10/2025 11/09/2027 Swap 1.49 % 50,000 Daily Simple SOFR + 10 bps 11/10/2025 11/09/2028 Swap 2.02 % 50,000 Daily Simple SOFR + 10 bps 11/10/2025 11/09/2028 (1) In November 2024, the notional amount of the swap will increase to $150 million The Company enters into forward-starting interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance date of debt. During the three months ended June 30, 2023, the Company terminated four cash flow hedges in connection with the $100 million senior unsecured note offering that was entered into on June 5, 2023 and funded on July 12, 2023. These cash flow hedges had a total notional value of $100 million and were entered into at various dates ranging from February 2022 through April 2023 to hedge the interest rate on the offering. The swaps were terminated on May 25, 2023 for approximately a $8.1 million gain which will be amortized over the next 10 years as a reduction to interest expense. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. We estimate that over the next twelve months an additional $11.4 million will be reclassified to earnings as a reduction to interest expense. Non-designated Hedges We do not use derivatives for trading or speculative purposes. During the six months ended June 30, 2023 and 2022, we did not have any derivatives that were not designated as cash flow hedges for accounting purposes. Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheets The table below presents the fair value of our derivative financial instruments as well as their classification on the consolidated balance sheet as of June 30, 2023 and December 31, 2022. Derivative Assets Derivative Liabilities Balance Sheet Location Fair Value at Balance Sheet Location Fair Value at (Dollars in thousands) June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022 Derivatives designated as hedging instruments: Interest rate swaps Derivative assets $ 27,668 $ 35,276 Derivative liabilities $ — $ 9 Total $ 27,668 $ 35,276 $ — $ 9 Tabular Disclosure of the Effect of Derivative Instruments on the Consolidated Statements of Comprehensive Income (Loss) The table below presents the effect of our interest rate swaps on comprehensive income for the three and six months ended June 30, 2023 and 2022. (Dollars in thousands) Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Total Amount of Interest Expense Presented in the Consolidated Statements of Income Three months ended June 30, 2023 $ 11,005 Interest expense $ (2,562) $ (10,051) Three months ended June 30, 2022 8,254 Interest expense 1,142 (9,031) Six months ended June 30, 2023 5,412 Interest expense (4,639) (19,969) Six months ended June 30, 2022 22,000 Interest expense 2,804 (17,406) Tabular Disclosure Offsetting Derivatives The table below presents a gross presentation, the effects of offsetting, and a net presentation of our derivatives at June 30, 2023 and December 31, 2022. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheets. Offsetting of Derivative Assets Gross Amounts of Recognized Assets Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts of Assets Presented in the Consolidated Balance Sheet Gross Amounts Not Offset in the Consolidated Balance Sheet (In thousands) Financial Instruments Cash Collateral Received Net Amount June 30, 2023 $ 27,668 $ — $ 27,668 $ — $ — $ 27,668 December 31, 2022 35,276 — 35,276 (9) — 35,267 Offsetting of Derivative Liabilities Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts of Liabilities Presented in the Consolidated Balance Sheet Gross Amounts Not Offset in the Consolidated Balance Sheet (In thousands) Financial Instruments Cash Collateral Posted Net Amount June 30, 2023 $ — $ — $ — $ — $ — $ — December 31, 2022 9 — 9 (9) — — Credit-risk-related Contingent Features The agreement with our derivative counterparty provides that if we default on any of our indebtedness, including default for which repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations. |
SUPPLEMENTAL DETAIL FOR CERTAIN
SUPPLEMENTAL DETAIL FOR CERTAIN COMPONENTS OF CONSOLIDATED BALANCE SHEETS | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SUPPLEMENTAL DETAIL FOR CERTAIN COMPONENTS OF CONSOLIDATED BALANCE SHEETS | SUPPLEMENTAL DETAIL FOR CERTAIN COMPONENTS OF CONSOLIDATED BALANCE SHEETS Other Assets The components of other assets were as follows: June 30, December 31, (In thousands) 2023 2022 Operating lease right-of-use asset $ 4,177 $ 4,428 Prepaid acquisition costs and deposits 3,754 2,079 Accounts receivable 2,287 2,661 Prepaid assets 1,286 1,300 Food and beverage inventories 247 274 Other 1,697 1,530 Total Other Assets $ 13,448 $ 12,272 Other Liabilities The components of other liabilities were as follows: June 30, December 31, (In thousands) 2023 2022 Accrued interest expense $ 4,063 $ 3,845 Tenant improvements payable and deposits 9,544 5,953 Operating lease liability 4,896 5,141 Accrued tenant property tax 2,402 1,537 Intangible lease liabilities, net 1,323 1,452 Accrued compensation 1,784 2,700 Accrued operating expenses 421 257 Accounts payable 530 766 Other 2,308 2,366 Total Other Liabilities $ 27,271 $ 24,017 |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES We believe that we have been organized and have operated in conformity with the requirements for qualification and taxation as a REIT commencing with our taxable year ended December 31, 2016, and we intend to continue to operate in a manner that will enable us to maintain our qualification as a REIT. So long as we qualify as a REIT, we generally will not be subject to federal income tax on our net income that we distribute currently to our stockholders. Accordingly, no provision for federal income taxes has been included in the accompanying consolidated financial statements for the six months ended June 30, 2023 related to the REIT. Income tax expense consists of federal, state, and local income taxes incurred by FCPT’s TRS, and state and local income taxes incurred by FCPT on its lease portfolio. During the three and six months ended June 30, 2023, we recorded income tax expense of $91 thousand and $139 thousand, respectively. During the three and six months ended June 30, 2022, we recorded income tax expense of $144 thousand and $232 thousand, respectively. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts for income tax purposes, as well as operating loss and tax credit carryforwards. The Company evaluates the realizability of its deferred tax assets and recognizes a valuation allowance if, based on the available evidence, both positive and negative, it is more likely than not that some portion or all of its deferred tax assets will not be realized. When evaluating the realizability of its deferred tax assets, the Company considers, among other matters, estimates of expected future taxable income, nature of current and cumulative losses, existing and projected book/tax differences, tax planning strategies available, and the general and industry specific economic outlook. This realizability analysis is inherently subjective, as it requires the Company to forecast its business and general economic environment in future periods. During the three and six months ended June 30, 2023, $4 thousand and $49 thousand, respectively, was recorded as a deferred tax benefit related to net operating losses and routine book-tax differences within income tax expense in the Consolidated Statements of Income. During the three and six months ended June 30, 2022, $61 thousand of the net deferred tax asset was recorded as deferred tax expense related to routine book-tax differences within income tax expense in the Consolidated Statements of Income. |
EQUITY
EQUITY | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
EQUITY | EQUITY Preferred Stock At June 30, 2023 and December 31, 2022, the Company was authorized to issue 25,000,000 shares, $0.0001 par value per share of preferred stock. There were no shares issued and outstanding at June 30, 2023 and December 31, 2022. Common Stock At June 30, 2023 and December 31, 2022, the Company was authorized to issue 500,000,000 shares, $0.0001 par value per share of common stock. At June 30, 2023, there were 90,565,846 shares of the Company's common stock issued and outstanding. On March 13, 2023, we declared a dividend of $0.3400 per share, which was paid in April 2023 to common stockholders of record as of March 31, 2023. On June 14, 2023, we declared a dividend of $0.3400 per share, which was paid in July 2023 to common stockholders of record as of June 30, 2023. Common Stock Issuance Under the At-The-Market Program On November 7, 2022, the Company entered into a new ATM program (the “current ATM program”), pursuant to which shares of the Company’s common stock having an aggregate gross sales price of up to $450.0 million may be offered and sold (1) by the Company to, or through, a consortium of banks acting as its sales agents or (2) by a consortium of banks acting as forward sellers on behalf of any forward purchasers contemplated thereunder, in each case by means of ordinary brokers’ transactions on the NYSE or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices, by privately negotiated transactions (including block sales) or by any other methods permitted by applicable law. The ATM program replaces the Company’s previous $350.0 million ATM program (the “prior ATM program”), which was established in February 2021, under which the Company had sold shares of its common stock having an aggregate gross sales price of approximately $256.7 million through November 7, 2022. In connection with the Company’s current ATM program, the Company may enter into forward sale agreements with certain financial institutions acting as forward purchasers whereby, at the Company's discretion, the forward purchasers may borrow and sell shares of common stock. The use of forward sale agreements allows the Company to lock in a share price on the sale of shares of common stock at the time the respective forward sale agreements are executed but defer settling the forward sale agreements and receiving the proceeds from the sale of shares until a later date. During the six months ended June 30, 2023, the Company executed forward sale agreements with financial institutions acting as forward purchasers under the current ATM program to sell 1,907,946 shares of common stock at a weighted average sales price of $27.73 per share before sales commissions and offering expenses. During the three months ended June 30, 2023, the Company physically settled the remaining portion of its forward sale agreements and issued 4,113,788 shares at a weighted average share price of $26.81 for net proceeds of $110.3 million. During the six months ended June 30, 2023, the Company physically settled its forward sale agreements and issued and 4,437,970 shares at a weighted average share price of $26.88 for net proceeds of $119.3 million. During the three months ended June 30, 2023, the Company issued 4,463,788 shares under the current ATM program, including physically settled forward sale agreements, at a weighted average share price of $26.72 for net proceeds of $119.3 million. During the six months ended June 30, 2023, the Company issued 4,787,970 shares under the current ATM program, including physically settled forward sale agreements, at a weighted average share price of $26.79 for net proceeds of $128.3 million. During the three and six months ended June 30, 2022, the Company executed forward sale agreements with financial institutions acting as forward purchasers under the prior ATM program to sell 992,548 and 2,236,007 shares of common stock, respectively, at a weighted average sales price of $27.45 and $27.28 per share, respectively, before sales commissions and offering expenses. During the three and six months ended June 30, 2022, the Company physically settled a portion of these forward sale agreements and issued 173,424 shares under the prior ATM program at a weighted average share price of $26.16 for net proceeds of $4.5 million. The Company physically settled the remaining forward sale agreements prior to January 2, 2023. At June 30, 2023, there was $270.6 million available for issuance under the current ATM program. Noncontrolling Interest At June 30, 2023, there were 114,559 FCPT Operating Partnership Units (“OP units”) outstanding held by third parties. During the six months ended June 30, 2023, FCPT OP did not issue any OP units for consideration in real estate transactions. Generally, OP units participate in net income allocations and distributions and entitle their holder the right, subject to the terms set forth in the partnership agreement, to require FCPT OP to redeem all or a portion of the OP units held by such limited partner. At FCPT OP’s option, it may satisfy this redemption with cash or by exchanging non-registered shares of FCPT common stock on a one-for-one basis. Prior to the redemption of OP units, the limited partners participate in net income allocations and distributions in a manner equivalent to the common stockholders. The redemption value of outstanding non-controlling interest OP units was $2.9 million and $3.0 million as of June 30, 2023 and December 31, 2022, respectively. At June 30, 2023, FCPT was the owner of approximately 99.87% of FCPT’s OP units. The remaining 0.13%, or 114,559 of FCPT’s OP units were held by unaffiliated limited partners. During the three and six months ended June 30, 2023, FCPT OP distributed $39 thousand and $78 thousand, respectively, to its unaffiliated limited partners. Earnings Per Share The following table presents the computation of basic and diluted net earnings per common share for the three and six months ended June 30, 2023 and 2022. (In thousands except for shares and per share data) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Average common shares outstanding – basic 87,366,335 80,294,804 86,604,202 80,245,247 Net effect of dilutive equity awards 189,676 199,639 220,948 200,920 Average common shares outstanding – diluted 87,556,011 80,494,443 86,825,150 80,446,167 Net income available to common shareholders $ 23,625 $ 28,130 $ 46,749 $ 50,385 Basic net earnings per share $ 0.27 $ 0.35 $ 0.54 $ 0.63 Diluted net earnings per share $ 0.27 $ 0.35 $ 0.54 $ 0.63 For the three months ended June 30, 2023 and 2022, the number of outstanding equity awards that were anti-dilutive totaled 385,728 and 299,372, respectively. For the six months ended June 30, 2023 and 2022, the number of outstanding equity awards that were anti-dilutive totaled 354,456 and 298,091, respectively. Exchangeable OP units have been omitted from the denominator for the purpose of computing diluted earnings per share since FCPT OP, at its option, may satisfy a redemption with cash or by exchanging non-registered shares of FCPT common stock. The weighted average exchangeable OP units outstanding for the three and six months ended June 30, 2023 and 2022 was 114,559 and 114,559, respectively. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION On October 20, 2015, the Board of Directors of FCPT adopted, and FCPT’s sole stockholder at such time, Rare Hospitality International, Inc., approved, the Four Corners Property Trust, Inc. 2015 Omnibus Incentive Plan (the “2015 Plan”). The 2015 Plan provides for the grant of awards of nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, unrestricted stock, dividend equivalent rights, performance shares and other performance-based awards, other equity-based awards, and cash bonus awards to eligible participants. On June 10, 2022, the Board of Directors of FCPT adopted, and FCPT’s stockholders approved, the Amended and Restated Four Corners Property Trust, Inc. 2015 Omnibus Incentive Plan (the “Amended Plan”) to, among other things, increase the maximum number of shares of our common stock reserved for issuance under the 2015 Plan by 1,500,000 shares to 3,600,000 shares. At June 30, 2023, 1,695,561 shares of common stock were available for award under the Plan. The unamortized compensation cost of awards issued under the Plan totaled approximately $10.4 million at June 30, 2023 as shown in the following table. (In thousands) Restricted Stock Units Restricted Stock Awards Performance Stock Awards Total Unrecognized compensation cost at January 1, 2023 $ 2,117 $ 2,466 $ 822 $ 5,405 Equity grants 1,438 3,626 3,289 8,353 Equity grant forfeitures — (11) — (11) Equity compensation expense (971) (1,662) (693) (3,326) Unrecognized Compensation Cost at June 30, 2023 $ 2,584 $ 4,419 $ 3,418 $ 10,421 At June 30, 2023, the weighted average amortization period remaining for all of our equity awards was 2.2 years. Restricted Stock Units RSUs have been granted at a value equal to the five-day average or day of closing market price of our common stock on the date of grant, and will be settled in stock at the end of their vesting periods, which range between one At June 30, 2023 and December 31, 2022, there were 244,738 and 206,786 RSUs outstanding, respectively. During the three months ended June 30, 2023, there were 34,147 shares of RSUs granted, 1,381 shares of RSUs vested, and no RSUs were forfeited. During the six months ended June 30, 2023, there were 53,238 shares of restricted stock granted, 15,286 RSUs vested, and no RSUs were forfeited. Restrictions on these RSUs lapse through 2028. Restricted Stock Awards RSAs have been granted at a value equal to the five-day average closing market price of our common stock on the date of grant and will be settled in stock at the end of their vesting periods, which range between one At June 30, 2023 and December 31, 2022, there were 198,985 and 157,030 RSAs outstanding, respectively. During the three months ended June 30, 2023, there were 660 shares of restricted stock granted, 382 RSAs were forfeited, and no shares vested. During the six months ended June 30, 2023, there were 128,550 shares of restricted stock granted, 382 RSAs were forfeited, and restrictions on 86,213 RSAs lapsed and were distributed, of which 45,603 RSAs were designated for tax withholdings. Restrictions on these RSAs lapse through 2026. The Company expects all RSAs to vest. Performance-Based Restricted Stock Awards At June 30, 2023 and December 31, 2022, the target number of PSUs that were unvested was 225,654 and 202,560, respectively. During the three months ended June 30, 2023, no PSUs were granted or vested, and no PSUs were forfeited. During the six months ended June 30, 2023, PSUs with a target number of 87,700 shares were granted. PSUs with a target number of 64,606 shares vested with a total shareholder return of 93.0% of target, resulting in the distribution of 60,085 shares, of which 34,384 PSUs were designated for tax withholdings. The performance period of the unvested grants run from January 1, 2023 through December 31, 2025, from January 1, 2022 through December 31, 2024, and from January 1, 2021 through December 31, 2023. Pursuant to the PSU award agreement, each participant is eligible to vest in and receive shares of the Company's common stock based on the initial target number of shares granted multiplied by a percentage range between 0% and 200%. The percentage range is based on the attainment of a combination of relative shareholder return and total shareholder return of the Company compared to certain specified peer groups of companies during the performance period. The grant date fair values of PSUs were determined through Monte-Carlo simulations using the following assumptions: our common stock closing price at the grant date, the average closing price of our common stock price for the 20 trading days prior to the grant date and a range of performance-based vesting based on estimated total stockholder return over a three year Based on the grant date fair value, the Company expects to recognize $3.4 million in compensation expense on a straight-line basis over the remaining requisite service period associated with the unvested PSU awards. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTSThe carrying amounts of certain of the Company’s financial instruments including cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value due either to length of maturity or interest rates that approximate prevailing market rates. The carrying value of derivative financial instruments equal fair value in accordance with U.S. GAAP. Determining which category an asset or liability falls within the hierarchy requires significant judgment. We evaluate hierarchy disclosures each reporting period. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table presents the assets and liabilities recorded that are reported at fair value on our Consolidated Balance Sheets on a recurring basis. June 30, 2023 (In thousands) Level 1 Level 2 Level 3 Total Assets Derivative assets $— $27,668 $— $27,668 Liabilities Derivative liabilities $— $— $— $— December 31, 2022 (In thousands) Level 1 Level 2 Level 3 Total Assets Derivative assets $— $35,276 $— $35,276 Liabilities Derivative liabilities $— $9 $— $9 Derivative Financial Instruments Currently, we use interest rate swaps to manage our interest rate risk associated with our notes payable. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The fair values of interest rate options are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities. To comply with the provisions of ASC 820, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by ourselves and our counterparties. We have determined that the significance of the impact of the credit valuation adjustments made to our derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of our derivatives held at June 30, 2023, and December 31, 2022 were classified as Level 2 of the fair value hierarchy. Fair Value of Certain Financial Liabilities The following table presents the carrying value and fair value of certain financial liabilities that are recorded on our Consolidated Balance Sheets. The fair value of the debt (Level 2) is determined using the present value of the contractual cash flows, discounted at the current market cost of debt. June 30, 2023 (In thousands) Carrying Value (1) Fair Value Term loan due November 2025 $ 150,000 $ 148,847 Term loan due November 2026 100,000 99,291 Term loan due January 2027 90,000 89,010 Term loan due January 2028 90,000 88,574 Senior fixed note due June 2024 50,000 49,087 Senior fixed note due December 2026 50,000 48,301 Senior fixed note due June 2027 75,000 72,882 Senior fixed note due December 2028 50,000 48,158 Senior fixed note due April 2029 50,000 43,449 Senior fixed note due June 2029 50,000 44,243 Senior fixed note due April 2030 75,000 65,609 Senior fixed note due March 2031 50,000 42,532 Senior fixed note due April 2031 50,000 42,514 Senior fixed note due March 2032 75,000 63,637 Revolving credit facility due November 2025 15,000 14,884 December 31, 2022 (In thousands) Carrying Value (1) Fair Value Term loan due November 2025 $ 150,000 $ 149,495 Term loan due November 2026 100,000 99,949 Term loan due January 2027 90,000 89,595 Term loan due January 2028 90,000 89,309 Senior fixed note due June 2024 50,000 49,179 Senior fixed note due December 2026 50,000 48,548 Senior fixed note due June 2027 75,000 73,007 Senior fixed note due December 2028 50,000 48,251 Senior fixed note due April 2029 50,000 43,111 Senior fixed note due June 2029 50,000 43,967 Senior fixed note due April 2030 75,000 65,078 Senior fixed note due March 2031 50,000 41,989 Senior fixed note due April 2031 50,000 42,032 Senior fixed note due March 2032 75,000 62,828 Revolving credit facility due November 2025 — — (1) Carrying values exclude deferred financing costs |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Litigation We are subject to private lawsuits, administrative proceedings and claims that arise in the ordinary course of our business from time to time. A number of these lawsuits, proceedings and claims may exist at any given time. These matters typically involve claims from guests, employee wage and hour claims and others related to operational issues common to the restaurant industry. We record our best estimate of a loss when the loss is considered probable. When a liability is probable and there is a range of estimated loss with no best estimate in the range, we record the minimum estimated liability related to the lawsuits, proceedings or claims. While the resolution of a lawsuit, proceeding or claim may have an impact on our financial results for the period in which it is resolved, we believe that the maximum liability related to probable lawsuits, proceedings and claims in which we are currently involved, individually and in the aggregate, will not have a material adverse effect on our financial position, results of operations or liquidity. |
SEGMENTS
SEGMENTS | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
SEGMENTS | SEGMENTS During the three and six months ended June 30, 2023 and 2022, we operated in two segments: real estate operations and restaurant operations. Our segments are based on our organizational and management structure, which aligns with how our results are monitored and performance is assessed. Expenses incurred at our corporate office are allocated to real estate operations. The accounting policies of the reportable segments are the same as those described in Note 2 - Summary of Significant Accounting Policies . The following tables present financial information by segment for the three and six months ended June 30, 2023 and 2022. Three Months Ended June 30, 2023 (In thousands) Real Estate Operations Restaurant Operations Intercompany Total Revenues: Rental revenue $ 52,843 $ — $ — $ 52,843 Intercompany rental revenue 214 — (214) — Restaurant revenue — 7,845 — 7,845 Total revenues 53,057 7,845 (214) 60,688 Operating expenses: General and administrative 5,600 — — 5,600 Depreciation and amortization 11,636 181 — 11,817 Property expenses 2,676 — — 2,676 Restaurant expenses — 7,411 (214) 7,197 Total operating expenses 19,912 7,592 (214) 27,290 Interest expense (10,051) — — (10,051) Other income 226 — — 226 Realized gain on sale 173 — — 173 Income tax expense (53) (38) — (91) Net Income $ 23,440 $ 215 $ — $ 23,655 Three Months Ended June 30, 2022 (In thousands) Real Estate Operations Restaurant Operations Intercompany Total Revenues: Rental revenue $ 47,904 $ — $ — $ 47,904 Intercompany rental revenue 211 — (211) — Restaurant revenue — 7,521 — 7,521 Total revenues 48,115 7,521 (211) 55,425 Operating expenses: General and administrative 4,698 — — 4,698 Depreciation and amortization 9,948 180 — 10,128 Property expenses 1,987 — — 1,987 Restaurant expenses — 7,263 (211) 7,052 Total operating expenses 16,633 7,443 (211) 23,865 Interest expense (9,031) — — (9,031) Other income 29 — — 29 Realized gain on sale 5,756 — — 5,756 Income tax expense (44) (100) — (144) Net Income (Loss) $ 28,192 $ (22) $ — $ 28,170 Six Months Ended June 30, 2023 (In thousands) Real Estate Operations Restaurant Operations Intercompany Total Revenues: Rental revenue $ 105,040 $ — $ — $ 105,040 Intercompany rental revenue 428 — (428) — Restaurant revenue — 15,600 — 15,600 Total revenues 105,468 15,600 (428) 120,640 Operating expenses: General and administrative 11,655 — — 11,655 Depreciation and amortization 23,630 363 — 23,993 Property expenses 5,843 — — 5,843 Restaurant expenses — 14,920 (428) 14,492 Total operating expenses 41,128 15,283 (428) 55,983 Interest expense (19,969) — — (19,969) Other income 526 — — 526 Realized gain on sale 1,735 — — 1,735 Income tax expense (105) (34) — (139) Net Income $ 46,527 $ 283 $ — $ 46,810 Six Months Ended June 30, 2022 (In thousands) Real Estate Operations Restaurant Operations Intercompany Total Revenues: Rental revenue $ 94,807 $ — $ — $ 94,807 Intercompany rental revenue 422 — (422) — Restaurant revenue — 15,015 — 15,015 Total revenues 95,229 15,015 (422) 109,822 Operating expenses: General and administrative 9,967 — — 9,967 Depreciation and amortization 19,652 180 — 19,832 Property expenses 3,836 — — 3,836 Restaurant expenses — 14,357 (422) 13,935 Total operating expenses 33,455 14,537 (422) 47,570 Interest expense (17,406) — — (17,406) Other income 86 — — 86 Realized gain on sale 5,756 — — 5,756 Income tax expense (92) (140) — (232) Net Income $ 50,118 $ 338 $ — $ 50,456 The following tables present supplemental information by segment at June 30, 2023 and December 31, 2022. Supplemental Segment Information at June 30, 2023 (In thousands) Real Estate Operations Restaurant Operations Total Total real estate investments $ 2,806,825 $ 22,858 $ 2,829,683 Accumulated depreciation (714,959) (7,282) (722,241) Total real estate investments, net 2,091,866 15,576 2,107,442 Cash and cash equivalents 10,340 857 11,197 Total assets 2,316,096 21,885 2,337,981 Total debt, net of deferred financing costs 1,011,605 — 1,011,605 Supplemental Segment Information at December 31, 2022 (In thousands) Real Estate Operations Restaurant Operations Total Total real estate investments $ 2,633,002 $ 22,700 $ 2,655,702 Accumulated depreciation (699,825) (6,877) (706,702) Total real estate investments, net 1,933,177 15,823 1,949,000 Cash and cash equivalents 25,260 1,036 26,296 Total assets 2,176,336 22,251 2,198,587 Total debt, net of deferred financing costs 995,477 — 995,477 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS The Company reviewed its subsequent events and transactions that have occurred after June 30, 2023, the date of the Consolidated Balance Sheet, through August 2, 2023, and noted the following: Acquisitions Through August 2, 2023, the Company invested $111.0 million in the acquisition of twenty-six net lease properties with an investment yield of approximately 6.4%, and approximately 12.4 years of lease term remaining. The Company funded the acquisitions with cash on hand. The Company anticipates accounting for these transactions as asset acquisitions in accordance with U.S. GAAP. There were no contingent liabilities associated with these transactions at June 30, 2023. Capital Resources On June 5, 2023, FCPT entered into agreements to issue $100 million of senior unsecured notes (the "Notes"), which were issued on July 12, 2023. The Notes have a ten-year term, maturing on July 11, 2033, and are priced at a fixed interest rate of 6.44%. The Notes were issued at par value. In connection with the offering of the Notes, the Company terminated interest rate swaps entered into previously to partially hedge the interest rate of this offering. This resulted in a gain of $8.1 million for the Company and a 5.39% yield to maturity including the gain. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net income available to common shareholders | $ 23,625 | $ 28,130 | $ 46,749 | $ 50,385 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jun. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The accompanying consolidated financial statements (the “Consolidated Financial Statements”) include the accounts of Four Corners Property Trust, Inc. and its consolidated subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Consolidated Financial Statements reflect all adjustments which are, in the opinion of management, necessary to a fair presentation of the results for the interim periods presented. These adjustments are considered to be of a normal, recurring nature. |
Reclassifications | Reclassifications Certain amounts previously reported under specific financial statement captions have been reclassified to be consistent with the current period presentation. As of June 30, 2023, we have conformed the prior presentation of the Long-term debt, net of deferred financing costs to the current format for comparability purposes. |
Use of Estimates | Use of Estimates The preparation of these Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The estimates and assumptions used |
Real Estate Investments, Net | Real Estate Investments, Net Real estate investments, net are recorded at cost less accumulated depreciation. Building components are depreciated over estimated useful lives ranging from seven using the straight-line method. Leasehold improvements, which are reflected on our Consolidated Balance Sheets as a component of buildings, equipment, and improvements, net are amortized over the lesser of the non-cancelable lease term or the estimated useful lives of the related assets using the straight-line method. Equipment is depreciated over estimated useful lives ranging from two also using the straight-line method. Real estate development and construction costs for newly constructed restaurant and retail locations are capitalized in the period in which they are incurred. Gains and losses on the disposal of land, buildings, and equipment are included in realized gain on sale, net, in our accompanying Consolidated Statements of Income (“Income Statements”). Our accounting policies regarding land, buildings, equipment, and improvements, include our judgments regarding the estimated useful lives of these assets, the residual values to which the assets are depreciated or amortized, the determination of what constitutes a reasonably assured lease term, and the determination as to what constitutes enhancing the value of or increasing the life of existing assets. These judgments and estimates may produce materially different amounts of reported depreciation and amortization expense if different assumptions were used. As discussed further below, these judgments may also impact our need to recognize an impairment charge on the carrying amount of these assets as the cash flows associated with the assets are realized, or as our expectations of estimated future cash flows change. Acquisition of Real Estate The Company evaluates acquisitions to determine whether transactions should be accounted for as asset acquisitions or business combinations in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2017-01. The Company has determined the land, building, site improvements, and in-places leases (if any) of assets acquired were each single assets as the building and property improvements are attached to the land and cannot be physically removed and used separately from the land without incurring significant costs or reducing their fair value. Additionally, the Company has not acquired a substantive process used to generate outputs. As substantially all of the fair value of the gross assets acquired are concentrated in a single identifiable asset and there were no processes acquired, the acquisitions do not qualify as a business and are accounted for as asset acquisitions. Related transaction costs are generally capitalized and amortized over the useful life of the acquired assets. The Company allocates the purchase price (including acquisition and closing costs) of real estate acquisitions to land, building, and improvements based on their relative fair values. The determination of the building fair value is on an ‘as-if-vacant’ basis. Value is allocated to acquired lease intangibles (if any) based on the costs avoided and revenue recognized by acquiring the property subject to lease and avoiding an otherwise ‘dark period’. In making estimates of fair values for this purpose, the Company uses a third-party specialist that obtains various information about each property, as well as the pre-acquisition due diligence of the Company and prior leasing activities at the site. Lease Intangibles Lease intangibles, if any, acquired in conjunction with the purchase of real estate represent the value of in-place leases and above- or below-market leases. For real estate acquired subject to existing lease agreements, acquired lease intangibles are valued based on the Company’s estimates of costs related to tenant acquisition and the asset carrying costs, including lost revenue, that would be incurred during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. Above-market and below-market lease intangibles are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to the leases at the time of acquisition of the real estate and the Company’s estimate of current market lease rates for the property, measured over a period equal to the remaining initial term of the lease. In-place lease intangibles are amortized on a straight-line basis over the remaining initial term of the related lease and included in depreciation and amortization expense. Above-market lease intangibles are amortized over the remaining initial terms of the respective leases as a decrease in rental revenue. Below-market lease intangibles are generally amortized as an increase to rental revenue over the remaining initial term of the respective leases, but may be amortized over the renewal periods if the Company believes it is likely the tenant will exercise the renewal option. Should a lease terminate early, the unamortized portion of any related lease intangible is immediately recognized as an impairment loss included in depreciation and amortization expense. To date, the Company has not had significant early terminations. Finance ground lease assets are also included in lease intangible assets, net on the Consolidated Balance Sheets. See Leases below for additional information. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Land, buildings and equipment and certain other assets, including definite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such events and changes may include macroeconomic conditions, including those caused by global pandemics, which may result in property operational disruption and indicate that the carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future undiscounted net cash flows expected to be generated by the assets. Identifiable cash flows are measured at the lowest level for which they are largely independent of the cash flows of other groups of assets and liabilities, generally at the restaurant and retail level. If these assets are determined to be impaired, the amount of impairment recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. Fair value is generally determined by appraisals or sales prices of comparable assets. The judgments we make related to the expected useful lives of long-lived assets and our ability to realize undiscounted cash flows in excess of the carrying amounts of these assets are affected by factors such as the ongoing maintenance and improvements of the assets, changes in economic conditions, changes in usage or operating performance, desirability of the restaurant and retail sites and other factors, such as our ability to sell our assets held for sale. As we assess the ongoing expected cash flows and carrying amounts of our long-lived assets, significant adverse changes in these factors could cause us to realize a material impairment loss. |
Real Estate Held for Sale | Real Estate Held for SaleReal estate is classified as held for sale when the sale is probable, will be completed within one year, purchase agreements are executed, the buyer has a significant deposit at risk, and no financing contingencies exist which could prevent the transaction from being completed in a timely manner. Restaurant and retail sites and certain other assets to be disposed of are included in assets held for sale when the likelihood of disposing of these assets within one year is probable. Assets whose disposal is not probable within one year remain in land, buildings, equipment and improvements until their disposal within one year is probable. Disposals of assets that have a major effect on our operations and financial results or that represent a strategic shift in our operating businesses meet the requirements to be reported as discontinued operations. Real estate held for sale is reported at the lower of carrying amount or fair value, less estimated costs to sell. |
Cash, Cash Equivalents, and Restricted Cash | Cash, Cash Equivalents, and Restricted Cash We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents can consist of cash and money market accounts. Restricted cash consists of 1031 tax deferred real estate exchange proceeds and is included in Other assets in our Consolidated Balance Sheets. |
Debt | Debt The Company’s debt consists of non-amortizing term loans, a revolving credit facility and senior, unsecured, fixed rate notes (collectively referred to as “Debt”). Debt is carried at unpaid principal balance, net of deferred financing costs. All of our debt is currently unsecured and interest is paid monthly on our non-amortizing term loans and revolving credit facility and semi-annually on our senior fixed rate notes. Deferred Financing Costs Financing costs related to debt are deferred and amortized over the remaining life of the debt using the effective interest method. These costs are presented as a direct deduction from their related liabilities in the Consolidated Balance Sheets. |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities We enter into derivative instruments for risk management purposes only, including derivatives designated as hedging instruments as required by FASB ASC Topic 815, Derivatives and Hedging, and those utilized as economic hedges. Our use of derivative instruments is currently limited to interest rate hedges. These instruments are generally structured as hedges of the variability of cash flows related to forecasted transactions (cash flow hedges). We do not enter into derivative instruments for trading or speculative purposes, where changes in the cash flows of the derivative are not expected to offset changes in cash flows of the hedged item. All derivatives are recognized on the balance sheet at fair value. For those derivative instruments for which we intend to elect hedge accounting, at the time the derivative contract is entered into, we document all relationships between hedging instruments and hedged items, as well as our risk-management objective and strategy for undertaking the various hedge transactions. This process includes linking all derivatives designated as cash flow hedges to specific assets and liabilities on the consolidated balance sheet or to specific forecasted transactions. We also formally assess, both at the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items. To the extent our derivatives are effective in offsetting the variability of the hedged cash flows, and otherwise meet the cash flow hedge accounting criteria in accordance with United States generally accepted accounting principles (“U.S. GAAP”), changes in the derivatives’ fair value are not included in current earnings but are included in accumulated other comprehensive income, net of tax. These changes in fair value will be reclassified into earnings at the time of the forecasted transaction. Ineffectiveness measured in the hedging relationship is recorded in earnings in the period in which it occurs. |
Other Assets and Liabilities | Other Assets and Liabilities Other assets primarily consist of right of use operating lease assets, pre-acquisition costs, restricted cash, prepaid assets, food and beverage inventories for use by our Kerrow operating subsidiary, escrow deposits, and accounts receivable. Other liabilities primarily consist of accrued compensation, accrued interest expense, accrued operating expenses, intangible lease liabilities, and operating lease liabilities. |
Leases, Lessee | Leases Effective January 1, 2019, the Company adopted FASB Accounting Standards Codification 842, Leases, including effective amendments (“ASC 842”). All significant lease arrangements are generally recognized at lease commencement. For leases where the Company is the lessee upon adoption of ASC 842, operating or finance lease right-of-use (“ROU”) assets and lease liabilities are recognized at commencement based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset during the reasonably certain lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. As part of certain real estate investment transactions, the Company may enter into long-term ground leases as a lessee. The Company recognizes a ground lease (or right-of-use) asset and related lease liability for each of these ground leases. Ground lease assets and lease liabilities are recognized based on the present value of the lease payments. The Company uses its estimated incremental borrowing rate, which is the estimated rate at which the Company could borrow on a collateralized basis with similar payments over a similar term, in determining the present value of the lease payments. |
Leases, Lessor | For leases where the Company is the lessor, we determine the classification upon commencement. At June 30, 2023, all such leases are classified as operating leases. These operating leases may contain both lease and non-lease components. The Company accounts for lease and non-lease components as a single component. |
Revenue Recognition | Revenue Recognition Rental Revenue For those net leases that provide for periodic and determinable increases in base rent, base rental revenue is recognized on a straight-line basis over the applicable lease term when collectability is probable. Recognizing rental revenue on a straight-line basis generally results in recognized revenues during the first half of a lease term exceeding the cash amounts contractually due from our tenants, creating a deferred rent receivable. In certain circumstances, the Company may offer tenant allowance funds in exchange for increasing rent, extending the term, and including annual sales reporting among other items. These tenant allowance funds are classified as lease incentives upon payment and are amortized as a reduction to revenue over the lease term. Lease incentives are included in intangible lease assets, net, on our Consolidated Balance Sheets. The Company did not pay any lease incentives to tenants during the six months ended June 30, 2023. During the year ended December 31, 2022, the Company paid lease incentives of $0.1 million to tenants. We assess the collectability of our lease receivables, including deferred rents receivable, on several factors, including payment history, the financial strength of the tenant and any guarantors, historical operations and operating trends of the property, and current economic conditions. If our evaluation of these factors indicates it is not probable that we will be able to recover substantially all of the receivable, we derecognize the deferred rent receivable asset and record that revenue as a reduction in rental revenue. If we determine the lease receivable will not be collected due to a credit concern, we reduce the recorded revenue for the period and related accounts receivable. For those leases that provide for periodic increases in base rent only if certain revenue parameters or other substantive contingencies are met, the increased rental revenue is recognized as the related parameters or contingencies are met, rather than on a straight-line basis over the applicable lease term. Costs paid by the lessor and reimbursed by the lessees are included in variable lease payments and presented on a gross basis within rental revenue. Sales taxes collected from lessees and remitted to governmental authorities are presented on a net basis within rental revenue. Restaurant Revenue Restaurant revenue represents food, beverage, and other products sold and is presented net of the following discounts: coupons, employee meals, complimentary meals and gift cards. Revenue from restaurant sales, whether received in cash or by credit card, is recognized when food and beverage products are sold. At June 30, 2023 and December 31, 2022, credit card receivables, included in other assets, totaled $194 thousand and $195 thousand, respectively. We recognize sales from our gift |
Restaurant Expenses | Restaurant ExpensesRestaurant expenses include restaurant labor, general and administrative expenses, rent expense, and food and beverage costs. Food and beverage costs include inventory, warehousing, related purchasing and distribution costs. Vendor allowances received in connection with the purchase of a vendor’s products are recognized as a reduction of the related food and beverage costs as earned. |
Realized Gain on Sale | Realized Gain on SaleThe Company recognizes gain on sale of real estate in accordance with FASB ASU No. 2017-05, “Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.” The Company evaluates each transaction to determine if control of the asset, as well as other specified criteria, has been transferred to the buyer to determine proper timing of revenue recognition, as well as transaction price allocation. |
Income Taxes | Income Taxes We believe that we have been organized and have operated in conformity with the requirements for qualification and taxation as a REIT commencing with our taxable year ended December 31, 2016, and we intend to continue to operate in a manner that will enable us to maintain our qualification as a REIT. So long as we qualify as a REIT, we generally will not be subject to federal income tax on our net income that we distribute currently to our shareholders. To maintain our qualification as a REIT, we are required under the Code to distribute at least 90% of our REIT taxable income (without regard to the deduction for dividends paid and excluding net capital gains) to our shareholders and meet certain other requirements. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate rates. Even if we qualify as a REIT, we may also be subject to certain state, local and franchise taxes. Under certain circumstances, federal income and excise taxes may be due on our undistributed taxable income. The Kerrow Restaurant Operating Business is a TRS and is taxed as a C corporation. |
Earnings Per Share | Earnings Per Share Basic earnings per share (“EPS”) are computed by dividing net income allocated to common shareholders by the weighted-average number of common shares outstanding for the reporting period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. No effect is shown for any securities that are anti-dilutive. Net income allocated to common shareholders represents net income less income allocated to participating securities and non-controlling interests. None of the Company’s equity awards are participating securities. |
Noncontrolling Interest | Noncontrolling Interest Noncontrolling interest represents the aggregate limited partnership interests in FCPT OP held by third parties. In accordance with GAAP, the noncontrolling interest of FCPT OP is shown as a component of equity on our Consolidated Balance Sheets, and the portion of income allocable to third parties is shown as net income attributable to noncontrolling interests in our Income Statements and Consolidated Statements of Comprehensive Income (Loss) (“Comprehensive Income Statement”). The Company follows the guidance issued by the FASB regarding the classification and measurement of redeemable securities. At FCPT OP’s option, it may satisfy this redemption with cash or by exchanging non-registered shares of FCPT common stock on a one-for-one basis. Accordingly, the Company has determined that the common OP units meet the requirements to be classified as permanent equity. A reconciliation of equity attributable to noncontrolling interest is disclosed |
Stock-Based Compensation | Stock-Based Compensation The Company’s stock-based compensation plan provides for the grant of restricted stock awards (“RSAs”), deferred stock units (“DSUs”), performance-based awards, including performance stock units (“PSUs”), dividend equivalents (“DEUs”), restricted stock units (“RSUs”), and other types of awards to eligible participants. DEUs are earned during the vesting period and received upon vesting of award. Upon forfeiture of an award, DEUs earned during the vesting period are also forfeited. We classify stock-based payment awards either as equity awards or liability awards based upon cash settlement options. Equity classified awards are measured based on the fair value on the date of grant. Liability classified awards are remeasured to fair value each reporting period. We recognize costs resulting from the Company’s stock-based compensation awards on a straight-line basis over their vesting periods, which range between one |
Fair Value of Financial Instruments | Fair Value of Financial Instruments We use a fair value approach to value certain assets and liabilities. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. We use a fair value hierarchy, which distinguishes between assumptions based on market data (observable inputs) and an entity's own assumptions (unobservable inputs). The hierarchy consists of three levels: • Level 1 - Quoted market prices in active markets for identical assets or liabilities; • Level 2 - Inputs other than level one inputs that are either directly or indirectly observable; and • Level 3 - Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use. |
Application of New Accounting Standards | Application of New Accounting Standards We consider the applicability and impact of all ASUs issued by the FASB. ASUs not yet adopted were assessed and determined to be either not applicable or are expected to have minimal impact to our consolidated result of operations, financial position and cash flows. |
Fair Value Measurements | The carrying amounts of certain of the Company’s financial instruments including cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value due either to length of maturity or interest rates that approximate prevailing market rates. The carrying value of derivative financial instruments equal fair value in accordance with U.S. GAAP. Determining which category an asset or liability falls within the hierarchy requires significant judgment. We evaluate hierarchy disclosures each reporting period. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Reconciliation of Cash, Cash Equivalents, and Restricted Cash | The following table provides a reconciliation of cash, cash equivalents, and restricted cash in our Consolidated Balance Sheets to the total amount shown in our Consolidated Statements of Cash Flows: June 30, December 31, (In thousands) 2023 2022 Cash and cash equivalents $ 11,197 $ 26,296 Restricted cash (included in Other assets) — — Total Cash, Cash Equivalents, and Restricted Cash $ 11,197 $ 26,296 |
REAL ESTATE INVESTMENTS, NET _2
REAL ESTATE INVESTMENTS, NET AND INTANGIBLE ASSETS AND LIABILITIES, NET (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Real Estate [Abstract] | |
Schedule of Real Estate Investments, Net | Real estate investments, net, which consist of land, buildings and improvements leased to others subject to net operating leases and those utilized in the operations of Kerrow Restaurant Operating Business are summarized as follows: June 30, December 31, (In thousands) 2023 2022 Land $ 1,187,742 $ 1,115,827 Buildings and improvements 1,506,157 1,404,198 Equipment 135,784 135,677 Total gross real estate investments 2,829,683 2,655,702 Less: Accumulated depreciation (722,241) (706,702) Total real estate investments, net 2,107,442 1,949,000 Intangible lease assets, net 114,298 106,206 Total Real Estate Investments and Intangible Lease Assets, Net $ 2,221,740 $ 2,055,206 |
Schedule of Intangible Assets | The following tables detail intangible lease assets and liabilities. June 30, December 31, (In thousands) 2023 2022 Acquired in-place lease intangibles $ 124,619 $ 109,371 Above-market leases 13,821 13,821 Finance leases - right of use asset (1) 14,040 16,201 Lease incentives 7,241 6,989 Tenant improvements intangibles 3,605 — Direct lease costs 271 153 Total 163,597 146,535 Less: Accumulated amortization (49,299) (40,329) Intangible Lease Assets, Net $ 114,298 $ 106,206 (1) See Note 5 - Leases for additional information on finance leases - right of use assets. |
Schedule of Intangible Liabilities | June 30, December 31, (In thousands) 2023 2022 Below-market leases $ 2,610 $ 2,610 Less: Accumulated amortization (1,287) (1,158) Intangible Lease Liabilities, Net $ 1,323 $ 1,452 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The following table presents the estimated impact during the next five years and thereafter related to the amortization of in-place lease intangibles, and above-market and below-market lease intangibles for properties held for investment at June 30, 2023. (In thousands) June 30, 2023 (six months) $ 8,747 2024 16,152 2025 13,835 2026 12,060 2027 9,692 Thereafter 32,425 Total Future Amortization $ 92,911 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Schedule of Operating Lease Liability Maturities | As of June 30, 2023, maturities of operating lease liabilities were as follows: (In thousands) June 30, 2023 (six months) $ 355 2024 718 2025 470 2026 310 2027 319 Thereafter 4,753 Total Payments 6,925 Less: Interest (2,029) Operating Lease Liability $ 4,896 |
Schedule of Components of Rental Revenue | The following table shows the components of rental revenue for the three and six months ended June 30, 2023 and 2022. Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2023 2022 2023 2022 Lease revenue - operating leases $ 50,593 $ 46,147 $ 100,267 $ 91,490 Variable lease revenue (tenant reimbursements) 2,250 1,757 4,773 3,317 Total Rental Revenue $ 52,843 $ 47,904 $ 105,040 $ 94,807 |
Schedule of Future Minimum Lease Payments to be Received | The table presents future minimum lease payments due during the initial lease term only as lease renewal periods are exercisable at the option of the lessee. (In thousands) June 30, 2023 (six months) $ 103,914 2024 208,905 2025 207,401 2026 205,748 2027 197,622 Thereafter 914,913 Total Future Minimum Lease Payments $ 1,838,503 |
DEBT, NET OF DEFERRED FINANCI_2
DEBT, NET OF DEFERRED FINANCING COSTS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Term Loans and Notes Payable | The following table presents the Term Loan balances as of June 30, 2023 and December 31, 2022. Outstanding Balance Maturity Interest June 30, December 31, (Dollars in thousands) Date Rate 2023 2022 Term Loans: Term loan due 2025 Nov 2025 6.15% (a) 150,000 150,000 Term loan due 2026 Nov 2026 6.15% (a) 100,000 100,000 Term loan due 2027 Jan 2027 6.10% (a) 90,000 90,000 Term loan due 2028 Jan 2028 6.10% (a) 90,000 90,000 Total Term Loans $ 430,000 $ 430,000 (a) Loan is a variable‑rate loan which resets at Daily Simple SOFR + the applicable credit spread of 0.95% to 1.00% at June 30, 2023. The following table presents the senior unsecured fixed rate notes balance as of June 30, 2023 and December 31, 2022. Outstanding Balance Maturity Interest June 30, December 31, (Dollars in thousands) Date Rate 2023 2022 Notes Payable: Senior unsecured fixed rate note, issued June 2017 Jun 2024 4.68 % $ 50,000 $ 50,000 Senior unsecured fixed rate note, issued December 2018 Dec 2026 4.63 % 50,000 50,000 Senior unsecured fixed rate note, issued June 2017 Jun 2027 4.93 % 75,000 75,000 Senior unsecured fixed rate note, issued December 2018 Dec 2028 4.76 % 50,000 50,000 Senior unsecured fixed rate note, issued April 2021 Apr 2029 2.74 % 50,000 50,000 Senior unsecured fixed rate note, issued March 2020 Jun 2029 3.15 % 50,000 50,000 Senior unsecured fixed rate note, issued March 2020 Apr 2030 3.20 % 75,000 75,000 Senior unsecured fixed rate note, issued March 2022 Mar 2031 3.09 % 50,000 50,000 Senior unsecured fixed rate note, issued April 2021 Apr 2031 2.99 % 50,000 50,000 Senior unsecured fixed rate note, issued March 2022 Mar 2032 3.11 % 75,000 75,000 Total Notes $ 575,000 $ 575,000 |
Schedule of Debt Maturities | The following presents scheduled principal payments related to the Company’s debt as of June 30, 2023. (In thousands) June 30, Remainder of 2023 $ — 2024 50,000 2025 150,000 2026 150,000 2027 165,000 Thereafter 490,000 Total Scheduled Principal Payments $ 1,005,000 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Swaps Held | Product Fixed Rate Notional Amount Index Effective Date Maturity Date Swap 2.19 % $ 100,000 Daily Simple SOFR + 10 bps 10/25/2022 11/09/2023 Swap 1.88 % 150,000 Daily Simple SOFR + 10 bps 11/09/2022 11/09/2024 Swap 0.44 % 50,000 Daily Simple SOFR + 10 bps 10/25/2022 11/09/2025 Swap 2.70 % 25,000 Daily Simple SOFR + 10 bps 11/09/2022 11/09/2025 Swap (1) 0.82 % 50,000 Daily Simple SOFR + 10 bps 11/09/2023 11/09/2025 Swap 4.12 % 25,000 Daily Simple SOFR + 10 bps 03/09/2023 11/09/2026 Swap 3.65 % 25,000 Daily Simple SOFR + 10 bps 11/09/2023 11/09/2026 Swap 2.25 % 25,000 1m Term SOFR 11/10/2025 11/09/2028 Swap 1.48 % 50,000 Daily Simple SOFR + 10 bps 11/10/2025 11/09/2027 Swap 1.54 % 50,000 Daily Simple SOFR + 10 bps 11/10/2025 11/09/2027 Swap 1.49 % 50,000 Daily Simple SOFR + 10 bps 11/10/2025 11/09/2028 Swap 2.02 % 50,000 Daily Simple SOFR + 10 bps 11/10/2025 11/09/2028 (1) In November 2024, the notional amount of the swap will increase to $150 million |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The table below presents the fair value of our derivative financial instruments as well as their classification on the consolidated balance sheet as of June 30, 2023 and December 31, 2022. Derivative Assets Derivative Liabilities Balance Sheet Location Fair Value at Balance Sheet Location Fair Value at (Dollars in thousands) June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022 Derivatives designated as hedging instruments: Interest rate swaps Derivative assets $ 27,668 $ 35,276 Derivative liabilities $ — $ 9 Total $ 27,668 $ 35,276 $ — $ 9 Offsetting of Derivative Assets Gross Amounts of Recognized Assets Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts of Assets Presented in the Consolidated Balance Sheet Gross Amounts Not Offset in the Consolidated Balance Sheet (In thousands) Financial Instruments Cash Collateral Received Net Amount June 30, 2023 $ 27,668 $ — $ 27,668 $ — $ — $ 27,668 December 31, 2022 35,276 — 35,276 (9) — 35,267 Offsetting of Derivative Liabilities Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts of Liabilities Presented in the Consolidated Balance Sheet Gross Amounts Not Offset in the Consolidated Balance Sheet (In thousands) Financial Instruments Cash Collateral Posted Net Amount June 30, 2023 $ — $ — $ — $ — $ — $ — December 31, 2022 9 — 9 (9) — — |
Schedule of Derivative Instruments, Gain (Loss) | The table below presents the effect of our interest rate swaps on comprehensive income for the three and six months ended June 30, 2023 and 2022. (Dollars in thousands) Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Total Amount of Interest Expense Presented in the Consolidated Statements of Income Three months ended June 30, 2023 $ 11,005 Interest expense $ (2,562) $ (10,051) Three months ended June 30, 2022 8,254 Interest expense 1,142 (9,031) Six months ended June 30, 2023 5,412 Interest expense (4,639) (19,969) Six months ended June 30, 2022 22,000 Interest expense 2,804 (17,406) |
SUPPLEMENTAL DETAIL FOR CERTA_2
SUPPLEMENTAL DETAIL FOR CERTAIN COMPONENTS OF CONSOLIDATED BALANCE SHEETS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Components of Other Assets | The components of other assets were as follows: June 30, December 31, (In thousands) 2023 2022 Operating lease right-of-use asset $ 4,177 $ 4,428 Prepaid acquisition costs and deposits 3,754 2,079 Accounts receivable 2,287 2,661 Prepaid assets 1,286 1,300 Food and beverage inventories 247 274 Other 1,697 1,530 Total Other Assets $ 13,448 $ 12,272 |
Schedule of Components of Other Liabilities | The components of other liabilities were as follows: June 30, December 31, (In thousands) 2023 2022 Accrued interest expense $ 4,063 $ 3,845 Tenant improvements payable and deposits 9,544 5,953 Operating lease liability 4,896 5,141 Accrued tenant property tax 2,402 1,537 Intangible lease liabilities, net 1,323 1,452 Accrued compensation 1,784 2,700 Accrued operating expenses 421 257 Accounts payable 530 766 Other 2,308 2,366 Total Other Liabilities $ 27,271 $ 24,017 |
EQUITY (Tables)
EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table presents the computation of basic and diluted net earnings per common share for the three and six months ended June 30, 2023 and 2022. (In thousands except for shares and per share data) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Average common shares outstanding – basic 87,366,335 80,294,804 86,604,202 80,245,247 Net effect of dilutive equity awards 189,676 199,639 220,948 200,920 Average common shares outstanding – diluted 87,556,011 80,494,443 86,825,150 80,446,167 Net income available to common shareholders $ 23,625 $ 28,130 $ 46,749 $ 50,385 Basic net earnings per share $ 0.27 $ 0.35 $ 0.54 $ 0.63 Diluted net earnings per share $ 0.27 $ 0.35 $ 0.54 $ 0.63 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | The unamortized compensation cost of awards issued under the Plan totaled approximately $10.4 million at June 30, 2023 as shown in the following table. (In thousands) Restricted Stock Units Restricted Stock Awards Performance Stock Awards Total Unrecognized compensation cost at January 1, 2023 $ 2,117 $ 2,466 $ 822 $ 5,405 Equity grants 1,438 3,626 3,289 8,353 Equity grant forfeitures — (11) — (11) Equity compensation expense (971) (1,662) (693) (3,326) Unrecognized Compensation Cost at June 30, 2023 $ 2,584 $ 4,419 $ 3,418 $ 10,421 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets Measured on Recurring Basis | The following table presents the assets and liabilities recorded that are reported at fair value on our Consolidated Balance Sheets on a recurring basis. June 30, 2023 (In thousands) Level 1 Level 2 Level 3 Total Assets Derivative assets $— $27,668 $— $27,668 Liabilities Derivative liabilities $— $— $— $— December 31, 2022 (In thousands) Level 1 Level 2 Level 3 Total Assets Derivative assets $— $35,276 $— $35,276 Liabilities Derivative liabilities $— $9 $— $9 |
Schedule of Fair Value Measurements, Nonrecurring | The following table presents the carrying value and fair value of certain financial liabilities that are recorded on our Consolidated Balance Sheets. The fair value of the debt (Level 2) is determined using the present value of the contractual cash flows, discounted at the current market cost of debt. June 30, 2023 (In thousands) Carrying Value (1) Fair Value Term loan due November 2025 $ 150,000 $ 148,847 Term loan due November 2026 100,000 99,291 Term loan due January 2027 90,000 89,010 Term loan due January 2028 90,000 88,574 Senior fixed note due June 2024 50,000 49,087 Senior fixed note due December 2026 50,000 48,301 Senior fixed note due June 2027 75,000 72,882 Senior fixed note due December 2028 50,000 48,158 Senior fixed note due April 2029 50,000 43,449 Senior fixed note due June 2029 50,000 44,243 Senior fixed note due April 2030 75,000 65,609 Senior fixed note due March 2031 50,000 42,532 Senior fixed note due April 2031 50,000 42,514 Senior fixed note due March 2032 75,000 63,637 Revolving credit facility due November 2025 15,000 14,884 December 31, 2022 (In thousands) Carrying Value (1) Fair Value Term loan due November 2025 $ 150,000 $ 149,495 Term loan due November 2026 100,000 99,949 Term loan due January 2027 90,000 89,595 Term loan due January 2028 90,000 89,309 Senior fixed note due June 2024 50,000 49,179 Senior fixed note due December 2026 50,000 48,548 Senior fixed note due June 2027 75,000 73,007 Senior fixed note due December 2028 50,000 48,251 Senior fixed note due April 2029 50,000 43,111 Senior fixed note due June 2029 50,000 43,967 Senior fixed note due April 2030 75,000 65,078 Senior fixed note due March 2031 50,000 41,989 Senior fixed note due April 2031 50,000 42,032 Senior fixed note due March 2032 75,000 62,828 Revolving credit facility due November 2025 — — (1) Carrying values exclude deferred financing costs |
SEGMENTS (Tables)
SEGMENTS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following tables present financial information by segment for the three and six months ended June 30, 2023 and 2022. Three Months Ended June 30, 2023 (In thousands) Real Estate Operations Restaurant Operations Intercompany Total Revenues: Rental revenue $ 52,843 $ — $ — $ 52,843 Intercompany rental revenue 214 — (214) — Restaurant revenue — 7,845 — 7,845 Total revenues 53,057 7,845 (214) 60,688 Operating expenses: General and administrative 5,600 — — 5,600 Depreciation and amortization 11,636 181 — 11,817 Property expenses 2,676 — — 2,676 Restaurant expenses — 7,411 (214) 7,197 Total operating expenses 19,912 7,592 (214) 27,290 Interest expense (10,051) — — (10,051) Other income 226 — — 226 Realized gain on sale 173 — — 173 Income tax expense (53) (38) — (91) Net Income $ 23,440 $ 215 $ — $ 23,655 Three Months Ended June 30, 2022 (In thousands) Real Estate Operations Restaurant Operations Intercompany Total Revenues: Rental revenue $ 47,904 $ — $ — $ 47,904 Intercompany rental revenue 211 — (211) — Restaurant revenue — 7,521 — 7,521 Total revenues 48,115 7,521 (211) 55,425 Operating expenses: General and administrative 4,698 — — 4,698 Depreciation and amortization 9,948 180 — 10,128 Property expenses 1,987 — — 1,987 Restaurant expenses — 7,263 (211) 7,052 Total operating expenses 16,633 7,443 (211) 23,865 Interest expense (9,031) — — (9,031) Other income 29 — — 29 Realized gain on sale 5,756 — — 5,756 Income tax expense (44) (100) — (144) Net Income (Loss) $ 28,192 $ (22) $ — $ 28,170 Six Months Ended June 30, 2023 (In thousands) Real Estate Operations Restaurant Operations Intercompany Total Revenues: Rental revenue $ 105,040 $ — $ — $ 105,040 Intercompany rental revenue 428 — (428) — Restaurant revenue — 15,600 — 15,600 Total revenues 105,468 15,600 (428) 120,640 Operating expenses: General and administrative 11,655 — — 11,655 Depreciation and amortization 23,630 363 — 23,993 Property expenses 5,843 — — 5,843 Restaurant expenses — 14,920 (428) 14,492 Total operating expenses 41,128 15,283 (428) 55,983 Interest expense (19,969) — — (19,969) Other income 526 — — 526 Realized gain on sale 1,735 — — 1,735 Income tax expense (105) (34) — (139) Net Income $ 46,527 $ 283 $ — $ 46,810 Six Months Ended June 30, 2022 (In thousands) Real Estate Operations Restaurant Operations Intercompany Total Revenues: Rental revenue $ 94,807 $ — $ — $ 94,807 Intercompany rental revenue 422 — (422) — Restaurant revenue — 15,015 — 15,015 Total revenues 95,229 15,015 (422) 109,822 Operating expenses: General and administrative 9,967 — — 9,967 Depreciation and amortization 19,652 180 — 19,832 Property expenses 3,836 — — 3,836 Restaurant expenses — 14,357 (422) 13,935 Total operating expenses 33,455 14,537 (422) 47,570 Interest expense (17,406) — — (17,406) Other income 86 — — 86 Realized gain on sale 5,756 — — 5,756 Income tax expense (92) (140) — (232) Net Income $ 50,118 $ 338 $ — $ 50,456 The following tables present supplemental information by segment at June 30, 2023 and December 31, 2022. Supplemental Segment Information at June 30, 2023 (In thousands) Real Estate Operations Restaurant Operations Total Total real estate investments $ 2,806,825 $ 22,858 $ 2,829,683 Accumulated depreciation (714,959) (7,282) (722,241) Total real estate investments, net 2,091,866 15,576 2,107,442 Cash and cash equivalents 10,340 857 11,197 Total assets 2,316,096 21,885 2,337,981 Total debt, net of deferred financing costs 1,011,605 — 1,011,605 Supplemental Segment Information at December 31, 2022 (In thousands) Real Estate Operations Restaurant Operations Total Total real estate investments $ 2,633,002 $ 22,700 $ 2,655,702 Accumulated depreciation (699,825) (6,877) (706,702) Total real estate investments, net 1,933,177 15,823 1,949,000 Cash and cash equivalents 25,260 1,036 26,296 Total assets 2,176,336 22,251 2,198,587 Total debt, net of deferred financing costs 995,477 — 995,477 |
ORGANIZATION (Details)
ORGANIZATION (Details) - Darden $ in Millions | Nov. 09, 2015 USD ($) property brand |
Separation And Spin-Off [Line Items] | |
Equity interest contributed (as a percent) | 1 |
Number of real estate properties | property | 418 |
Number of brands | 5 |
Stockholder's equity, conversion ratio | 0.3333 |
Revolving Credit and Term Loan | Secured Debt | |
Separation And Spin-Off [Line Items] | |
Payment from issuance of long-term debt | $ | $ 315 |
Longhorn San Antonio Business | |
Separation And Spin-Off [Line Items] | |
Number of brands | 6 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Real Estate Investments, Net (Details) | Jun. 30, 2023 |
Minimum | Building and Building Improvements | |
Property, Plant and Equipment [Line Items] | |
Useful life (in years) | 7 years |
Minimum | Equipment | |
Property, Plant and Equipment [Line Items] | |
Useful life (in years) | 2 years |
Maximum | Building and Building Improvements | |
Property, Plant and Equipment [Line Items] | |
Useful life (in years) | 55 years |
Maximum | Equipment | |
Property, Plant and Equipment [Line Items] | |
Useful life (in years) | 15 years |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Impairment of Long-Lived Assets (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Impairment expense | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Real Estate Held For Sale (Details) - property | 6 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Assets held for sale disposal period (in years) | 1 year | |
Number of properties held for sale | 0 | 2 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 | Jun. 30, 2022 | Dec. 31, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 11,197 | $ 26,296 | ||
Restricted cash (included in Other assets) | 0 | 0 | ||
Total Cash, Cash Equivalents, and Restricted Cash | $ 11,197 | $ 26,296 | $ 21,614 | $ 6,300 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Lease incentive payment | $ 0 | $ 100,000 |
Credit Card Receivable | ||
Disaggregation of Revenue [Line Items] | ||
Restaurant revenue | $ 194,000 | $ 195,000 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Realized Gain on Sale (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 USD ($) property | Jun. 30, 2022 USD ($) property | Jun. 30, 2023 USD ($) property | Jun. 30, 2022 USD ($) property | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Number of real estate properties sold | property | 1 | 3 | 4 | 3 |
Realized gain from sale of properties | $ | $ 173 | $ 5,800 | $ 1,700 | $ 5,800 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Noncontrolling Interest (Details) | Jun. 30, 2023 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Redeemable noncontrolling interest, convertible shares, conversion ratio | 1 |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Stock-Based Compensation (Details) | 6 Months Ended |
Jun. 30, 2023 | |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period (in years) | 1 year |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period (in years) | 5 years |
CONCENTRATION OF CREDIT RISK (D
CONCENTRATION OF CREDIT RISK (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2023 USD ($) restaurant state | |
Concentration Risk [Line Items] | |
Number of states in which entity operates | state | 47 |
Derivative exposure to risk | $ 27.7 |
Revolving Credit Facility | Secured Debt | |
Concentration Risk [Line Items] | |
Line of credit facility, current borrowing capacity | $ 235 |
Revenue Benchmark | Geographic Concentration Risk | Texas | |
Concentration Risk [Line Items] | |
Concentration risk (as a percent) | 10.20% |
Darden | Revenue Benchmark | Customer Concentration Risk | |
Concentration Risk [Line Items] | |
Concentration risk (as a percent) | 51.20% |
Olive Garden | |
Concentration Risk [Line Items] | |
Number of restaurants | restaurant | 313 |
Olive Garden | Revenue Benchmark | Customer Concentration Risk | |
Concentration Risk [Line Items] | |
Concentration risk (as a percent) | 38.20% |
Olive Garden | Leased Properties | Customer Concentration Risk | |
Concentration Risk [Line Items] | |
Concentration risk (as a percent) | 28.50% |
Long Horn Steakhouse | Revenue Benchmark | Customer Concentration Risk | |
Concentration Risk [Line Items] | |
Concentration risk (as a percent) | 10.80% |
Long Horn Steakhouse | Leased Properties | Customer Concentration Risk | |
Concentration Risk [Line Items] | |
Concentration risk (as a percent) | 10.50% |
REAL ESTATE INVESTMENTS, NET _3
REAL ESTATE INVESTMENTS, NET AND INTANGIBLE ASSETS AND LIABILITIES, NET - Real Estate Investments, Net (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Real Estate [Line Items] | ||
Land | $ 1,187,742 | $ 1,115,827 |
Total real estate investments | 2,829,683 | 2,655,702 |
Less: Accumulated depreciation | (722,241) | (706,702) |
Total real estate investments, net | 2,107,442 | 1,949,000 |
Intangible lease assets, net | 114,298 | 106,206 |
Total real estate investments and intangible lease assets, net | 2,221,740 | 2,055,206 |
Properties Subject To Leases And Operations Of Kerrow Restaurant Business | ||
Real Estate [Line Items] | ||
Land | 1,187,742 | 1,115,827 |
Buildings and improvements | 1,506,157 | 1,404,198 |
Equipment | 135,784 | 135,677 |
Total real estate investments | 2,829,683 | 2,655,702 |
Less: Accumulated depreciation | (722,241) | (706,702) |
Total real estate investments, net | 2,107,442 | 1,949,000 |
Intangible lease assets, net | 114,298 | 106,206 |
Total real estate investments and intangible lease assets, net | $ 2,221,740 | $ 2,055,206 |
REAL ESTATE INVESTMENTS, NET _4
REAL ESTATE INVESTMENTS, NET AND INTANGIBLE ASSETS AND LIABILITIES, NET - Real Estate Investments, Narrative (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 USD ($) property state | Jun. 30, 2022 USD ($) property state | Jun. 30, 2023 USD ($) property state | Jun. 30, 2022 USD ($) property state | Dec. 31, 2022 USD ($) | |
Real Estate [Line Items] | |||||
Payments to acquire business | $ 194,970,000 | $ 99,408,000 | |||
Number of states in which entity operates | state | 47 | 47 | |||
Contingent consideration | $ 0 | $ 0 | |||
Number of real estate properties sold | property | 1 | 3 | 4 | 3 | |
Real estate investment property, net | $ 2,107,442,000 | $ 2,107,442,000 | $ 1,949,000,000 | ||
Realized gain (losses) from operation | 173,000 | $ 5,800,000 | 1,700,000 | $ 5,800,000 | |
Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||||
Real Estate [Line Items] | |||||
Real estate investment property, net | $ 11,000,000 | $ 6,300,000 | 11,000,000 | 6,300,000 | |
Properties Subject To Leases And Operations Of Kerrow Restaurant Business | |||||
Real Estate [Line Items] | |||||
Payments to acquire business | $ 195,000,000 | $ 99,400,000 | |||
Number of restaurants | property | 59 | 44 | 59 | 44 | |
Number of states in which entity operates | state | 24 | 22 | 24 | 22 | |
Payments to acquire land | $ 70,700,000 | $ 51,200,000 | |||
Payments to acquire buildings and improvements | 105,100,000 | 39,700,000 | |||
Payments to acquire intangible assets | $ 19,200,000 | $ 8,500,000 | |||
Occupation (as a percent) | 100% | 100% | 100% | 100% | |
Operating leases, term of contract (in years) | 12 years 1 month 6 days | 6 years 6 months | 12 years 1 month 6 days | 6 years 6 months | |
Real estate investment property, net | $ 2,107,442,000 | $ 2,107,442,000 | $ 1,949,000,000 | ||
Properties Leased Under The Ground Lease | |||||
Real Estate [Line Items] | |||||
Number of net lease property acquired | property | 1 | ||||
Increase in land | 2,300,000 | $ 2,300,000 | |||
Decrease in finance lease, right of use asset | $ 2,300,000 | $ 2,300,000 |
REAL ESTATE INVESTMENTS, NET _5
REAL ESTATE INVESTMENTS, NET AND INTANGIBLE ASSETS AND LIABILITIES, NET - Intangible Real Estate Assets, Net (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Finance leases - right of use asset | $ 14,040 | $ 16,201 |
Total | 163,597 | 146,535 |
Less: Accumulated amortization | (49,299) | (40,329) |
Intangible Lease Assets, Net | $ 114,298 | $ 106,206 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Intangible lease assets, net | Intangible lease assets, net |
Acquired in-place lease intangibles | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible lease assets, gross | $ 124,619 | $ 109,371 |
Above-market leases | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible lease assets, gross | 13,821 | 13,821 |
Lease incentives | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible lease assets, gross | 7,241 | 6,989 |
Tenant improvements intangibles | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible lease assets, gross | 3,605 | 0 |
Direct lease costs | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible lease assets, gross | $ 271 | $ 153 |
REAL ESTATE INVESTMENTS, NET _6
REAL ESTATE INVESTMENTS, NET AND INTANGIBLE ASSETS AND LIABILITIES, NET - Intangible Real Estate Liabilities, Net (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Real Estate [Abstract] | ||
Below-market leases | $ 2,610 | $ 2,610 |
Less: Accumulated amortization | (1,287) | (1,158) |
Intangible Lease Liabilities, Net | $ 1,323 | $ 1,452 |
REAL ESTATE INVESTMENTS, NET _7
REAL ESTATE INVESTMENTS, NET AND INTANGIBLE ASSETS AND LIABILITIES, NET - Intangible Lease Assets and Liabilities, Net, Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Total weighted average amortization period (in years) | 8 years 4 months 24 days | |||
Acquired in-place lease intangibles | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | $ 4,000 | $ 3,200 | $ 7,900 | $ 6,100 |
Total weighted average amortization period (in years) | 8 years | |||
Above-market and below-market leases | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | 338 | 388 | $ 692 | 778 |
Lease incentives | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | $ 146 | $ 136 | $ 281 | $ 271 |
Total weighted average amortization period (in years) | 12 years 3 months 18 days | |||
Above-market leases | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Total weighted average amortization period (in years) | 6 years 9 months 18 days | |||
Below-market Leases | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Total weighted average amortization period (in years) | 10 years 1 month 6 days | |||
Tenant improvements intangibles | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Total weighted average amortization period (in years) | 15 years 8 months 12 days |
REAL ESTATE INVESTMENTS, NET _8
REAL ESTATE INVESTMENTS, NET AND INTANGIBLE ASSETS AND LIABILITIES, NET - Amortization Expense (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Real Estate [Abstract] | |
2023 (six months) | $ 8,747 |
2024 | 16,152 |
2025 | 13,835 |
2026 | 12,060 |
2027 | 9,692 |
Thereafter | 32,425 |
Total Future Amortization | $ 92,911 |
LEASES - Operating Lease Liabil
LEASES - Operating Lease Liability, Narrative (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) groundLease | Jun. 30, 2022 USD ($) | |
Leases [Abstract] | ||||
Number of ground leases | groundLease | 2 | |||
Weighted average discount rate (as a percent) | 4.28% | 4.28% | ||
Weighted average remaining lease term (in years) | 15 years 10 months 24 days | 15 years 10 months 24 days | ||
Rental expense | $ | $ 217 | $ 218 | $ 457 | $ 453 |
LEASES - Operating Lease Liab_2
LEASES - Operating Lease Liability Maturities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Lessee, Operating Lease, Liability, to be Paid, Fiscal Year Maturity [Abstract] | ||
2023 (six months) | $ 355 | |
2024 | 718 | |
2025 | 470 | |
2026 | 310 | |
2027 | 319 | |
Thereafter | 4,753 | |
Total Payments | 6,925 | |
Less: Interest | (2,029) | |
Operating Lease Liability | $ 4,896 | $ 5,141 |
LEASES - Components of Rental R
LEASES - Components of Rental Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Leases [Abstract] | ||||
Lease revenue - operating leases | $ 50,593 | $ 46,147 | $ 100,267 | $ 91,490 |
Variable lease revenue (tenant reimbursements) | 2,250 | 1,757 | 4,773 | 3,317 |
Total Rental Revenue | $ 52,843 | $ 47,904 | $ 105,040 | $ 94,807 |
LEASES - Future Minimum Lease P
LEASES - Future Minimum Lease Payments to be Received (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Operating Leases, Lessor | |
2023 (six months) | $ 103,914 |
2024 | 208,905 |
2025 | 207,401 |
2026 | 205,748 |
2027 | 197,622 |
Thereafter | 914,913 |
Total Future Minimum Lease Payments | $ 1,838,503 |
LEASES - Ground Leases as Lesse
LEASES - Ground Leases as Lessee (Details) - Ground Lease - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Lessee, Lease, Description [Line Items] | ||
Finance ground lease assets | $ 14 | $ 16.2 |
Ground lease renewal term (in years) | 99 years | |
Weighted average remaining non-cancelable lease term (in years) | 90 years 7 months 6 days | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Ground lease remaining term (in years) | 61 years | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Ground lease remaining term (in years) | 96 years |
DEBT, NET OF DEFERRED FINANCI_3
DEBT, NET OF DEFERRED FINANCING COSTS - Narrative (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | |
Term Loan | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 430,000 | $ 430,000 |
Weighted average interest rate (as a percent) | 6.13% | 5.10% |
Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 575,000 | $ 575,000 |
Line of Credit | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Fair value of amount outstanding | 15,000 | 0 |
Line of credit facility, current borrowing capacity | $ 235,000 | |
Extension period (in months) | 6 months | |
Weighted average interest rate (as a percent) | 6% | |
Line of Credit | Letter of Credit | ||
Debt Instrument [Line Items] | ||
Letters of credit outstanding, amount | $ 0 | $ 0 |
DEBT, NET OF DEFERRED FINANCI_4
DEBT, NET OF DEFERRED FINANCING COSTS - Term Loans (Details) - Term Loan - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||
Outstanding Balance | $ 430,000 | $ 430,000 |
Minimum | SOFR | ||
Debt Instrument [Line Items] | ||
Variable rate (as a percent) | 0.95% | |
Maximum | SOFR | ||
Debt Instrument [Line Items] | ||
Variable rate (as a percent) | 1% | |
Term loan due 2025 | ||
Debt Instrument [Line Items] | ||
Interest Rate | 6.15% | |
Outstanding Balance | $ 150,000 | 150,000 |
Term loan due 2026 | ||
Debt Instrument [Line Items] | ||
Interest Rate | 6.15% | |
Outstanding Balance | $ 100,000 | 100,000 |
Term loan due 2027 | ||
Debt Instrument [Line Items] | ||
Interest Rate | 6.10% | |
Outstanding Balance | $ 90,000 | 90,000 |
Term loan due 2028 | ||
Debt Instrument [Line Items] | ||
Interest Rate | 6.10% | |
Outstanding Balance | $ 90,000 | $ 90,000 |
DEBT, NET OF DEFERRED FINANCI_5
DEBT, NET OF DEFERRED FINANCING COSTS - Notes Payable (Details) - Unsecured Debt - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Outstanding Balance | $ 575,000 | $ 575,000 |
Senior fixed note due June 2024 | ||
Debt Instrument [Line Items] | ||
Interest Rate | 4.68% | |
Outstanding Balance | $ 50,000 | 50,000 |
Senior fixed notes due December 2026 | ||
Debt Instrument [Line Items] | ||
Interest Rate | 4.63% | |
Outstanding Balance | $ 50,000 | 50,000 |
Senior fixed note due June 2027 | ||
Debt Instrument [Line Items] | ||
Interest Rate | 4.93% | |
Outstanding Balance | $ 75,000 | 75,000 |
Senior fixed notes due December 2028 | ||
Debt Instrument [Line Items] | ||
Interest Rate | 4.76% | |
Outstanding Balance | $ 50,000 | 50,000 |
Senior fixed note due April 2029 | ||
Debt Instrument [Line Items] | ||
Interest Rate | 2.74% | |
Outstanding Balance | $ 50,000 | 50,000 |
Senior fixed notes due June 2029 | ||
Debt Instrument [Line Items] | ||
Interest Rate | 3.15% | |
Outstanding Balance | $ 50,000 | 50,000 |
Senior fixed notes due April 2030 | ||
Debt Instrument [Line Items] | ||
Interest Rate | 3.20% | |
Outstanding Balance | $ 75,000 | 75,000 |
Senior fixed note due March 2031 | ||
Debt Instrument [Line Items] | ||
Interest Rate | 3.09% | |
Outstanding Balance | $ 50,000 | 50,000 |
Senior fixed note due April 2031 | ||
Debt Instrument [Line Items] | ||
Interest Rate | 2.99% | |
Outstanding Balance | $ 50,000 | 50,000 |
Senior fixed note due March 2032 | ||
Debt Instrument [Line Items] | ||
Interest Rate | 3.11% | |
Outstanding Balance | $ 75,000 | 75,000 |
The Notes | ||
Debt Instrument [Line Items] | ||
Outstanding Balance | $ 575,000 | $ 575,000 |
DEBT, NET OF DEFERRED FINANCI_6
DEBT, NET OF DEFERRED FINANCING COSTS - Debt Maturities (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Debt Disclosure [Abstract] | |
Remainder of 2023 | $ 0 |
2024 | 50,000 |
2025 | 150,000 |
2026 | 150,000 |
2027 | 165,000 |
Thereafter | 490,000 |
Total Scheduled Principal Payments | $ 1,005,000 |
DEBT, NET OF DEFERRED FINANCI_7
DEBT, NET OF DEFERRED FINANCING COSTS - Deferred Financing Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | |||||
Amortization of financing costs | $ 1,128 | $ 964 | |||
Term Loan and Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Net unamortized deferred financing costs | $ 5,100 | 5,100 | $ 5,900 | ||
Amortization of financing costs | 403 | $ 335 | 805 | 670 | |
Unsecured Debt | |||||
Debt Instrument [Line Items] | |||||
Net unamortized deferred financing costs | 3,300 | 3,300 | $ 3,700 | ||
Amortization of financing costs | $ 161 | $ 161 | $ 323 | $ 294 |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS - Narrative (Details) | 3 Months Ended | 6 Months Ended | |||
May 25, 2023 USD ($) | Jun. 30, 2023 USD ($) derivativeInstrument swap | Jun. 30, 2023 USD ($) swap | Jul. 12, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
Derivative [Line Items] | |||||
Estimated reclassification to earnings from AOCI | $ 11,400,000 | ||||
Derivative instrument obligation | $ 27,700,000 | $ 27,700,000 | $ 35,300,000 | ||
Unsecured Debt | Private Senior Note Offering | Subsequent Event | |||||
Derivative [Line Items] | |||||
Debt instrument, face amount | $ 100,000,000 | ||||
Designated as Hedging Instrument | |||||
Derivative [Line Items] | |||||
Number of instruments | swap | 1 | 1 | |||
Designated as Hedging Instrument | Cash Flow Hedging | |||||
Derivative [Line Items] | |||||
Notional amount | $ 100,000,000 | $ 100,000,000 | |||
Cash flow hedges terminated | derivativeInstrument | 4 | ||||
Swap | |||||
Derivative [Line Items] | |||||
Deferred derivative gain | $ 8,100,000 | ||||
Amortization period of deferred gain on derivative | 10 years | ||||
Swap | Designated as Hedging Instrument | Variable Rate Debt | |||||
Derivative [Line Items] | |||||
Debt instrument, face amount | $ 350,000,000 | 350,000,000 | 325,000,000 | ||
Notional amount | $ 350,000,000 | $ 350,000,000 | $ 325,000,000 |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Derivatives Swaps Held (Details) - Not Designated as Hedging Instrument - USD ($) $ in Thousands | Nov. 30, 2024 | Jun. 30, 2023 |
Swap, 2.19% Maturity 11/09/2023 | ||
Derivative [Line Items] | ||
Fixed Rate | 2.19% | |
Notional Amount | $ 100,000 | |
Swap, 2.19% Maturity 11/09/2023 | SOFR | ||
Derivative [Line Items] | ||
Basis spread on variable rate (as a percent) | 0.10% | |
Swap, 1.88% Maturity 11/09/2024 | ||
Derivative [Line Items] | ||
Fixed Rate | 1.88% | |
Notional Amount | $ 150,000 | |
Swap, 1.88% Maturity 11/09/2024 | SOFR | ||
Derivative [Line Items] | ||
Basis spread on variable rate (as a percent) | 0.10% | |
Swap, 0.44% Maturity 11/09/2025 | ||
Derivative [Line Items] | ||
Fixed Rate | 0.44% | |
Notional Amount | $ 50,000 | |
Swap, 0.44% Maturity 11/09/2025 | SOFR | ||
Derivative [Line Items] | ||
Basis spread on variable rate (as a percent) | 0.10% | |
Swap, 2.70% Maturity 11/09/2025 | ||
Derivative [Line Items] | ||
Fixed Rate | 2.70% | |
Notional Amount | $ 25,000 | |
Swap, 2.70% Maturity 11/09/2025 | SOFR | ||
Derivative [Line Items] | ||
Basis spread on variable rate (as a percent) | 0.10% | |
Swap, 0.82% Maturity 11/09/2025 | ||
Derivative [Line Items] | ||
Fixed Rate | 0.82% | |
Notional Amount | $ 50,000 | |
Swap, 0.82% Maturity 11/09/2025 | Forecast | Subsequent Event | ||
Derivative [Line Items] | ||
Notional Amount | $ 150,000 | |
Swap, 0.82% Maturity 11/09/2025 | SOFR | ||
Derivative [Line Items] | ||
Basis spread on variable rate (as a percent) | 0.10% | |
Swap, 4.12% Maturity 11/09/2026 | ||
Derivative [Line Items] | ||
Fixed Rate | 4.12% | |
Notional Amount | $ 25,000 | |
Swap, 4.12% Maturity 11/09/2026 | SOFR | ||
Derivative [Line Items] | ||
Basis spread on variable rate (as a percent) | 0.10% | |
Swap, 3.65% Maturity 11/09/2026 | ||
Derivative [Line Items] | ||
Fixed Rate | 3.65% | |
Notional Amount | $ 25,000 | |
Swap, 3.65% Maturity 11/09/2026 | SOFR | ||
Derivative [Line Items] | ||
Basis spread on variable rate (as a percent) | 0.10% | |
Swap, 2.25% Maturity 11/09/2028 | ||
Derivative [Line Items] | ||
Fixed Rate | 2.25% | |
Notional Amount | $ 25,000 | |
Swap, 1.48% Maturity 11/09/2027 | ||
Derivative [Line Items] | ||
Fixed Rate | 1.48% | |
Notional Amount | $ 50,000 | |
Swap, 1.48% Maturity 11/09/2027 | SOFR | ||
Derivative [Line Items] | ||
Basis spread on variable rate (as a percent) | 0.10% | |
Swap, 1.54% Maturity 11/09/2027 | ||
Derivative [Line Items] | ||
Fixed Rate | 1.54% | |
Notional Amount | $ 50,000 | |
Swap, 1.54% Maturity 11/09/2027 | SOFR | ||
Derivative [Line Items] | ||
Basis spread on variable rate (as a percent) | 0.10% | |
Swap, 1.49% Maturity 11/09/2028 | ||
Derivative [Line Items] | ||
Fixed Rate | 1.49% | |
Notional Amount | $ 50,000 | |
Swap, 1.49% Maturity 11/09/2028 | SOFR | ||
Derivative [Line Items] | ||
Basis spread on variable rate (as a percent) | 0.10% | |
Swap, 2.02% Maturity 11/09/2028 | ||
Derivative [Line Items] | ||
Fixed Rate | 2.02% | |
Notional Amount | $ 50,000 | |
Swap, 2.02% Maturity 11/09/2028 | SOFR | ||
Derivative [Line Items] | ||
Basis spread on variable rate (as a percent) | 0.10% |
DERIVATIVE FINANCIAL INSTRUME_5
DERIVATIVE FINANCIAL INSTRUMENTS - Derivatives Balance Sheet (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | $ 27,668 | $ 35,276 |
Derivative Liabilities | 0 | 9 |
Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | 27,668 | 35,276 |
Derivative Liabilities | 0 | 9 |
Designated as Hedging Instrument | Interest rate swaps | Derivative assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | 27,668 | 35,276 |
Designated as Hedging Instrument | Interest rate swaps | Derivative liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities | $ 0 | $ 9 |
DERIVATIVE FINANCIAL INSTRUME_6
DERIVATIVE FINANCIAL INSTRUMENTS - Derivatives Income Statement (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | $ 11,005 | $ 8,254 | $ 5,412 | $ 22,000 |
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | (2,562) | 1,142 | (4,639) | 2,804 |
Total Amount of Interest Expense Presented in the Consolidated Statements of Income | (10,051) | (9,031) | (19,969) | (17,406) |
Interest rate swaps | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | 11,005 | 8,254 | 5,412 | 22,000 |
Interest rate swaps | Interest expense | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | $ (2,562) | $ 1,142 | $ (4,639) | $ 2,804 |
DERIVATIVE FINANCIAL INSTRUME_7
DERIVATIVE FINANCIAL INSTRUMENTS - Derivatives Offsetting (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Offsetting of Derivative Assets | ||
Gross Amounts of Recognized Assets | $ 27,668 | $ 35,276 |
Gross Amounts Offset in the Consolidated Balance Sheet | 0 | 0 |
Net Amounts of Assets Presented in the Consolidated Balance Sheet | 27,668 | 35,276 |
Gross Amounts Not Offset in the Consolidated Balance Sheet, Financial Instruments | 0 | (9) |
Gross Amounts Not Offset in the Consolidated Balance Sheet, Cash Collateral Received | 0 | 0 |
Net Amount | 27,668 | 35,267 |
Offsetting of Derivative Liabilities | ||
Gross Amounts of Recognized Liabilities | 0 | 9 |
Gross Amounts Offset in the Consolidated Balance Sheet | 0 | 0 |
Net Amounts of Liabilities Presented in the Consolidated Balance Sheet | 0 | 9 |
Gross Amounts Not Offset in the Consolidated Balance Sheet, Financial Instruments | 0 | (9) |
Gross Amounts Not Offset in the Consolidated Balance Sheet, Cash Collateral Posted | 0 | 0 |
Net Amount | $ 0 | $ 0 |
SUPPLEMENTAL DETAIL FOR CERTA_3
SUPPLEMENTAL DETAIL FOR CERTAIN COMPONENTS OF CONSOLIDATED BALANCE SHEETS - Other Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Operating lease right-of-use asset | $ 4,177 | $ 4,428 |
Prepaid acquisition costs and deposits | 3,754 | 2,079 |
Accounts receivable | 2,287 | 2,661 |
Prepaid assets | 1,286 | 1,300 |
Food and beverage inventories | 247 | 274 |
Other | 1,697 | 1,530 |
Total Other Assets | $ 13,448 | $ 12,272 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Total Other Assets | Total Other Assets |
SUPPLEMENTAL DETAIL FOR CERTA_4
SUPPLEMENTAL DETAIL FOR CERTAIN COMPONENTS OF CONSOLIDATED BALANCE SHEETS - Other Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accrued interest expense | $ 4,063 | $ 3,845 |
Tenant improvements payable and deposits | 9,544 | 5,953 |
Operating lease liability | 4,896 | 5,141 |
Accrued tenant property tax | 2,402 | 1,537 |
Intangible lease liabilities, net | 1,323 | 1,452 |
Accrued compensation | 1,784 | 2,700 |
Accrued operating expenses | 421 | 257 |
Accounts payable | 530 | 766 |
Other | 2,308 | 2,366 |
Total Other Liabilities | $ 27,271 | $ 24,017 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 91 | $ 144 | $ 139 | $ 232 |
Deferred income tax | $ (4) | $ 61 | $ (49) | $ 61 |
EQUITY - Preferred Stock and Co
EQUITY - Preferred Stock and Common Stock (Details) - $ / shares | 3 Months Ended | 6 Months Ended | |||||
Jun. 14, 2023 | Mar. 13, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Equity [Abstract] | |||||||
Preferred stock, shares authorized (in shares) | 25,000,000 | 25,000,000 | 25,000,000 | ||||
Preferred stock, par value (in usd per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Preferred stock, shares issued (in shares) | 0 | 0 | 0 | ||||
Preferred stock, shares outstanding (in shares) | 0 | 0 | 0 | ||||
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 | 500,000,000 | ||||
Common stock, par value (in usd per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Common stock, shares issued (in shares) | 90,565,846 | 90,565,846 | 85,637,293 | ||||
Common stock, shares outstanding (in shares) | 90,565,846 | 90,565,846 | 85,637,293 | ||||
Dividends declared per common share (in usd per share) | $ 0.3400 | $ 0.3400 | $ 0.3400 | $ 0.3325 | $ 0.6800 | $ 0.6650 |
EQUITY - Common Stock Issuance
EQUITY - Common Stock Issuance Under the At-The-Market Program (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 21 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Nov. 07, 2022 | Feb. 28, 2021 | |
Subsidiary, Sale of Stock [Line Items] | ||||||
Net proceeds from ATM equity issuance | $ 128,184 | $ 4,354 | ||||
At-The-Market Offering | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Stock issuance, sales agreement, value available for issuance | $ 270,600 | 270,600 | $ 450,000 | $ 350,000 | ||
Net proceeds from ATM equity issuance | $ 119,300 | $ 4,500 | $ 128,300 | $ 4,500 | $ 256,700 | |
Weighted average share price (in usd per share) | $ 26.72 | $ 26.16 | $ 26.79 | $ 26.16 | ||
ATM proceeds, net of issuance costs (in shares) | 4,463,788 | 173,424 | 4,787,970 | 173,424 | ||
At-The-Market Offering, Forward Sale Agreement | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Number of shares issued in transaction (in shares) | 992,548 | 1,907,946 | 2,236,007 | |||
Weighted average share price (in usd per share) | $ 27.45 | $ 27.73 | $ 27.28 | |||
At-The-Market Offering, Settled Forward Sale Agreement | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Net proceeds from ATM equity issuance | $ 110,300 | $ 119,300 | ||||
Weighted average share price (in usd per share) | $ 26.81 | $ 26.88 | ||||
ATM proceeds, net of issuance costs (in shares) | 4,113,788 | 4,437,970 |
EQUITY - Noncontrolling Interes
EQUITY - Noncontrolling Interest (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2023 USD ($) shares | Jun. 30, 2023 USD ($) shares | Dec. 31, 2022 USD ($) | |
Class of Stock [Line Items] | |||
Outstanding number of units (in shares) | shares | 114,559 | 114,559 | |
Redeemable noncontrolling interest, convertible shares, conversion ratio | 1 | 1 | |
Redemption value | $ 2,900 | $ 2,900 | $ 3,000 |
Distribution to limited partners | $ 39 | $ 78 | |
Four Corners Property Trust | |||
Class of Stock [Line Items] | |||
Noncontrolling interest, ownership percentage by parent (as a percent) | 99.87% | 99.87% | |
Noncontrolling interest, ownership percentage by noncontrolling owners (as a percent) | 0.13% | 0.13% |
EQUITY - Earnings Per Share (De
EQUITY - Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Equity [Abstract] | ||||
Average common shares outstanding – basic (in shares) | 87,366,335 | 80,294,804 | 86,604,202 | 80,245,247 |
Net effect of dilutive equity awards (in shares) | 189,676 | 199,639 | 220,948 | 200,920 |
Average common shares outstanding - diluted (in shares) | 87,556,011 | 80,494,443 | 86,825,150 | 80,446,167 |
Net income available to common shareholders | $ 23,625 | $ 28,130 | $ 46,749 | $ 50,385 |
Basic net earnings per share (in usd per share) | $ 0.27 | $ 0.35 | $ 0.54 | $ 0.63 |
Diluted net earnings per share (in usd per share) | $ 0.27 | $ 0.35 | $ 0.54 | $ 0.63 |
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 385,728 | 299,372 | 354,456 | 298,091 |
Weighted average units of partnership interest, amount (in shares) | 114,559 | 114,559 | 114,559 | 114,559 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 10, 2022 | Jun. 30, 2023 | Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |||
Increase in number of shares reserved for future issuance (in shares) | 1,500,000 | ||
Maximum number of shares reserved for future issuance (in shares) | 3,600,000 | ||
Shares available for grant (in shares) | 1,695,561 | ||
Unrecognized compensation cost | $ 10,421 | $ 5,405 | |
Period for recognition (in years) | 2 years 2 months 12 days |
STOCK-BASED COMPENSATION - Unam
STOCK-BASED COMPENSATION - Unamortized Compensation Cost of Awards (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized [Roll Forward] | |
Unrecognized compensation cost at January 1, 2023 | $ 5,405 |
Equity grants | 8,353 |
Equity grant forfeitures | (11) |
Equity compensation expense | (3,326) |
Unrecognized Compensation Cost at June 30, 2023 | 10,421 |
Restricted Stock Units | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized [Roll Forward] | |
Unrecognized compensation cost at January 1, 2023 | 2,117 |
Equity grants | 1,438 |
Equity grant forfeitures | 0 |
Equity compensation expense | (971) |
Unrecognized Compensation Cost at June 30, 2023 | 2,584 |
Restricted Stock Awards | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized [Roll Forward] | |
Unrecognized compensation cost at January 1, 2023 | 2,466 |
Equity grants | 3,626 |
Equity grant forfeitures | (11) |
Equity compensation expense | (1,662) |
Unrecognized Compensation Cost at June 30, 2023 | 4,419 |
Performance Stock Awards | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized [Roll Forward] | |
Unrecognized compensation cost at January 1, 2023 | 822 |
Equity grants | 3,289 |
Equity grant forfeitures | 0 |
Equity compensation expense | (693) |
Unrecognized Compensation Cost at June 30, 2023 | $ 3,418 |
STOCK-BASED COMPENSATION - RSUs
STOCK-BASED COMPENSATION - RSUs and Restricted Stock Awards (Details) - shares | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | |
Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period (in years) | 1 year | ||
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period (in years) | 5 years | ||
Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Average closing market price, common stock, period (in days) | 5 days | ||
Outstanding (in shares) | 244,738 | 244,738 | 206,786 |
Granted (in shares) | 34,147 | 53,238 | |
Vested (in shares) | 1,381 | 15,286 | |
Forfeited (in shares) | 0 | 0 | |
Restricted Stock Units | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period (in years) | 1 year | ||
Restricted Stock Units | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period (in years) | 5 years | ||
Restricted Stock Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Average closing market price, common stock, period (in days) | 5 days | ||
Outstanding (in shares) | 198,985 | 198,985 | 157,030 |
Granted (in shares) | 660 | 128,550 | |
Vested (in shares) | 0 | ||
Forfeited (in shares) | 382 | 382 | |
Restrictions on awards (in shares) | 86,213 | ||
Awards forfeited and returned (in shares) | 45,603 | ||
Restricted Stock Awards | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period (in years) | 1 year | ||
Restricted Stock Awards | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period (in years) | 3 years |
STOCK-BASED COMPENSATION - Perf
STOCK-BASED COMPENSATION - Performance- Based Restricted Stock Awards (Details) - Performance Stock Awards $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2023 shares | Jun. 30, 2023 USD ($) day shares | Dec. 31, 2022 shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unvested PSUs (in shares) | 225,654 | 225,654 | 202,560 |
Granted (in shares) | 0 | 87,700 | |
Shares vested in period (in shares) | 0 | 64,606 | |
Forfeited (in shares) | 0 | ||
Percentage of target shares distributed (as a percent) | 93% | ||
Total distribution of shares (in shares) | 60,085 | ||
Shares designated for tax withholding (in shares) | 34,384 | ||
Threshold trading days (in days) | day | 20 | ||
Performance period (in years) | 3 years | ||
Expected volatility rate (as a percent) | 51.20% | ||
Risk free interest rate (as a percent) | 3.76% | ||
Dividend yield (as a percent) | 0% | ||
Grant date fair value | $ | $ 3.3 | ||
Compensation expense | $ | $ 3.4 | ||
Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage multiplier (as a percent) | 0 | ||
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage multiplier (as a percent) | 2 |
FAIR VALUE MEASUREMENTS - Asset
FAIR VALUE MEASUREMENTS - Assets and Liabilities at Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Assets | ||
Derivative assets | $ 27,668 | $ 35,276 |
Liabilities | ||
Derivative liabilities | 0 | 9 |
Fair Value, Recurring | ||
Assets | ||
Derivative assets | 27,668 | 35,276 |
Liabilities | ||
Derivative liabilities | 0 | 9 |
Level 1 | Fair Value, Recurring | ||
Assets | ||
Derivative assets | 0 | 0 |
Liabilities | ||
Derivative liabilities | 0 | 0 |
Level 2 | Fair Value, Recurring | ||
Assets | ||
Derivative assets | 27,668 | 35,276 |
Liabilities | ||
Derivative liabilities | 0 | 9 |
Level 3 | Fair Value, Recurring | ||
Assets | ||
Derivative assets | 0 | 0 |
Liabilities | ||
Derivative liabilities | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - Finan
FAIR VALUE MEASUREMENTS - Financial Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Carrying Value | Line of Credit | Revolving Credit Facility | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | $ 15,000 | $ 0 |
Fair Value | Line of Credit | Revolving Credit Facility | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 14,884 | 0 |
Term loan due November 2025 | Carrying Value | Term Loan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 150,000 | 150,000 |
Term loan due November 2025 | Fair Value | Term Loan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 148,847 | 149,495 |
Term loan due November 2026 | Carrying Value | Term Loan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 100,000 | 100,000 |
Term loan due November 2026 | Fair Value | Term Loan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 99,291 | 99,949 |
Term loan due January 2027 | Carrying Value | Term Loan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 90,000 | 90,000 |
Term loan due January 2027 | Fair Value | Term Loan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 89,010 | 89,595 |
Term loan due January 2028 | Carrying Value | Term Loan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 90,000 | 90,000 |
Term loan due January 2028 | Fair Value | Term Loan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 88,574 | 89,309 |
Senior fixed note due June 2024 | Carrying Value | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 50,000 | 50,000 |
Senior fixed note due June 2024 | Fair Value | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 49,087 | 49,179 |
Senior fixed note due December 2026 | Carrying Value | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 50,000 | 50,000 |
Senior fixed note due December 2026 | Fair Value | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 48,301 | 48,548 |
Senior fixed note due June 2027 | Carrying Value | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 75,000 | 75,000 |
Senior fixed note due June 2027 | Fair Value | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 72,882 | 73,007 |
Senior fixed note due December 2028 | Carrying Value | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 50,000 | 50,000 |
Senior fixed note due December 2028 | Fair Value | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 48,158 | 48,251 |
Senior fixed note due April 2029 | Carrying Value | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 50,000 | 50,000 |
Senior fixed note due April 2029 | Fair Value | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 43,449 | 43,111 |
Senior fixed note due June 2029 | Carrying Value | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 50,000 | 50,000 |
Senior fixed note due June 2029 | Fair Value | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 44,243 | 43,967 |
Senior fixed note due April 2030 | Carrying Value | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 75,000 | 75,000 |
Senior fixed note due April 2030 | Fair Value | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 65,609 | 65,078 |
Senior fixed note due March 2031 | Carrying Value | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 50,000 | 50,000 |
Senior fixed note due March 2031 | Fair Value | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 42,532 | 41,989 |
Senior fixed note due April 2031 | Carrying Value | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 50,000 | 50,000 |
Senior fixed note due April 2031 | Fair Value | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 42,514 | 42,032 |
Senior fixed note due March 2032 | Carrying Value | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | 75,000 | 75,000 |
Senior fixed note due March 2032 | Fair Value | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | $ 63,637 | $ 62,828 |
SEGMENTS - Narrative (Details)
SEGMENTS - Narrative (Details) - segment | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Segment Reporting [Abstract] | ||||
Number of operating segments | 2 | 2 | 2 | 2 |
SEGMENTS - Income by Segment (D
SEGMENTS - Income by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Revenues: | ||||
Rental revenue | $ 52,843 | $ 47,904 | $ 105,040 | $ 94,807 |
Restaurant revenue | 7,845 | 7,521 | 15,600 | 15,015 |
Total revenues | 60,688 | 55,425 | 120,640 | 109,822 |
Operating expenses: | ||||
General and administrative | 5,600 | 4,698 | 11,655 | 9,967 |
Depreciation and amortization | 11,817 | 10,128 | 23,993 | 19,832 |
Total operating expenses | 27,290 | 23,865 | 55,983 | 47,570 |
Interest expense | (10,051) | (9,031) | (19,969) | (17,406) |
Other income | 226 | 29 | 526 | 86 |
Realized gain on sale | 173 | 5,756 | 1,735 | 5,756 |
Income tax expense | (91) | (144) | (139) | (232) |
Net Income (Loss) | 23,655 | 28,170 | 46,810 | 50,456 |
Restaurant | ||||
Revenues: | ||||
Restaurant revenue | 7,845 | 7,521 | 15,600 | 15,015 |
Operating expenses: | ||||
Expenses | 7,197 | 7,052 | 14,492 | 13,935 |
Property | ||||
Operating expenses: | ||||
Expenses | 2,676 | 1,987 | 5,843 | 3,836 |
Operating Segments | Real Estate Operations | ||||
Revenues: | ||||
Rental revenue | 52,843 | 47,904 | 105,040 | 94,807 |
Total revenues | 53,057 | 48,115 | 105,468 | 95,229 |
Operating expenses: | ||||
General and administrative | 5,600 | 4,698 | 11,655 | 9,967 |
Depreciation and amortization | 11,636 | 9,948 | 23,630 | 19,652 |
Total operating expenses | 19,912 | 16,633 | 41,128 | 33,455 |
Interest expense | (10,051) | (9,031) | (19,969) | (17,406) |
Other income | 226 | 29 | 526 | 86 |
Realized gain on sale | 173 | 5,756 | 1,735 | 5,756 |
Income tax expense | (53) | (44) | (105) | (92) |
Net Income (Loss) | 23,440 | 28,192 | 46,527 | 50,118 |
Operating Segments | Real Estate Operations | Restaurant | ||||
Revenues: | ||||
Restaurant revenue | 0 | 0 | 0 | 0 |
Operating expenses: | ||||
Expenses | 0 | 0 | 0 | 0 |
Operating Segments | Real Estate Operations | Property | ||||
Operating expenses: | ||||
Expenses | 2,676 | 1,987 | 5,843 | 3,836 |
Operating Segments | Restaurant Operations | ||||
Revenues: | ||||
Rental revenue | 0 | 0 | 0 | 0 |
Total revenues | 7,845 | 7,521 | 15,600 | 15,015 |
Operating expenses: | ||||
General and administrative | 0 | 0 | 0 | 0 |
Depreciation and amortization | 181 | 180 | 363 | 180 |
Total operating expenses | 7,592 | 7,443 | 15,283 | 14,537 |
Interest expense | 0 | 0 | 0 | 0 |
Other income | 0 | 0 | 0 | 0 |
Realized gain on sale | 0 | 0 | 0 | 0 |
Income tax expense | (38) | (100) | (34) | (140) |
Net Income (Loss) | 215 | (22) | 283 | 338 |
Operating Segments | Restaurant Operations | Restaurant | ||||
Revenues: | ||||
Restaurant revenue | 7,845 | 7,521 | 15,600 | 15,015 |
Operating expenses: | ||||
Expenses | 7,411 | 7,263 | 14,920 | 14,357 |
Operating Segments | Restaurant Operations | Property | ||||
Operating expenses: | ||||
Expenses | 0 | 0 | 0 | 0 |
Intercompany | ||||
Revenues: | ||||
Rental revenue | 214 | 211 | 428 | 422 |
Total revenues | (214) | (211) | (428) | (422) |
Operating expenses: | ||||
General and administrative | 0 | 0 | 0 | 0 |
Depreciation and amortization | 0 | 0 | 0 | 0 |
Total operating expenses | (214) | (211) | (428) | (422) |
Interest expense | 0 | 0 | 0 | 0 |
Other income | 0 | 0 | 0 | 0 |
Realized gain on sale | 0 | 0 | 0 | 0 |
Income tax expense | 0 | 0 | 0 | 0 |
Net Income (Loss) | 0 | 0 | 0 | 0 |
Intercompany | Restaurant | ||||
Operating expenses: | ||||
Expenses | (214) | (211) | (428) | (422) |
Intercompany | Property | ||||
Operating expenses: | ||||
Expenses | $ 0 | $ 0 | $ 0 | $ 0 |
SEGMENTS - Supplemental Segment
SEGMENTS - Supplemental Segment Information (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Segment Reporting Information [Line Items] | ||
Total real estate investments | $ 2,829,683 | $ 2,655,702 |
Accumulated depreciation | (722,241) | (706,702) |
Total real estate investments, net | 2,107,442 | 1,949,000 |
Cash and cash equivalents | 11,197 | 26,296 |
Total assets | 2,337,981 | 2,198,587 |
Total debt, net of deferred financing costs | 1,011,605 | 995,477 |
Real Estate Operations | ||
Segment Reporting Information [Line Items] | ||
Total real estate investments | 2,806,825 | 2,633,002 |
Accumulated depreciation | (714,959) | (699,825) |
Total real estate investments, net | 2,091,866 | 1,933,177 |
Cash and cash equivalents | 10,340 | 25,260 |
Total assets | 2,316,096 | 2,176,336 |
Total debt, net of deferred financing costs | 1,011,605 | 995,477 |
Restaurant Operations | ||
Segment Reporting Information [Line Items] | ||
Total real estate investments | 22,858 | 22,700 |
Accumulated depreciation | (7,282) | (6,877) |
Total real estate investments, net | 15,576 | 15,823 |
Cash and cash equivalents | 857 | 1,036 |
Total assets | 21,885 | 22,251 |
Total debt, net of deferred financing costs | $ 0 | $ 0 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | 1 Months Ended | 6 Months Ended | ||||
Aug. 02, 2023 USD ($) property | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jul. 12, 2023 USD ($) | Jun. 05, 2023 | May 25, 2023 USD ($) | |
Subsequent Event [Line Items] | ||||||
Payments to acquire business | $ 194,970,000 | $ 99,408,000 | ||||
Derivatives, yield (as a percent) | 5.39% | |||||
Swap | ||||||
Subsequent Event [Line Items] | ||||||
Deferred derivative gain | $ 8,100,000 | |||||
Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Payments to acquire business | $ 111,000,000 | |||||
Number of net lease property acquired | property | 26 | |||||
Real estate investments yield (as a percent) | 6.40% | |||||
Real estate investments, remaining lease term (in years) | 12 years 4 months 24 days | |||||
Subsequent Event | Unsecured Debt | Private Senior Note Offering | ||||||
Subsequent Event [Line Items] | ||||||
Debt instrument, face amount | $ 100,000,000 | |||||
Debt term (in years) | 10 years | |||||
Interest rate (as a percent) | 6.44% |