FCPT - Earnings call transcript Q1 2020 | Four Corners Property Trust, Inc.

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Operator

Good day, and welcome to FCPT Announces Earnings for First Quarter 2020 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

I would now like to turn the conference over to Gerry Morgan. ahead. go Please

Gerald Morgan

Sarah. Thank you,

course statements of made will the call, us. this are based forward-looking which assumptions make on During we beliefs by and

Our predict. and by beyond be control actual that our to factors are known ability or results will unknown affected

not of future are prove some performance, guarantee incorrect. be a assumptions and will Our to

as All our which can current be a description some today, of call filings, For of presented potential risks, the at XXXX. SEC fcpt.com. the X, more detailed please information on refer to May found is

and In also presented addition, Company's reconciliation on this to available can non-GAAP our on financial call, measures such be as AFFO also the on found website. supplemental report, FFO

that, over the call I'll to with turn And Bill.

William Lenehan

quarter response COVID-XX. Good joining you morning. Thank for and first to results us our discuss ongoing to

best providers, all time times, thanks and and of your you First, to medical are our service this benefit. who all working uncertain and for and safety these our of family's wishes our other during the to all health during

I'll and to before quarter earnings the first about discussing collection the begin current results our response release. broad a second included in environment, quarter results, our with the comments few

LongHorn in past reduced returning Texas XX% FCPT dining sincere in six months. to tirelessly Antonio, admiration and my who all team, approaching the to occupancy is who Group have under Jim a last to team been this prior maximum week, to perform Dilts, in our weeks, over achieving innovative First regular continued business and levels, in Kerrow last have San A of XX% to-go Carol restaurant with to much from the within the thanks over acknowledgment home team, two special and Brat

have restaurant unprecedented months have operating shown few model. But many last an environment in adjusting their tenacity The for been operators.

different the of rebound traffic restaurant will see reopen accordingly. starting are country and to We parts

which others believe and strong time. was Strong strength will of Brinker operators the and capitalized this portfolio, relatively We outperform tenants from scale. and coverage, our the run during locations, benefits from well rent should their in Darden built benefit like industry-leading long on

the Now in results turning to our quarter. reported first

we We $X.XX, Our in of year-end. increase. per portfolio performed from achieved share quarter, at rent expected a represents quarter AFFO properties from an acquired X.X of benefited the full which year-over-year as as

During deadlines average of response properties, acquired cash first million, the quarter, XX to in a prior for decision on purchase FCPT pipeline, X.X, existing to of initial the an in to combined COVID-XX. our extend weighted yield March price at $XX.X

rents. of low XX Speaking to land properties the XX to and building, leases, is the XX the quality Further, XX with our basis the equates FCPT were the leases ground are average brand's $X.X acquisitions, corporate are operator, less which of the quarter and constructed of property the first than million. tenant owns per

have our decline, With great later respect year. to until believe will as acquisitions future, general, in for a the we near environment But for activities pricing. acquisition acquisition the in by to should competition paused we requesting counterparties environment be which poised the deadlines improve will in acquisition we extend

our years four which and we well. being last the disciplined spent and how acquisitions underwrite balance have We finance on position us construct will sheet,

collections, collected. for currently With April, over and daily to at stand received to continue quarter rents second XX% regard be rent we

coming. We are X, May also start additional collected off over with to through collections, XX% a on payments May strong with rent

tenants. deferral The remains engaged in conversations construction with team rent

forgiveness the enforce nor not lending with choose will discussing of we course, tenants rent tenant. are and pay, continue cases provisions leases the we Of money tenants, where to to any to not are in

BJ's it of also our raised announced million, recent raised tenants night and raised noteworthy, weeks. $XX last $XXX many recently We It million, Brinker would modification note has of that as Darden million, examples. equity in raised that the lease have that seeking tenants is recently. around number $XXX decreased

We extensions our the limited exchange are slightly has and it five-year long-term including conversion rent expect the short-term to performance rent will our portfolio to both may bumps few of our for in lease for weeks rise to Regardless, shareholders. But preliminary scope, April. collections for concessions, below value put approach discussions increases. continue in and collections been drive That improve with of for into we May, tenants, coming in a annual rent periods.

and quarter I our it will remind dividend words dividend our Finally, some a the Gerry to early few assessment in June, and environment. the that financial FCPT over turn The of mid-April. before the discuss on everyone, review in we or on full will Board declared dividend. liquidity I quarter first payment of I to position, results based paid second

dividend in approximately first conservative XX% which is ratio was Our level. the quarter, a payout

Gerry Now, through you Gerry? results. financial take will our

Gerald Morgan

the A for Bill. recognizing as at current rental first million a first of million. straight-line rent excluding focus then after a $XXX of in March We comments base this $XX.X And rental Thanks, is less few basis, place on in of cash the quick cash quarter, leases quarter, on run adjustments. the rate it is non-cash annual generated income point. XX

prior average rent escalator the coronavirus remains forced X.Xx to in the closures. annual cash at was coverage tenure approximately measured the as our in EBITDAR weighted slowdown impact time X.X% Our and period of

in per versus $X.XX results in As quarter $X.XX a AFFO, quarter of first was increase the Bill our or of mentioned, quarter share we've which reported XXXX.

sheet, balance capital to the two to Turning offerings note.

X.XX%. March fund on of XX nine-year are senior we of quarter, of rate expected notes, second $XXX interest a entered which issue April XX-year the unsecured private X, fixed a and million fixed of notes, interest on X at rate of to to which X.X% million funded June on million $XX agreements $XX into in at notes First,

loss, issued These at and over rate. interest the approximately to will we add all-in of annual points XX offering, notes be with the the rate were in which and life par, a terminated connection swaps at the interest basis also amortized notes

for of approximately deducting FCPT quarter, XXX,XXX after price $XX.XX million approximately shares sold total at per offering proceeds first average fees and the during net an $X.X expenses. Second, share, of

Turning over cash balance, $XX abundance and the quarter million second caution, to of revolver reserves environment. we revolver an balance and our out ended of of million given COVID-XX with cash $XXX the a

As of disclosed $XX of this revolver stand first we in private funding balance reserve the note. environment We as of this after the stabilizes. to the million with a of utilize cash remainder portion the $XXX over currently cash quarter, pay further yesterday's release, down of million, over the may some

X.Xx strong, fixed quite remain metrics and March XX. X.X the leverage of debt of overall first net a charge coverage EBITDA in with to at adjusted quarter, Our

the term Xx. debt maturity which the November $XXX leverage first be Our to timing of of revolver million. to our extended maturity also net can option, remain a below of committed to XXXX to We X.X target debt at is maintaining

back you With to that, for comments. closing Bill,

William Lenehan

always In of weeks over in guided focused on We've conclusion, principles. and and remain months. our our fact-based the Gerry. adjust our ourselves to we working decision-making on tenants business with will model reopen, interactions transparency we and upcoming Thanks these reporting by responsiveness as in very they all our prided and be continue investment shareholders, to

that, Q&A. over Sarah for will to With turn back we it

Operator

Thank you.

the Crossett Our with We question-and-answer Nate now first Please from comes begin ahead. go Berenberg. Instructions] question [Operator session. will

Nate Crossett

guys. Good Hey. morning,

William Lenehan

Nate. morning, Good

Nate Crossett

Yes.

for last how of acquisitions. on but many I would time And question lot if was the kind pretty when on you pause moment, you strong. characterize at a signed a in how of then acquiring the it kind know now hold the acquisitions queue guys I the funnel, Is and you start So just again? of are postponed? there deal you're think will? were

William Lenehan

great place. I we're think a in Yes,

vast are majority assets with the we'd but deposits, that are the sellers. – minimal folks under have are if contract stabilizes, world We buy. strong to the A that assets willing like

world our stabilized off earlier I stock prudent what's to in sort So think to we year, on have pause holds. as But of better thing panic has a going see happen. the what and it's clarity can and the levels

into won't it take mode. us get to think much back I acquisition

Nate Crossett

the there, about hold, But know out what changed? just size I I of size with opportunities is that the this of changes terms meaningful on Yes. – been the is mean Has everything of pipeline? has there in this, like or but any all actual

William Lenehan

Not much. pre-COVID, obvious. acquirer friendly to the just was pretty acquisition would is for say what pipeline the dynamic past. similar reported I the is I than it to more in mean, state our simply we've that

Nate Crossett

of are they – then they quick too or programs on yet And one just tenants saying any Fed you? or are they are any the one, XX% not collected rents of in the Okay. accessing, those to May, big PPP of what or PPP, for do

William Lenehan

And bag. think it's – is a mixed I just It's the month. bit early earnings in of little part a call

performance reopening, collecting Act process is, People with improving in collection rent, and most updated say, what wanted have the and the the people make we had PPP of having hearing accessing to just But CARES would day. But weeks the recent across along I discussions, businesses been we're information. sort underlying sure are we're every ongoing. So Board. is is

Nate Crossett

Okay. That's helpful. you. Thank

William Lenehan

Thanks. Yes. problem Nate. No

Operator

Our ahead. from Mings with Raymond James. next go question Please Collin comes

Collin Mings

Thanks, and morning good

William Lenehan

Good morning, Collin.

Collin Mings

good Hey, morning.

But diversification term, question, remarks First you the moving actually on thing broadly your accelerate if does of kind some would moving touched pricing creates more I you on restaurant strategy? on and forward? in but what to that your Nate's back And more forward. restaurants built, just front, lead is beyond to investment maybe longer assume do prepared opportunities acquisitions. anything just inherently change wanted your you about just in dislocation terms change I expect of will go that expectations you this to

William Lenehan

strategy Colin. brands too on the very national served soon our properties, acquisition being basic has of I sort focusing will rent lot methodical, going tenants really are well I a that, well. us tell, into this, capitalized, of think focusing of on to low that it's comment

same, avoided retail those more types, quasi we've net the this. served entertainment-focused run that that's So Collin, like avoided big of lease, of and stuff remain – and also strip tenants many centers comment, lot coming off box will a well. really would and think we've the I out I the us would of property

Collin Mings

it. Got

what then little collecting to in And the just you've for taking exchange the as create opportunity strike in on comments looking you've also prepared thus what well remarks, quantify maybe some in short-term you in annual how that again more, you're long-term value? company terms some maybe of deferrals, agreed and And short-term But for rent. between far but release, touched deferrals, kind bumps a exchange of can your to that? getting explore is to Okay. think a then on and the rent getting maybe in press thought process you ways bit to outlined, as short-term in I balance expand

William Lenehan

far. Well, mostly Sure. been it's discussions thus

was basis, a something is of that just there positive Whereas We we Four with the long-term that papered if do on a shareholder months anything value long-term a to take is But tenants. can much very couple haven't idea creation standpoint. for for Corners. of

I do. think that's to we're here what

XX, a trying so options back So literally XX, what's tenants, our short-term. one that to Four real communicative bit flexible, be the operate so Taking period renewal to long-term early. we Maybe very we're mean, months just their is to to well, going trying out specific, six that do look this sense in things the obvious just inured benefit really responsive of the a we'll exercise time of short having a I to And have that on XX, and being pretty during we're of lease, of shareholders. be to restaurants, XX-year Corner our couple them with tenants. of ways help a trying come over in dislocation. of be is tenants and We say, more we this, when

Collin Mings

Got it.

well? away, Okay. by Just to if mean on at the dividend about the front able just distribution, capital talk funded cash I about there a and bit here, flow some maybe is just might that are more in helpful the to but current be the allocation how quarter? think thoughts utilize If variables the and acquisitions to thought pay to little still June the Bill, cash is there more is then, dividend is willingness a just fully multiple there recognizing that back And going while plans as a maybe play better? being and then, the keeping a Board for not and

William Lenehan

Sure.

think, haven't Collin, I really begun we even those conversations.

more you know I ago, at just Board exact how is if meeting we're we five more think much don't weeks something our weeks now saying, simply like We'll than know we three away. of much know back the time. number, right. knew reflect but I that so

mentioned. We have strong very Gerry as a liquidity position,

We have, the think in highest the I among collections industry.

position. a in We're good really

just point looks we'll June. So know about or that think the five we're The make we going I from Board will about weeks don't speculate four in trying want to now. world what how to is, the to more how is decide, decide much

in going but And company the discuss, to so something is shape. we're great

Collin Mings

value guess part, just I at asking Okay. the it's is kind same that there dividend maybe even of thought to opposed way of way, different the have the an with about if you proposition, maybe, the fair not to is if slightly for even level, think a flow to dividend align that maybe in that a is it? the you the cash Is operating as important if will shareholders, that a important short-term. part

William Lenehan

I'm Collin, are comments. not Yes. dividends But I going further to to mean, make important REITs.

Collin Mings

Fair enough. All Bill. I'll Thanks turn right. it over.

William Lenehan

Collin. Thanks

Operator

go Stevenson question with Please comes Janney. Rob next from Our ahead.

Robert Stevenson

Good morning, guys.

ballpark they of at, had was number Darden the cover a formed, your really cushion in comfortably that pre-COVID rent? were the that revenue at What where relative a basis set on operationally. to Four talked Darden when to about, sort needs be level some to leases You've past, Corners Bill

William Lenehan

the into X% rents versus of kind standard Darden X% rent sales this, to Going about industry X%. were that's a of to level

covered things Will when get were that quickly four No. they a going X.Xx, going be this think are our wall well reopen, again. immediately? they So into I point coverage to to very-very where leases the we're

recession. industry standard our But think the XXXX, during bottom leases the if have about X.Xx would of XXXX you metrics of X.Xx, been

So think won't coverage, there it that the I take no. But will very covered. be well them that for be immediately same long is of to level that it

Robert Stevenson

return you of the as eat dining? and that in-house to restaurant viewing inside were same that that also that's Is a location, in person restricted are now Okay. tenants location? going some And the takeout how assets, given doing come the operate those from

that all expectation point? additive the staffing increase in-house cannibalize in-house the the is in dining? you the once people impact, with viewing and positive are of be deal somewhat at some the of will for this words, needed as other terms dining expenses In Or to especially limited takeout, that

William Lenehan

I think the behavior how some X%. of sales seen. and moment just But answer it's casual delivery real have takeout dining the a into knows. think brands one no this that fantastic been a we've consumer to is it's important question, would in XX% going for We've dramatic change have

really So less own what standpoint experience, that innovative, alcohol like the driving obviously and and competition our from very restaurants, well states factors steak typically any so lead they've Chili's we've in-dining to are cuisine One, California technology then like Two, as allowing and seen type been Texas far sales do brands from innovation, that? – delivery. a a at doesn't all well on go.

are they've Audible. unprepared But kits. calling They selling kits, meal meal

can you home. cook at So

or going great from XX%, I a it's be X% that to really to is, and that to went in-dining. think to go what's cannibalized interesting thinking, pick clearly, and Just year two to going by get see up now,

to a and serve if multiples during in to it loyal it's what this – terrific your if were profitable, terrific certainly time. It's it's also still dining. I it's even would person way note an of XX%, a XX% most was But way to to key customer, keep quite or in-dining as it's it before. adjunct And by people recede

And example, we've so to had daily. strong they've on We for the over in it what percent. weekend. as seen Texas, gone business check We

operate that experience of time, But a think XX% and XXX% the I restaurants, types. going do combine I positive going, at ordering, who branded restaurants it's going over long-term relevant anticipate to the execution that previously. might that going full XX% to back months. some can for you think to cuisine XX% technology a can capacity have take didn't

Robert Stevenson

you May calendar Where in XX% X. collection normally? five typical of perspective you typically May on pre-COVID, that a can you I are pay, then that in month, rents, And give be right. electronic would wise that of XX% the at given you or were the is you as XX% mean XX%, or All where days little release said that normally sort

William Lenehan

XXX that think sort has of have do basis. to May the thing, tenants that a that had April of have so. wanting COVID update that Yes. we've basis those if weeks on and We're as discussions, of But I sent rent in. points ago number certainly Similar and couple how think provided a north a we rent folks increased, we withheld typical discussion, that or about had have you

normal much a is under it's environment, it. certainly So showing But higher. position improvement we're I would how

Robert Stevenson

cash and bad All right. XXXX revenue for you collectability accruing XX% to anybody for And to threshold follow move then for you've me. yet? them last one debt now what And the Gerry below recognition expense? has basis had are

Gerald Morgan

the Yes. end quarter. at the of The collectability done is test

back that before this remember happen. you March, of really the of if at So most end was

So that collectability a end we took we reserve of minor had amount March. the of at

bigger of think for number whole I at the the will end and ourselves be the for second our quarter. industry

of the the just think minor second is and at answer amount I quarter. we'll So see end the the a end of the have quarter to at first

Robert Stevenson

Okay.

Gerald Morgan

Yes, so XX,XXX terms was for immaterial clearly in the reserve of first quarter, point, an sub to Bill's it amount.

Rob. Sorry

Robert Stevenson

Thanks it. Okay. Appreciate guys.

Operator

question comes go Please next with McGrath Our ahead. Evercore. from Sheila

Sheila McGrath

Yes, good morning.

side previously. kind pretty obviously when you I mall think think the side very challenged. of pause opportunities wondered owners if out you to things, mall of there or on much other are of you is more that, tapped do the in acquisitions On get this just opportunity that you

William Lenehan

is question. a It terrific

drawing of to happen have years think opportunity. would in what sort forward, continue I in buy of five I that are I next XXXX. is in think say What I there'll sort selective I likely important remember. might and be we're one very to COVID-XX and of also properties the an out much mall remain it But really happened very selective, is key more be seeing, malls that to to off-mall. think opportunity. think that's three The we're be will would adjacent, will We

Sheila McGrath

And the those? any Okay. leases well the detail acquisitions more or provide below on just quarter, color? term? lease these Were then It could was you additional in ground on or remaining shorter rent any market

William Lenehan

Yes, basis ground of around The XX were let me XX of million. here. notes of just number was, average the get leases, an $X.X my

bit the that's owners, they of lease to. reflected buying not So mall quite metric a short properties term and and manage a below that replacement cost, from is

point a you I'll rents this low provides extensions. in out, opportunity, COVID-XX have if pandemic, get But really to go just and interesting

somewhat five, difficult where real lease. when shareholders. to can will still And have a reason been their But I five-year years on six our really so and benefit trade. in have We attention tenants now we the past, to things get exercise they extension, have it's to the specific a long-term, in a think conversation,

Sheila McGrath

then open? percentage great aren't Great, portfolio Texas, where of states are or what in in last Florida currently and is are your largest idea restaurants what open that Any states reverse one states is that either and one, open. two your percent –

Gerald Morgan

Right. that restricted that properties I the our vast Sheila would open. It's of vast, think Well majority, they say state. majority open I are in more are vast the just

open a flattish through their So they revenues drive through most business last their was are and of are because for to QSR, year generally anyway.

And – then for them Darden, seating. limited just most open, there's are of with

track state don't it's, We it by state. So way. that

or great contemplate as leases two building's the whether our to top Our mentioned, reopening. you not. states don't have it's But operating

Sheila McGrath

Okay. Thank you.

William Lenehan

Sheila. Thanks,

Operator

comes with Massocca question from John Ladenburg. go Please ahead. next Our

John Massocca

Good morning.

William Lenehan

Good morning.

John Massocca

mean relief you which in often the be mentioned rent further your form that like nature, are? some they was in along at COVID deferrals. – it's those helpful? the discussions broader of risk of with more maybe than rent just any there earnings the far conversations Fed some in April we're kind short-term provide color color you requests parsing portfolio, a cursory would received the kind how was on So update. language you most statement, I them in Are entire basically your release, more of maybe Can of

William Lenehan

last landlords. mean, the John us I for language tenants. otherwise, to what the as would same had almost Yes, understand expectation I exactly it's talking we in our be We're as we don't that's do what our report.

there. gotcha is there So

John Massocca

rent kind Okay. I obligation of ask are just maybe reach in are, May? like along I out given there the and just that those of of to conversations situation the want deferral, – paying your far wasn't current rent make how tenants obviously for sure some potential about people mean

William Lenehan

having say no in out responsibly what's a Yes, would discussions. those I lot trying mean But any other release. different REIT finalized the discussions and of sort of material a haven't amendments. We're is figure There that's having that amendment I we're from to mutually we any had beneficial managed.

John Massocca

in are that of you guess, of rent, tenants necessarily some maybe discussions, Understood. swaps, currently are open open just and assets be kind even to? but who And kind them, then general people of to not in guys are would deferring something those I of for rent and all

William Lenehan

We're definitely having those conversations.

John Massocca

Okay. much. me. very That's you it Thank from guys

William Lenehan

Thanks, John.

Operator

with go JPMorgan. Our Please next from question comes ahead. Anthony Paolone

Anthony Paolone

Okay, thank you.

a So on but don't Bill, Darden's XX% situation. a I kind if maybe – viewed guess as may last up a of that so that revenues a of it's question, I just much gotcha, perception maybe more know your following be it's of binary

is just I kind comments of that the there I So take and it's things that, lot what thinking of table. mean this lot – kind a basically is guess more on than about? fluid mean of that a I other your

William Lenehan

have in and what provide long-term Darden the other on in them lots can Yes, be of pay of rent, I that say, for of some beneficial we but Four would capability short they relief would about, billion all hand and $X.X we're so roughly term. do I tenants to cash them to mean Corners, has our talking

But But tenant, nature, more those short not advanced short-term All term because do revolve deferment, in as relatively others. abatement. phenomenon. around some on view conversations conversations conversations, we the this being than are a the depend the are all

is this, do. will shareholders, our what of value point which create to obviously be is we out able interesting where job be to coming things some we'll to, there really our think that I And for

Anthony Paolone

kind in months drag of in next ultimately there that plays or what And of the Darden do you you few want get the to just to out, out? could given think you a do that as think again, the size mix is and just will how this sense something

William Lenehan

Yes. very of I nothing different month than it be our happen may that, does very And expectation certainly will would feel nothing environment different a may with happen say the feel frankly, as now, would a that tenants. Darden, my with month ago. from today many

Anthony Paolone

respect do with various Okay. operators, the deals like lot the it you And outparcel with – just what had, mall sounds you want then to other of or you a that question have to like to give it and control your have to any there. financial of over I like have or the requirements out close Does push you risk things just ability have you sort is there performance there? any you

William Lenehan

estate Well, isn't we America there Four mall understands, have minimal. a very deposit now, I everyone pause, deposits, risk. but Corners just But real pretty if on And most are transactions and right especially significant they're counterparties. in think not at in

with them. like discussions holds. just understanding that the are what having future have want great we're They better a So we'd assets to We to own.

Anthony Paolone

Thank great. you. Okay,

Operator

ahead. [Michael go from Cureton]. comes with Please question next Our Clare Instructions] [Operator

Unidentified Analyst

curious, thanks Hey, to are tenants? just Most the able of you call. take from for been have mine answered, buildings any back

William Lenehan

don't so. mean so. maybe I one. is think don't I there I think

Unidentified Analyst

Thanks.

Operator

question go with Please from [indiscernible]. Our next comes ahead.

Unidentified Analyst

Bill. you. Thank Good morning,

William Lenehan

morning. Good

Unidentified Analyst

I had a question. quick

So that terms fast collections all not sure I'm versus are dining? so at for all terms that of ended said in you in up number could April, you collections break casual in you versus XX% and QSR of you categories May, where of but casual

Gerald Morgan

XX%. the were Well, at Sure. month, we prior

exact but because been a has the hasn't universally percentage of say have me, companies. I say versus dining, in not QSR do QSR, doesn't that's as We who don't that skew business tenants their front haven't higher owned I true. been impacted say, would paid, nearly numbers bigger would I fast as private QSR casual but much, it it much skews I really have casual companies would equity as So

Unidentified Analyst

you. All okay. thank right, Interesting,

Gerald Morgan

Thank you.

Operator

This remarks. concludes our to like for question-and-answer conference over session. turn Bill closing back Lenehan any I to would the

William Lenehan

Great. it. I you, everyone. Thank appreciate

around Hope if are questions. all you We have well. is

Operator

concluded. is for you Thank attending conference now today's The presentation.

may You disconnect. now

Gerald Morgan	Chief Financial Officer
William Lenehan	President and Chief Executive Officer
Nate Crossett	Berenberg Capital Markets
Collin Mings	Raymond James & Associates, Inc.
Robert Stevenson	Janney Montgomery Scott
Sheila McGrath	Evercore ISI
John Massocca	Ladenburg Thalmann
Anthony Paolone	JPMorgan Securities LLC

Four Corners Property Trust (FCPT) 9 May 202020 Q1 Earnings call transcript