FCPT - Earnings call transcript Q1 2022 | Four Corners Property Trust, Inc.

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Operator

00:05 Hello and a warm welcome to the FCPT First Quarter 2022 Financial Results Conference Call. My name is Lydia, and I'll be your operator today. [Operator Instructions] 00:21 It's my pleasure to now hand you over to our host, Gerry Morgan. Please go ahead.

Gerry Morgan

0:29 Thank you, Lydia.

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

unknown to results including pandemic and that actual will our affected COVID-XX known Our control. beyond be duration of uncertainty remaining the and related are scope, severity by factors

our a can potential future incorrect. are performance April found a For Our risks, XX:XX All presented will refer detailed some the which of XXXX. not XX, on is more assumptions of SEC and at fcpt.com. guarantee this of today description be current please to be filings, prove information to as call

report In with Bill. as addition, AFFO in the can I'll measures presented to supplemental our financial found turn to FFO available XX:XX website. on also this that, call on And and non-GAAP call over be such company's reconciliation the

Bill Lenehan

morning. you, review and discuss and discuss results. And will first the quarter Jerry. XX.X% Thank continue us remarks. then, summary, to XX:XX at the joining financial remained quarter Wernig we XX.X%. XX:XX at going for introductory to industry-leading Good occupancy our have In you Gerry acquisitions our details make around collections Patrick am the Thank I pipeline. for results. to some will

other pre-pandemic and tenants levels. restaurant retail performance XXXX topline Our are often above experiencing

Baird’s Quick XXX% restaurants the XX. recent to weekly weekly survey is April continue and of most operators represents portfolio XX:XX casual at best-in-class quality per share, and according are Restaurant We $X.XX restaurant we operated also with increase acquired first an Moving recent XX attractive remained aligned onto properties tenants' quarter performance. X% approximately year-over-year. quarter, to We have characterized tenants, reported XXX% and high our strong approximately our results operating dining of most confident in levels low reported XXXX at rents in rent first which by AFFO service quarter. the highly levels. where at operators

properties XX:XX leases ownership in seven initial where a combined XX X.X%. of XX vacate. are and tenant acquired tenant we FCPTs land $XX acquisitions FCPT the would to credit XX for The strong if the price mentioned, of As corporate ground of an million operators represent to yield quarter cash and the are the owns revert were leases, with building the profiles. and

new brands The XX:XX XXX in first include Turning us quarter's the sheet. of investments balance bring a one the to portfolio. total to brand

have priced March, raised coupon. private of support We the last $XXX program. thankfully closing our million over This but at to $XXX was December a year-to-date in funded that of includes million X.X% capital investment note

We also acquisitions. agreed XXXX to issue rating BBB equity announced settle an $XX In the of over March, fund which stable a with flat via forward outlook. FCPTs expect to agreements, XX:XX to Fitch remainder million upgrade of of sale debt we to

acquisitions and this we Patrick bond Gerry to turn loans As term as on to lead existing the and will XX:XX our I'll interest note additional a well further recent describe, and comments investment it facility some future will private reduction on as that, for over in expect With environment. pricing. overall expense credit

Patrick Wernig

makes to us more far discussing pipeline. the rates efforts sense about our and to cap But XXXX. national in the the less in we to our trends normalize. focus to quality yields. brands when a XXXX observed advertising spoken compelling on properties (ph) so environment XX:XX rates for the to sectors mix where frequently XXXX There service government with franchisee quick available bond until rates operators I'd and cap returns in still and pricing are service accretive into are QX. us. We approach as acquisition start few point like markets It in by Thanks, those quick our past persisted Bill. have cap cap for rate Those well,

We a quickly FCPTs that assets would the our makes up rates comprise of [indiscernible]. XX% significant a and QSR X% to in see of portion note portfolio, course that casual of I valuing range. are cap just XX:XX fast market private to the glad low X%

retail due to Fortunately, the sectors, deals platform our sub dining, shift able casual and within we to auto retail were our pursues, acquisitions wider service. set of to team now closing medical

outparcel year, for one medical and with new For we've We auto the pipeline tenants well-located a on XX% our service estate. handful investments to quarter, high quality stable casual property service out a Looking real was at other oriented built closed for properties rest of retail. of dining of XX%. accounted the our properties retail leased and XX:XX of the and

yields with and be mix similar medical consistent a retail expect from other for a acquisitions. contributor auto remain to services pipeline to QX what shift likely sector as restaurants prior for service will we Our the XXXX. saw bit year, The in full greater we

view has our As said, rising rates pricing, sellers asset with be levels. been assets. previously That consistent mentioned, and XXXX should a net factor year-to-date the we've interest as observed how lease price

a While of and relief in cap movement that early current still modest to for recent we to weeks, signs lease waiting see we net price are have rates. started

We compression. will discipline FCPT that real past any years (ph) the dynamic rate and see cap improves. in has price able further over been to waited of time Regardless several maintain

The XX:XX opportunities, we As result, pipeline, moving it such some we earlier X.X% mentioned simultaneously attractive the cushion. was call, to pricing prudent build remain we new average, improve advantage the a at the would the and this our will out from that where further can we we take our On so Bob compelling. cap We sale the As carefully. opportunities have particularly disposition of rate last volumes we're of portfolio. brand closed a especially underperform month. our sales portfolio at store and spreads continue property selecting Evans

us and final our reminder our quality. historically, alternative other properties this slightly of demand volume should provides been an XX:XX We We our the of at strong quarter QX pricing One properties or capital rates. here, higher several close the portfolio similar of have that has cap lowest source recognize for quarter validation year.

million closed was and financial on we ended turning XX:XX of XXXX our portfolio $XX volumes. of Now discussion QX and in to XX% XX% $XX It year and on million XXXX, for Gerry our being up results. full respectively. example, and acquisitions For

Gerry Morgan

quarter we the XX:XX X.X%. Thanks, stock-based rent credit non-cash income a first I'll sheet This of reported excluding first rent -- the expect any is how of annual end for balance remains the and couple X.X million highlight basis, quarter annual and be expense XX:XX $XXX.X material million in quarter, standard nor $XX.X XX.X% comments we quarter our last continue million cash to or year. after times cash I will at G&A rate for place for be Pat. compares base who of are. quarter, average fourth start the of base financial with the of Cash tenant and FCPT collections to XX% low collectability on adjustments. leases the our generated G&A times and excluding a in cash to to rental for escalator current results. We tenant rental there the first line We coverage in was the comments to XX:XX $X.X X.X rents of straight estimated reserves and report the quarter other rent make. cash call, For continues the On the million for first XX-year cash were no quarter run the $X.X million changes as the comp our impairments. around weighted in consistent with $XX

lowers at reserves the XX:XX recent EBITDA save which will pricing by and equity of the Fitch of sets BBB with X.X acquisition and forward either million Bill comprised year based later activity times. needed price pandemic, times. million leverage least on volume As X debt equity our grade pleased highlighted that $XX to achieve grid. $XX through of during sold by due to to first of mentioned, the financial performance conservative on the from similar expect the position commitment upgrade and target quarter, Net flat. we as forward X.X to $XX.XX ended to greater minus in up Fitch as Moody's X.X weighted liquidity, with the of quality term than of availability full to is a Bill per pro share our our pursuant are cash credit loans funds from this in agreement, to respect expense and XX:XX announcement investment that portfolio, in were quarter of of the A $XXX rating based was We Finally, have the us under our sale we times on in year raise ATM fund capitalization strength and forma XX:XX equity and BBB agreements from upgrade including their initial policies. million $X last to our rating to rating to quarter forward approximately for the a in S&P, switching these interest mentioned, or if our the times approximately we we leverage facility to draw second per our average our at million the to maintain We the well acquisitions program. range was quarter, revolver.

for I'll issuances. from and spending We note also private to on with to And the Lydia turn benefit back Lydia? Q&A. that, revolver lower over it future expect on XX:XX Thanks.

Operator

X:XX [Operator question comes Instructions] Thank from you. Our Crossett today Berenberg. Nate first of

is line Your open.

Nate Crossett

guys. XX:XX Good Hey. morning,

Gerry Morgan

Good morning. XX:XX

Nate Crossett

today. hood recent rating the question for And raised, at I credit debt ones? year other could a kind about another eminent you I is Maybe guess talked other of there one XX:XX their what's the question -- of from agencies XX know you Maybe guys or a where process morning. credit the Gerry, rating.

Gerry Morgan

on but are won't treasury varies rates it greatly, spreads XX:XX Yeah. I up. comment are pricing up, current because

step don't well. second us probably, clearly into the we agencies with right, came you're in activity, ongoing it's comment S&P. exactly contact been where So than be to know We inception rating we a or right next from both We've get and XXXX since on today. it's would for were Moody's in but either higher them

Nate Crossett

The That's it Okay. I sound was years. on mentioned QX the the and two last of helpful. how pipeline you late kind in XX:XX guess alike, comment in

that? you maybe reading see saying a next So we in quarters that are flow, few signaling is as that deal should what the ramp on by kind of guys I'm

Bill Lenehan

think, opportunities feel say, that more where multiple is reasonable happened I a what's in pretty hangs year the like has especially equity most us years, a this second but I the event we would there volatile the in environment interesting Nate, historically. than with Obviously, some chance that right that of been our it XX:XX is half is provides now. do

Nate Crossett

was of mentioned mean the I -- on on I rates, XX:XX cap depending see you're [Multiple was but comment can it some or maybe to that cap rates there there relation what different kind think like, and way Speakers] Okay. rates is what buying, And maybe that quantify moving? it's do to that I any seeing think moving of you're evidence obviously, of you kind we

Bill Lenehan

a had we on where to debt levered weeks up dropped of with weeks, XX:XX deals couple would I gone we last the the literally Nate, and buyer levered would were they that as out, hoop few buyers we that just that and last the properties hanging opportunities describe seller the buyer repriced couple as had rebound. -- and I say around have original in the a the been able on of pick found more

Nate Crossett

helpful. That's you. Okay. Thank XX:XX

Bill Lenehan

XX:XX Yeah. Thanks.

Operator

JPMorgan. Paolone Please Our XX:XX go ahead. comes question of next Anthony from

Anthony Paolone

Can up follow because like sounds XX:XX see of was ask the things just the of bit like this. to comment market, to Thank here. going what those prevalent color how And just kind just you're cap are it around you to I'll well more of last your how part start own pipeline be could the more, adjust a happen to the maybe saying? maybe and needs you. are deal on on they as I in buyers, it comment, sensitive levered little rates types

Bill Lenehan

XX:XX Yes.

needs in spreads the basis you basis, look need So from base equity holding on out rates rates change our today, at published concur depending seeing the is, XX to IRR on anything what rates. are to And equity and run assume constant math get the Gerry XX-year cap would the I buyer the becomes if for spreads some to it will you that constant. and Anthony, to hold widely point say out LTV math reference base bank's rate points you not debt, We're what But that. mentioned and XX. I as you reference of leverage like at November too. go the plus return credit

return holder or lower needs rate a equity change. just, level asset the of must the to either much So you're accept pricing

to And so that. see we've begun

in close say, see has to Yeah, over of see portfolios and which going to them been can't great would competitive I I imminently think there would it we've begun post-COVID/ pricing, larger was more mentioned, have see Speakers]. very Pat be conservatism the they that years great folks to since where it's as [Multiple it be couple the been last to

Anthony Paolone

right. seeing lot being How looking And a of these ago, restaurant what their you I of mode. for about a days you new businesses expansion an All just that and then are sites the couple the had expanding like feel you operators mentioned side? XX:XX remember feel still just and and [indiscernible] from Do case? that's do on they quarters

Bill Lenehan

that to the costs is enthusiasm, it mitigants for still case, XX:XX say Anthony. I costs and our substantially but higher were two the grow important still they looking would and to with I are hard that construction the is to expensive are say find. Yeah, ago years I that those labor, would two brands than that for construction pressures pressures and caveats labor think

Anthony Paolone

then a the Can lower that. about question how The got quarter. the walt positive me, just thought (ph) of a there about traditional deals. Did Okay. you deals on for $XX million last you sevens Is feel of mark-to-market? just the side XX:XX on seemed types in little like you for those. compensated your in of you talk And

Just there. any thoughts

Bill Lenehan

Yeah. XX:XX

in it's and other you should world. I be feel you we've the have performing score would comfortable buying taken term acquisition to been in exactly done so thousands less I all since scoring so beginning quarters that factor at how is term for that and of of waiting, term property a we've are years, terms factor, lease cetera, how factors strong. in we the cetera. say a one and other way very our and where from rent, to would order methodology has that consistent how are, it is model the us confident get an of a but we've the with is other that need consistent And where where look are So through our strongly say that's like and et strength of brand, factors tens there properties good I important that our incredibly think we level properties et the first the less, Term important factors

Anthony Paolone

Okay. Thank you. Great. XX:XX

Bill Lenehan

XX:XX Thank you.

Operator

Our XX:XX Baird. question your next Thank [Operator Instructions] the in Wes comes queue from you. Golladay Wes, of line open. is

Wes Golladay

Can guys. put money the morning, dispositions. to to quantify to want Good the of assets Hey. is I the, XX:XX to go rate the back be This low that who cap of and size the it, buyers? XXXX work? non-core bucket the you call needs

Bill Lenehan

for but XX:XX we of Yeah. acquisition disposition We give guidance, dispositions couple don't had haven't the years. or last

exactly be that we the buyers notable. of don't know, about, be So it's purchase under we the Evans, to fact from it low will is, I what is would have focus say accretion talking the interesting intentions we're overall, that cap that but think $X And it Bob we important, on means what was which are, we able But price price. would our rate significant purchase million. the rents, since properties low course,

So that property my to brand. presumption redevelop buyer that into is is going another

course, of happening ground said, remodeling to what's because construction. a being that's buying up property much that is and Now than expensive in construction speaks costs less

Wes Golladay

for little looking widened structure favorable forward, the cost bit you for there is you at funding do guess of more of the cost changes. debt XX:XX in-store and Got uncertainty as much it. deals, and a economic And moment. then, more equities and near-term the any for have I capital now

little bit in a mean forward? you equity going warrant would So

Bill Lenehan

doing assumption. that's rates the last pricing this think before is six reasonable a months for actually what Gerry a I And XX:XX And we've to moved. over to. kudos Lydia? deal bond

Operator

you. Thank XX:XX

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

John Massocca

morning. Good XX:XX

Bill Lenehan

XX:XX Good morning.

John Massocca

XX-year acquisitions, something lease for factor the holding XX:XX of kind spread leaseback, versus on at cap term what's these more sale lease traditional of So lease lease, of some of rate duration? term other if of and you of constant, broad kind your kind up maybe other assets question kind sub on was a look all the following

Bill Lenehan

point, XX:XX being out number often five that Darden lease in properties would point the of basis market very years, with years also XX IG the years, primary being and Sure. I XX what a XX would I'll investment years has XX of XX range. in XX sold certainly say that to that non-IG XX but grade, XXXX I years. was terms over traditional the it's point it, ago But note very XX often basis has an changed recently last of obviously, exchange

just you're terms as XX-year as you XX many seeing not to historically. lease So had

term be have was mortgages say feel in being makes on like that what properties property the today. shorter would well individual compensated, to we're that may traditional I sensible to it's So it's available the this we I market And helpful properties lease manageable that But then -- risk not that vacancies, say, don't would put we property our to finance no level. X,XXX are do. acquisitions also virtually a harder the for They're harder very is with portfolio. and

John Massocca

time thinking people interest of that comfortable it just about loan of cost balance thinking then out kind weigh portion your the onto have of kind And debt the rate is today. kind or that are the you're are you that sheet, it of of some of floating can something term size? on Okay. because XX:XX given how uncertainty, than how of you about the portion we they kind with the of moving swapped idle Is

Gerry Morgan

the on we’re that done that supplemental next in in way we through million hedged year you'll see remind debt footnote, and XXX the years after some John, a us year, the hedged this our we've to XXX communicate extend all hedging Yeah. XXXX. out XX:XX just in term we’re of

rate taken they that during off rate to bank loans we've period So in though place, the debt interest the versus the time since term renew some loans. those on hedges. process a even different with put variable It's risk table obviously,

at done like is (ph) a our to we've rental average since Remember a feel are good fixed we So on mitigating of job inc fixed be or income predominantly risk. our year. policies X.X%

Bill Lenehan

I notch fully since higher XX:XX essentially level guess hedged. been Yeah. inception, one we've

Gerry Morgan

Yeah. XX:XX

Bill Lenehan

mean that XX:XX I your answered question.

John Massocca

I of Speakers] to would near-term -- mean for are [Multiple short is going to something I got XX% it so here, it, time term, comfortable to period there is Speakers] XX:XX that address you a that XX% of is [Multiple any unhedged mean potentially with that? look go just or you is

Bill Lenehan

XX:XX question off time virtually actually this as hedged going entirely forward. are we we Why goes think we entirely don't we expect as into because be hedged to and by, enter line swaps almost take I new would

John Massocca

Okay. XX:XX

Operator

The XX:XX in Sheila Sheila. go question the Evercore. queue next Please of from comes McGrath ahead,

Sheila McGrath

to wanted Good that you or higher Yes. the at because this I to buyers. interest evidence just reduced the that rates for obtain will are have to loan XX:XX you ask you you that do are think your values give opportunity Do lenders more on on morning. them see highly there comments are -- able levered more all? from they

Bill Lenehan

than is, looking slightly, say we the would quarter that XX:XX were, last better to they I and we're at what use more push number concerned do. and at the LTV I were leverage ability of Sheila is say building of we than down firms environment that private end the a lease last equity wouldn't typically was perhaps year, groups competitive that as very we far I

course, to as a makes guess up, acquisitions, own competitive that concerned but would rates I is, -- bit their create I that leverage assets make And returns it they valuable so, harder. was struggle little existing we a gone will levered the make more what have driven And pencil. I say of dynamic, would would

to either they will go need And capital deploying in less effective so be cap or rates up.

Sheila McGrath

you. Thank Okay. XX:XX

Bill Lenehan

XX:XX Thanks, Sheila.

Operator

this no stage. We queue in Instructions] [Operator questions XX:XX have the at further

over team management will the So remarks. hand the back to call for I closing

Bill Lenehan

us know. for XX:XX questions, joining To the today. let please thanks folks us Thanks. further everyone Thank you, extent, and the have Lydia on call

Operator

XX:XX you today's for call. This Thank joining. concludes

lines. You may now disconnect your

Four Corners Property Trust (FCPT) 27 Apr 222022 Q1 Earnings call transcript