FCPT - Earnings call 3 2023 | Four Corners Property Trust, Inc.

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Operator

Hello, and welcome to the FCPT Third Quarter 2023 Financial Results Conference Call. My name is Lauren, and I will be coordinating your call today. [Operator Instructions] I will now hand you over to your host, Gerry, to begin. Gerry, please go ahead.

Gerald Morgan

Thank you, Lauren.

During the course of this call, we will make forward-looking statements, which are based on our beliefs and assumptions. affected control and or be are factors will our beyond ability results by unknown known that Actual to predict.

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

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

presented in on AFFO, In company's this such financial addition, reconciliations I'll and found to as to that, can report. With measures be over Bill. the non-GAAP supplemental FFO it call turn

William Lenehan

to Good is to our in position. We reported morning. last financial up Thank and on you which with for AFFO remarks, then quarter QX year introductory and third market, quarter joining Josh going our $X.XX us Gerry I'm acquisition and comment per discuss share, further discuss $X.XX the results results. capital Patrick line of our will third from make and will expectations.

performing XX.X% with up $XXX end. FCPT the capital existing record XXXX, from already has year exceptionally quarter also year Our year-to-date. record was That acquisition a deployed well which had at full for is rent the million year. and occupancy with XX% portfolio a XX.X% quarter acquisition is collections of

trend, small rise to in X% Garden same-store sales share is early XXXX. X.X% sales benefits of Olive and restaurant sales sector see although positive for maturity. Year-over-year lock in Baird and with XXXX Research, same-store transactions the our platforms at gains were was benefited a from to remained the in X.X% growth third the of off Chili's average of capacity. whole and dining that saw to X%. from continue for according standout XXXX where our the a we a an LongHorn, We casual above yield Garden These X.X% in the declines June raised and reporting strong quarter respectively. funded range, as investments in our people a per $XX late hedge and debt with sector seeing offering price to equity

margins highlighted As last improving and also other are eases. quarter, as restaurant inflation commodity

rent This reports in the for of amongst and X.Xx was within strongest majority figure. industry that this of our net coverage Our the a third coverage remains portfolio the is underwriting lease our EBITDA to quarter reflection standards. significant the

of to detail. debt We $XXX million Turning properties start discuss July more $XXX with choose and to private attractive quarter the million did source. maturities now to fourth buyers We Gerry of XXXX near-term availability during this sell our on notes which if capital sources, issue to and not the in will very -- and we no equity in revolver liquidity quarter. access issued if

in [indiscernible] capital. this of us we capital to In increase let environment, earnings inception Since In allocators look intrinsic we this ahead, teams' remain capital And to company's mental market it metrics and challenging accretively. in discoverages our As we XXXX, environment of capital incentives disciplined that grow say models size without allocators deploy value. me capital. the just have established from we remain structured of making the is current deploying environment, our an or again. disciplined that

or not and have acquisition is we never acquisition to compensation Our tied volumes given guidance. earnings

accretive so. With turn activity operate successfully organization expect to investment believe We and be prepared impacting it the ratchet to further discuss to and will and is I and the when it nimble or to over that, environment do Patrick today's environment. we can morale. employee that down Finally, in we up to are overhead and negatively low investment benefit absolute without from costs up modulate relative activities

Patrick Wernig

had across properties. XX million We $XXX.X on a busy Bill. Thanks, quarter closing

record a for at at XX% a have have retail XX% XXXX we us. million medical our acquired been volume, at roughly and properties Year-to-date, XX service between at For which for of split is cap restaurant volume $XXX auto high year-to-date, XX%. rate, acquisitions X.X%

ourselves We remainder expect land to our on the year. Remind the simple. that do or market is business plays every come mix to relatively focus We remain properties balanced often the not pipeline based years. the to that long-term on of covered XX trophy XX over

the interesting portfolios similar investors who XXXX where investment but in reduced fewer points private a operators more patient, opportunities cap spread. several institutional view on moved pressures net seeing over does we're to largely some restaurant holding can much reaction next rate passing are are higher effects on seen opportunities namely the also been years. We've a tire and engage rates Both the along and pass basis and developers at tightening that deal does. The come market, accommodating based to priced are environment. are wait Our in that prior compressed willing quarters, applied industry XXX-plus closing our yield on we a a has remains or on with recent as scoring ago. rates. the past FCPT terms. more building to year and other have it to portfolio decisions for story really There pencil, be a than interest not enough current schedules lease sellers cap great months a are model Pricing consistently not line and improve buyers lending would is competition, and tighter If store nonprice for equity the of on the deal one sellers

is down some acquisition opportunity up is for The even rates over our recently and cap same, the term investors, re-leasing. than I to but interest the fairway will deals been Corners turn cap more pricing years in ] range. Josh, credit the you of answer [ it middle the we've meaningful what doing rate the expect been tenant asked We and discuss Four right previously available to at attractive to now. interesting for over movement. We've stronger dispositions most of absence short move the in by rate

Joshua C. Zhang

time Lobster were discipline works for sold an brand several properties our maintaining Thank These underperforming since versus October to these that a with to you, proactive it further spread. they Patrick. and the in and small positive exit early price, portfolio had at management underperforming when attractive of happened at at have in we were stores buyers We the for lined September closing months, Red are to similar them in that diversification and redeploy lines. gain. dispositions was a portfolio, relative right we average to our just the up others housekeeping proceeds representing particularly ample million, $XX We opportunities X sell

quarter, vacant. often better continue XX the to reached have best The released able site, only at term remain market, expiration. below XX end almost were and a XX Since use been leases where third Of are X positive we've existing candidate the well had of or of that leasing. cases tenants, these, to XX% to the were Turning X new tenant but inception value. a many higher positive and create on over spread by through and spread to meaningful certain upgrade. a rents were and we with tenants the rent and/or in is another X%, Of there's rent existing the leases credit renewed capture

XXXX. Gerry, for X% of less to We and I'll in it the portfolio the XXXX have you. rent back than the no turn expirations of maturing stream remainder lease over in is

Gerald Morgan

Josh. Thanks,

base after a basis, and income quarter, in the straight-line last of other rental of excluding third rent and XX.X% our million $XXX remains annual cash place our the at months. cash adjustments. on rental quarter revenues and as basis, $X.X million rate a grew year-over-year in including annual And escalator the X.X%. noncash benefit for the of weighted X-year end on third of XX reported $XX.X $XXX.X in rental quarter rent run leases our of average For is million increases current acquisitions rental cash We cash million,

third the of of was X.X% our changes collected the balance base no rental reserves, sheet compensation, or G&A there stock-based Cash for are material We million, expense, collectability in XX.X% excluding quarter. cash any $X quarter and representing rent income nor credit impairments. for

as share. loans expectations were the $XX on by AFFO internal were but of for impacted be take higher expense reminder, of approach G&A associated the investment expect per year. that XXX% our $XX the And costs are conservative with balance. to continue Results term will very cash to We expense and we and G&A of million the with unhedged a approximately generated program. We in million line interest revolver $X.XX a on

we the slight the rapid end, at total, experienced $XXX redeploy that $X We available $XX and of million deal million costs treasury we million unrestricted of $XXX nonreimbursed July and quarter $XX debt a the our quarter, rates. With capacity. million in fourth undrawn funded EBITDA charge have uptick third -- sheet proceeds the revolver abandoned XXXX cash respect balance acquisitions increase also held quarter balance net X.Xx. note extending maintaining our coverage the a conservative layering million maturities. funded the in X.Xx fixed begins. In of million hand, net debt overall healthy ratio $XXX sheet a and to leverage, that of on in our borrowings. us as to gives In available to on of the higher and to expenses adjusted adjusted was quarter offering private third from as the On $XXX revolver is we deal quarter capacity at We and million pipeline focused of remain in our property cash, with

we'll before maturity due XXXX million investor of our November $XX obligation to November next note $XXX debt Lauren due in is is debt a with in for that, debt net private XXXX. back Our June term -- only otherwise, over Q&A. And million XXXX. And it turn of

Operator

comes Scott. Stevenson Janney [Operator Instructions] from question Our first from Montgomery Rob

Robert Stevenson

differential, own in to restaurant you assets non-restaurant, add seeing for Any in talk you'd terms cap you're that the about portfolio want medical what any, and if assets? auto to rates real there? the between gap the of and Can

William Lenehan

availability driven Not not and estate generally. lease but really. think, real just all affects and really being by rates all I net credit It's, that of

Robert Stevenson

Okay.

of So or restaurant at you another, if to incremental portfolio, one are capital top nonrestaurant return, days? on of how it same today thinking are the the do these scarcity about whether terms of or diversify assets those the given the not asset in you

William Lenehan

Yes. assets, is process for Rob, and a really we've place It's now scoring years. about which the that had in model

really is and tends this there XX ], net in of into and for the really be an more ] the different prevalent thinking we too model at double-net look so more to not properties, get double we're builds building preferences auto one to weeds XX one's And in for and and or types service. our this buildings [ but [ leases

of ensure anything, little that stay to we've if from a a bit brand-new got away preference maybe roof. that So or

Robert Stevenson

capital any need quarter third quarter the be between you and from anything take of into going is Gerry, either of to need that then, higher rates fourth or that Okay. and thinking dispositions, And to FFO acquisitions the quarter abnormal anything raising consideration? we terms that we in about beyond do, out fourth to third sticking impact

Gerald Morgan

No, not really.

quarter that generally, nothing or a big on you the in a We what costs G&A the whatever with $XX revolver have of like as is. horizon is normal other think variable our is the quarter. fairly and larger "from to fourth that portion quarter loans million And of that interest one the would item that's the the proxy term we unhedged I property things expenses be typically, see rate and perspective". highlighted which is fourth balance respect Otherwise, don't on the that. debt, is

Operator

Paolone question JPMorgan. from comes form Anthony next is Our

Anthony Paolone

be about thinking Maybe compared your you're to Because cost I'd with I are like start where cap to expected to or rates spreads this your how sense? capital what get know terms weighted to up, go you to at capital? average need looking if of costs just But to a have like or do would trying something spread make gone in target of just understand you're up. just

William Lenehan

versus specifically. of don't comparing that number about Yes. then capital, we our our in portfolio And specific calculating the we're debt today dislocated. think our is markets of our buying. cost are is which group know the quality We're so equity, we're looking acquisition frankly, We the what really bullpen cost of -- of how have that they because

zone, So for think taken green but is, view our we and I zone. don't get this yellow reasons we model that people the have red into zone, of most through mental sort competitive we've specifics of

zone. little in Our days. up now stock gone last is of yellow the bottom at right the of a the bit couple right It's

business it I cautious went pretty we've had, preparing read is conference model and transcripts our a this would first what call, for In process we're mental where handful calls. inception. since was and to similar of So And XXXX, from say this again, is that's thought then. about remarkably back our I our

Anthony Paolone

-- Got of capital longer-term should thinking to that cap a and it. like how push at it, and your on the equity just we I mean -- you like to cost kind multiple, your most say and looking your about you when just front? you're of rate, just inverse so quite understand important be lot number the what's a to or

William Lenehan

Yes. has the the multiple We with even at if some look inverse triangulate associated money different of ATM. methods. raise it some you We cost adjusted typically for raising money. costs use Unfortunately, to minor the

that So be good probably way Go a cap with rate check it. would look at to would even be better. that

Anthony Paolone

all? a in need thinking capacity to appetite now, any wait sheet the see balance up at Or of terms really to above high the cap you Okay. Xs about And then push and in rates right where bit that?

William Lenehan

was than X%. a I different X% revolver Yes, say or your when you're borrowing would analysis

Now borrowing revolver expensive. is on your

some ball past. ball, rates artificially for And we had trading sort have that says game we'd accretive a REITs if buy decline, your you revolver going borrowing in of living, in buildings had unless wouldn't be Is to future. are buildings that that crystal the that plan so the on crystal isn't the be dramatically frankly, And buying to we derivatives.

think the cost look to is way I equity. at it So to

Gerald Morgan

And periodically just would it consistent, add, want above to below keep been reasons. good leverage we And Tony, that Xx I we can't I Xx. have think up our go that mean for doesn't pretty that

to there's is, this think go I'm highlighting what good now, leverage. is I not Bill Xx above right reasons sure

Anthony Paolone

can I difference restaurant Got There's at on Or it. and follow if here, questions. some restaurants. between the just still GLP-X about find about up like this they're just discussion there? other taking of mentioned think last you you one in lot that it's how point? tail one And then to get just And Like risk no the Okay. worth do at product of around Rob's and types. real all a if do same, drugs returns if the you

William Lenehan

the I'm certainly an expert been but doing on not we've implications. on homework Yes. GLP-X the drugs our

shift. in don't that current on have minor Our have is I some to behavioral that's major buying own a sort these concern. it's tenants our adapt of view very some we tenants' allows to businesses. we're decades. for conservatism We're some long-term if our think may why leases. the is minor effect changes our underwriting with It But to buildings business behavioral I there lead their think And might semi-regulated drugs going buildings model.

what's want be we based jerk So to look not long upon in knee term and reactions of trending. sort our

not So we're dismissive.

a probably what for side monitoring. the it's I certainly we on advise think actually probably moment, We adjusting will brought And down we're We've put at with really in great the lower this effects on issue. versus be sort lower injectable, think a experts a us future, in don't question. it's of cost, concern. consumable But current major this. even to head our

Operator

from Jim from comes Kammert question Evercore. next Our

James Kammert

of deck would I general obviously, curious, I Corners per rents. this care, and improvement But out paying much And rule, of higher was week. just investments noodling want rooms, in types how foot versus as put on to just a understand have that that tenant? assets how you urgent the your I Four was emergency medical split square for possible. if those retail

William Lenehan

premise that basic people real thumb participants don't. what tenant the that out reiterate the their get we rule these which construction you is costs. mixed I that, able But said, of sort are their bag. that's reject on, that costs be of sale of hang that which hat some leaseback follow is and the a I would some a would we entirety the it's to say Yes, market should

expensive buildings. say to rents. is higher It's being improve. record back would demonstrated these are construction something a the we closely. that are this -- So improved They watch us rent-sensitive. to we of have And I come track very as costs

that on we're factors focused rent-related it's XX% in and particularly medical. Our XX% to model something is in

it's we number larger from the a are ground of board, where So all cost of of you're I precise question those the it's construction distinction double between back seen that I to of that with construction we've before, were I not you a what What some And facilities specialized majority any have the across kinds on really away rate retail be. the underwriting. cap in new, no where in and costs forms the and stayed move have buildings is scenario where new of but are But Rob's buying record, because say the to use least reuse at track our distinction forms things brand from. And a everything would would nature. banking bearing lease, to other brands look about sometimes some retail, not restaurant maybe substantial that transactions something experiential premium would to other don't of none circle at new buildings, leases all. most kinds we've maybe draw net the of brands, the we is where medical highly focus you're a in to of reuse any concepts, we that at. and

James Kammert

Okay. that pretty a just and lease? Red back done largely remaining can on under Lobsters, assets circling are remind cleanup there me, sort you you of good. are Very on much culling, the master And

William Lenehan

very They well are covered. that and the ones are aren't

sell. We remains there. couple item. think mostly don't we to very in But lease. Lobster There's doing and is Red market, major couple quality master out a still a is And what have a a properties in of it's what again, had selling success We more I high the better. a but wanted

Operator

Fargo. Connor comes question Siversky next Wells from Our from

Connor Siversky

retail medical the that I presentation. presentation. detail on in one another just the Maybe appreciate

use find scoring lease kind nature. would higher acquisition the of system system more And where is that be you esoteric then I'm more little if think which assets, sits assets. in net the capital that might yields criteria with this today? other play, the could screen you to same described against potentially and for you of on you these wondering cost scoring scoring you So in as apply a restaurant maybe it favorably

William Lenehan

question. Great Yes.

So I different cetera, medical very between think per is XX% et net, property the has foot the of overlap types. similar lease the growth, for lease rent we are The would credit, term restaurants with a about between say square are that Those types. our triple rent cetera. model property scoring truly et how similar north locations

really focused way. thinking world on As the higher far we're yield, not finding about as that

We pencils, properties that that a cost are trying and acceptable. Pat and the to we'll and high-quality is yield find our capital at of that north are -- not here's find Josh that go convince ourselves today, of risk things

time. So we very buy, quality way, happy sure we is the live making because that what a different going with it with a which really long world and at for look we're focusing on we're to

Connor Siversky

And today any modeling was cost mix? it. Got the it should on of as or that it in I of funding Understood. funding earlier, we but at context acquisition, how be know the touched at that margin mix for capital looking the again, sits

William Lenehan

I for equity now, think Well, primary. would be the

We have sitting Gerry XXXX books. our proceeds exchange mentioned, as on

alluded the price the way. stuff would stock coming It's that There to to target-rich need made those considered Pricing inception. is is yet that our used. just environment most what not But Patrick since this to, I there is do. good appropriate have. in obviously high-quality had with We've we say, acquisitions very pipeline. we've acquisition be that our as So and

to would XXX you to assets inception, stock and But since acquisitions. to And if the price practice. business buying we us don't acquired extent need aggressively advantage torque for today, at So we buildings we of be attractive we rebound, buildings bought see you see our the that very practice. price, stock our take will

Operator

comes question Alex Our Baird. [ Hogan next ] from from

Unknown Analyst

is one Corners in first what's if nothing The external XXXX for baked front. does on the earnings growth Four the

William Lenehan

earnings prior. is annualization earnings in in of is give the guidance, in We our business growth I the factor primary year would assets don't the say that purchased driving but what

bumps rent X.X% We're on X.X% have We conservative pretty bumps. -- rent G&A.

of most little We rate fixed. have is but of floating debt, it a bit

throughout the year. the is the driver So of primary timing acquisitions

day So to We it's annualization. are try sets incentives, easy that don't we as stand. from what we've because year, to front-end loaded. it given every This property follow sold real we occurs, would like. is that be perverse tended where progress almost away looks say the time can back-end announcing I primary you but our give bought And in calculate of guidance. disclosure what also We to regime or loaded. But the stay pretty

Unknown Analyst

Okay. Helpful.

Second can you but parts near of to the you where spread term? the buy assets look and or X between sell over And contracting? sell widening is more guys either one, kind will

William Lenehan

portfolio Well, in is very existing I would investment-grade, little high-quality financeable bit largely if our say it's That's what's probably is world a anything widening today, properties. financeable. because the

properties states. in And XX so -- and we have

buyer So to lives. meet she XXXX we get the he where or exchange

don't some We always assets been of ours. large past. do in extent our higher of the portion seen as have It's of want at purchased never to properties responding. for. with a what to it's pricing are approached, the thoughtful you've sold today, some to think we've been I in Lobsters, able we But do a if business. Red we that huge the we the focus And culling than that

Unknown Analyst

me. And the for last one

the much the better. Lobster tenants watch year? any list? on there mentioned it You changed doing since has Red other beginning And of Are is the

William Lenehan

No.

Operator

[Operator questions. Instructions] have we further And no

Bill back remarks. hand for closing I'll So now over to

William Lenehan

Great. Thank Lauren. questions. robust the you, for Thanks

interested work thank our research being into Specifically, of for you went medical good that. lot in report. A

out. questions, continue reach Thank please love follow-up We'd have you you. dialogue. to the If

Operator

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

disconnect may your now You lines.

Four Corners Property Trust (FCPT) 2 Nov 232023 Q3 Earnings call transcript