FCPT - Earnings call 4 2023 | Four Corners Property Trust, Inc.

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Operator

Hello, and welcome to the FCPT Fourth Quarter 2023 Financial Results Conference Call. My name is Elliott, and I'll be coordinating your call today. [Operator Instructions] I'd now like to hand over to Gerry Morgan. The floor is yours. Please go ahead.

Gerald Morgan

Elliott. you, Thank

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

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

SEC can be found a description potential of which For risks, please our filings, website. more detailed refer to our on

XX, XXXX. All information February as on of call this current of is the presented today,

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

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

William Lenehan

Thank fourth Josh acquisition the and comment you Thank quarter results further Gerry will discuss market, with the will position. capital results. financial you, I introductory our Good our and discussion to will morning. and Patrick of for on joining Gerry. conclude make us remarks.

fourth X.X% is $X.XX quarter per We last of which QX from share, AFFO reported or $X.XX up year.

portfolio Our for occupancy end. is rent at quarter and collections with the quarter XX.X% XX.X% existing exceptionally well performing

acquisition acquisition record from XXXX, year our was year $XXX previous capital deployed million a in up XXXX. full had FCPT which a also XX% year. of That record was with

in We our in addition services historical focus. medical are to core establishing benefiting and from verticals restaurants, auto retail, other retail area of

share to capital. and second rates down utilizing about we half per we debt in of gains higher raised where equity the early These hedge interest lock $XX acquisition in an with debt equity price primarily late to XXXX to sources and reflect transactions yield of a impact with from maturity. slowed funded After were funds, 'XX of at the our X.X% of benefited the year average on in offering and June activity these

approximately activities costs, down $XXX,XXX was I increased property impact level purposely in by deal broken highlight expenses which XXXX level. acquisition would that an of slowing of elevated versus the XXXX also an

While no to the it XXXX right they if were accretive. these longer AFFO, decision impacted was terminate transactions

a the positive to in Year-over-year the quarter Baird restaurant the sector as range for in whole according research. X% remained fourth

respectively same-store Although Darden sales prior X% inflation for for as And labor ended saw standout and trend, is and most margins XX. well growth and Garden as their a sector of the saw declines recent from quarters November in period. ending reporting X year dining the X.X% off All seeing commodity for Chili's XX. the was December brands same-store levels that quarter expand strong LongHorn, casual sales small X.X% Olive easing. rise

Our EBITDAR our rent the strongest that majority for to of quarter coverage significant net portfolio fourth coverage lease the figure. This remains the this X.Xx the reports industry. amongst was within in

we quarter choose liquidity. million attractive of facility, an of with of XXXX issued $XX.X that buyers of properties sources. average of capital credit to minimal in revolving $XXX the to first maturities Turning if quarter We debt $XX.XX. to price sell We available at XXXX fourth on near-term equity source our capacity started and access to very highly million the

look we something ahead, this restate we I to said challenging quarter. As I accretively. is capital. making want market In to deploy of capital environment, it disciplined capital the last current allocators environment remain

incentives share team value. company's per increasing established size without grow just we have in our overall inception mental of to earnings to and capital discourage XXXX, the deploying models or Since structured metrics our intrinsic also

on goal acquisition commission, and work tied earnings acquisition as investment their does is team volumes not or to given we have not Our never guidance.

building the an our can the be negatively relative investment employee said, organization All and and pipeline and nimble absolute minimizing is low up impacting morale. accretive from laser-focused or while down that benefit we risk. activities and on modulate Finally, overhead without team

Cap are when Pat that up successfully that do so. to will rates on. elaborate is it in investment operate we We we we and believe to believe ratchet opportunities expect interesting prepared activity to accretive have found today's widened, have environment and

it that, Patrick to further With environment. investment the over I'll turn to discuss

Patrick Wernig

Thanks, Bill.

mentioned, rose XXXX. rates the our in Bill cap with was did while And As market cost improve, interest capital rates. of shift movement commensurate not in the

$XX.X despite volume down X for quarter. busiest properties year. moderated total, we of such, closed the million time historically As few last our being the we the acquisitions in our QX on In months across

building team. volume capacity. reflects We on our year's in prior our platform and spent years outpacing growing our And continued progress

reflected quality XXXX in buyers not given properties selective. was lease of it's net the in the to active years, the also while allowed which the directly number of very versus be prior strong these FCPT market, numbers, in Additionally, particularly reduced

note for to cap term year. long-term a large also rate transaction properties XX compared this longer that initial overall average years was year previous years year the years despite Our investment-grade than Darden last higher our the to year's was for XX bps X as lease the our We'd acquisitions tenant. X acquired like at with

for priced was months out year our and than to early And X worth XXXX's of X above full acquisitions year in were It's pointing prior to Most of figure. X% that the closed rate. QX cap and today, QX that. volume this we're cap a rates higher pricing QX

been roughly XX% our at have year, auto XX%. split at and the between For XX%, restaurant at retail service acquisitions medical

market XXXX opportunities the in monitor and have attractive to more expect to more pricing and to favorable XXXX. compared continue We

that we between converging, bid-ask while However, sellers, the note buyers spread and exists. still

know: to estate underwriting team and macro backdrop accretive. is We've still The we though, we believe is criteria real continues uncertain. it transact to service-based be focused purchasing retail on to where what operating As our meets mentioned creditworthy our and high-quality equipped businesses. tenants entirely earlier accretive that leased

it over discuss you Josh, re-leasing dispositions, our portfolio. turn to and I'll to

Joshua Zhang

for brand million, a We Patrick. versus in in October small Red one representing was average Thanks, $X.X sold that year gain. last underperforming property Lobster QX

sold course to of average X rent today. exposure year the we weighted Lobster properties last Over than past our Red X.X% weakest less our a base months, have and X.X% rate at down annual of of of the cap from have XX reduced X.X%

Currently, rest not better master the in are most are rent are line or of lease the reporting than our Red our portfolio. the master leased. And of in ones Lobsters coverage that

We be are be attractive has the that fortunate continue that if investments even our sold immense rates us into recycled at stores cap value our our reminds weakest performing that able markets even selective dispositions. unlocked portfolio be capital to challenging, to through and can accretively. It are

leases confidence set that QX reinforces in their portfolio. our levels at for levels. our rents This had in the rent Turning X with attractive renewing above We are to that expired leasing. all current tenants X

X.X% X.X% only XXXX today Our portfolio stands and XX.X% maturing in remains of well rent positioned XXXX, base annual occupancy and respectively. at with and

And with that, you. Gerry, I'll turn back over it to

Gerald Morgan

Josh. Thanks,

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

of we collected changes base credit As And to or Bill sheet in the were mentioned, our there or rent any no quarter. balance XX.X% fourth collectibility material reserves impairments.

income cash compensation expense to was rental for of the million, Cash X.X% $X.X QX excluding and -- XXXX. compared for representing G&A quarter, down stock-based X%

cash expect we million will purposes, XXXX. for G&A modeling $XX approximately your For be

As investment a conservative associated a reminder, to we XXX% G&A costs and take of our with approach internal team. expense

million the to had of $XXX sheet, $XX of of XXXX we end, at proceeds With of quarter and million cash, liquidity, redeploy unrestricted of undrawn available balance capacity. respect comprised revolver $X million million $XXX to

to With our quarter debt healthy net ratio to was overall adjusted the was leverage, a our charge X.Xx. fourth EBITDA and in coverage fixed X.Xx, respect

note near-term is of $XXX in debt million XXXX. debt XXXX. maturity is term million a Otherwise, only bank next obligation November $XX in June debt Our our of private of due due

or expect expiration cost prior stacking. maturity and maturity. this and capital this While to profile strong banks strategy, attractive conversations that based the our lender an our on options many we in of multiple we debt us small credit about comment recent expect layering we have market its our at open And the committed bank with well on specific remains amongst maturity June. in using timing group, conservatism won't to to when in thinking to address We available we remain

to with that, Elliott for investor I'll back it Q&A. over turn And

Operator

[Operator from Anthony Instructions] Paolone First comes today with JPMorgan. question

Anthony Paolone

it's whether things maybe you versus length you about how anything. estate Bill, talk, or could basis, is you deal yield if sizing just real that a wondering a the doing think good today, the what not up like you're what's higher lease or like like Just just

William Lenehan

I'd I having at invert excluding of more the attributes. net selection question. bias, lease look

being always being lease pricing tenants, like It's of not longer in auto focused still credit X the now we're case and and a we're having it's in -- having on very triple-net So where truly north getting leases industries focused term, service. even medical cap. on higher

been selective. always we've quite So

us more the allows Pat mentioned, even As more be so. environment recent to

rents while it. priced every is once very or still to at look are being able very see very unproven would high quickly aggressively properties the That's have or small, tenants. way it really ignore have So that a we in that I

construction our pipeline one investment-grade, example. seeing retail medical new triple-net, You're in be more would

Anthony Paolone

there far you I X, how right like think, upwards do the Xs. talked now? your we are think Xs, And couple you you is the think think should should -- where to in mentioned you've Do about a year, movement Or so that costs were that's be versus this I or that? deals and of capital some you enough you like think think good done like X, more

William Lenehan

I market our the think Obviously, we're Fed seeing works in a a the to current daily that couple bucks lot more that cost cap would sent the more has obvious stuff our direction. in to stock certainly be be capital. good kind do had rates, of the Xs. say the commentary a But And recent of if down up seems on our low It and price. basis. seemingly we trend would with on I

Operator

Wells We now Siversky Connor with turn to Fargo.

Connor Siversky

broker consider FCPT Is of I'm mentioned volumes. pricing the seller? factors to deal Or level that in curious any could extrapolate elevated costs opening a broken deals? little the you just dislocations there those acquisition to you between that point just other the remarks, impacted maybe on and that if due In bit. are

William Lenehan

just deposits. detail, maybe that walking we're one -- would get from I not to I level it's more mean Yes. away

in look LOI, a environmental or when you've It's even doing on that costs, some building. legal experts working haven't you're perhaps that. the been We with an to analyze gave issue to you structural third-party have

And XXX historically, we're of road our the find down times that north when and of buy are something it. buying you building buildings from that's a get with dissuades part then the there If business. going you to you year,

a sure to this decisions bad in that just don't deal property environment, But avoid wed and get the costs. make we we're making to long-term

was I notable years thought it worth it notable was 'XX, past. the in So wasn't really in mentioning.

Connor Siversky

there. the have eyes out appreciate then of context work the criteria anything macro now? of list. on quickly on the changing Is a mean the getting the maybe put that list? some are Or Okay. something considering in you there the assets. right you choppy That's in in those good to of I portfolio color. environment, watch Red of any the context else Lobster watch I I appreciate just And on

William Lenehan

No.

could more like been you on [indiscernible] happy to we've handful think million be higher I by could tenuous and we we it. get do years. certainly previous novel net this novel yields, alleys, what segue But comments washes, that's with that X no. And add we do I what my the mean lease didn't doing lease, credit those is an to is in than very things car last a Anthony's $X are bowling question, now Maybe net that, much handle doing. to and definitive of right the that

better of the consistent peers. errs there important macro, when a factors your conservative being your than choppy having that So in on portfolio is you one have of model hangs

Operator

[Operator Instructions] turn Alex ] Baird. Fagan to [ with Now

Unknown Analyst

auto is, an and as we looking investment total one pipeline higher XXXX? likely of is that even the will medical How part First investment like? percentage assets of see service what in

William Lenehan

we've be done 'XX. remain still portfolio you X, you'll because volumes what a will with year know before full predict to what's chunky for Hard X in months relatively consistent that deals I to imagine the exactly going happen sourcing the would absent percentages more in past.

radar, red I look a pipeline we ether. quite we're yellow, the term, orange going happen, green, being negotiating they're that red orange, say in that near to the We intend but there yellow to being not on know don't certainly we the they're pipeline out in The deals LOIs, way. would close Green being is whether decent. in color-coded that at close. the

I say bit now lot a if better got could orange we of and little in that cost would we've pipeline a things had right of of think would actually pretty have the we with it. markets the you It's bit lean little into, however with sensible funding make current unlevered it them at and a equity ROAs or debt harder. to associated IRRs, just look want capital capital

could that we a as really sources of much what it's of So as is for. capital capital function deploy it

Unknown Analyst

for any deals, the that are portfolio any that Four at? it. big ones currently actually, Got looking interesting potential Corners there on are And is

William Lenehan

looking there's dozen We're sizes. whether the outparcel you've And history, know, or don't last working Chili's summer we're Cheddar's transactions, been, on of something. our deals original or it's seen large at Pat's deal deals, always a I various throughout always half portfolio

where as -- we sellers and remarks, on buyers the a this is they're transact. is this basis points XX, are in where market to XX willing But mentioned apart

we're pulls we market have the seller more so their from seeing where assets than in the past. the And deals

Operator

remarks. Lenehan Q&A. now our concludes back This for I'll to hand Bill final

William Lenehan

can Thank Thank please to the days. were get out. to the to accomplish you, have that. we everyone. call our Elliott. about back hesitate to mark reach if questions, conclude Thank early as don't Well, have we in Hopefully, And you, in XX-minute able you pleased you.

Operator

Ladies gentlemen, We'd has your call like you participation. today's and concluded. now to thank for

lines. disconnect now may your You

Four Corners Property Trust (FCPT) 15 Feb 242023 Q4 Earnings call transcript