FCPT - Earnings call transcript Q1 2024 | Four Corners Property Trust, Inc.

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Operator

Welcome to the FCPT First Quarter 2024 Financial Results Conference Call. My name is Carla, and I will be coordinating your call today. [Operator Instructions]. I would now like to hand you over to Patrick Wernig. Patrick, please go ahead.

Patrick Wernig

Carla. you, Thank

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

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

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

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

William Lenehan

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

rent portfolio XX.X% very continues perform the occupancy for quarter well to and with end. existing at quarter Our XX.X% collections

to the for significant reports X.Xx impacted According industry. of in the quarter was the was strongest quarter that remains rent the this the which our EBITDAR portfolio amongst This X% lease in net to coverage Baird flat bad majority Research, remained figure. in the first within year-over-year Our coverage sales for January, the first whole positive range restaurant sector weather. as in a results after by

XX the ending quarter EBITDA Overall, margin pricing prior LongHorn cap X.X% points largest basis X.X% a to Garden Tuesday. Darden improved dining for on Brinker saw restaurant-level sales and improved for commodity small a a Similar sales XX.X%, and basis acquired XX.X%. for announced for EBITDA off Chili's X.X% the the FCPT grew same-store $XX.X for We second to levels rate. same-store reported note declines casual our X points period. margin tenant, million to restaurant-level productivity XX. quarter that last in Olive strong positive their and Darden, February improvements. at year in reflecting increase decline in also results quarter, XX properties X.X%

the medical we to benefit the retail addition properties core focus. were in of of establishing restaurants, All verticals in and our continue sector, from to area historical

capital fourth of this environment, acquisition quarter the capital. to in activity reflect we rates to comparison debt capital markets backdrop and disciplined The to it down seller capital market accept quarter acquisition to Similar reticence of to made higher in accretively. current slowed allocators of XXXX, the remain and current deploy cap In the equity cost pricing. challenging of we has

we've models incentives structure increasing metrics per in discourage to value. capital stated team or quarters the just grow intrinsic the as deploying mental our established share As of and have well, past, size we several company's to without also earnings

utilizing the early offering loans, capital to quarter March, $XX sources. of million average first $X.X $XX.XX. at an we We million in due offering million our achieve June to the to maturity feature $XX note was of accordion borrowing that of credit a costs. down facility of issued In in equity price Turning XXXX. favorable was pay the of issued used debt term private of

fund The maturity used remaining to in $XX acquisitions. balance our debt million next was is November not with Our until scheduled sheet shape great XXXX.

including Red of or on do that detail reports we get options restructuring not alternatives. public selling Union is for aware we Lobster, exploring into individual brand the While are normally Thai tenants, the

average brand stores brand and Before going coverage. above rents with rent below it own into to we a that of detail, EBITDAR note to is average important group

Now specifics. on to

level weaker management. with start performance and sales beginning show few profitability. a of to we store noticed portfolio stores monitoring XXXX, In I'll through First, our

gain. the average rent The of X.X% ground some case low in Blended both XX lease rent lease properties, average and X.X% rent months, our rent from average sold a leases, stores remaining equates have we own of with cap of $XXX,XXX rate property. next this ground per positive performing and today. together, master the of dropped Today, are which at XX an and are of base with an of outparcels XX a the master our the $XXX,XXX. of coverage. average Over and X to an annual rent we leases highest This of good rent In rent $XXX,XXX. lower we exposure X.X% to

to in important Lobsters in remember selective the Second, were that acquiring place. Red highly we it's first

passed we was the Lobster low. a for of set was underlying very years, where the lot rent high performance store locations Red Over on the

nearly rent the to Red median ballpark reviewed restaurants brand compare for the XX in of We comp X our our found Lobster brand locations. rent. XX recently comps We that have below remaining median set and XXX to the were XX rents of this

avoids restructuring, it come that, positioned we are that process. Lobster the Red hope if we While does manage feel well we to to

retirement been the we last years and X.X from as planned Patrick's CFO. will be carefully More promotions FCPT This tomorrow. over announced Gerry's and in completed importantly, March, transaction has

grow ago. part thank I in years XXXX, a employees great day would FCPT here been of was financial has what steward make like has helping in service Gerry as and X from many X is for contributions a to been today. spin-off instrumental sincerely it in his and Gerry us Gerry helping origin

Patrick excited a Four process to of our be understanding our in Gerry existed. him interim of before to future. Patrick role Corners hires around deep first and was the the role. our step even the creation the the He all team, at working capital brings the will While up Corners was also and JPMorgan markets, best of culture. in Four one wish advisory we our CFO on have in support I'm acquisition very

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

Patrick Wernig

Bill. Thanks,

X contribution and culture. last investments, we like for I'd remiss if about years and be this thank also over on also I work to as to through moment and to just transition of process. into his company comments your over get mentorship XX guidance the Before specifics didn't take him months our echo the I'd I significant personally Gerry

Now we've sellers be where our pipeline. acquisitions missing capital lease seeing there pricing rate transacting seller is fewer we expectations added to lot more lease outlook. turning are a Corners. seen adjust that there are shortage was net out a that We're opportunities pricing that them. cap seeking another reflect way, interesting makes pursuing the tenants net increases for elevated, than stable rates interest markets. of may Said to slowly while out at pricing no What in of there's and environment to as see And Four sense comfortable capital continue also buyers remain

net spread we worth sector And back and the that July. through while closings the pointing exists. out conversion also slow overall. still being while can have bid-ask from April between to be So for sellers acquisition the transaction had lumpy. record a It's That's strong we of year resulted in buyers in XXXX, down lease volume the year start a on

our sector stands XX% followed X%. automotive non-restaurant with and restaurants is of X,XXX now rents annual of portfolio XX%. now leases XX% at as our at medical Non-restaurant X%, by largest Darden base at portfolio retail Overall, at our our with at

to receive not properties capital strategy. but active new management we part as a strategic continue alternative any equity attractive reverse inquiries to issuing of and QX, we properties front, did On sell debt well portfolio our as on and the frequently dispositions consider potential disposition as our in

in attract continues and portfolio are attractive. buyers capital fortunate markets capital accretive for dispositions to needed that or our when We can less utilize are we recycling

I'll it Josh, over turn to you.

Joshua Zhang

Patrick. Thanks,

leasing. of XX had XX.X%. We had X to renewal spreads leases expire with in but Turning all renewing. XX positive tenants Those leases QX

we positive right the renew, not that rents and stands are process maturing This for with the our locations. of early and in slightly strong X did underwriting XXXX, set These ticked and positioned tenants quarter, only well XXXX for reinforce attractive base expect are leads confidence and on We respectively. at XX.X% results today partnering remains already Portfolio occupancy there. the have the we with re-leasing several at our in the levels up we results but rent at tenants in X.X% at but are X.X% annual that portfolio. the sites that

understand is unable brand on continuing Red be can prepared statements we to process. the Bill's on we a to Lobster, bankruptcy avoid are complicated So if it, and But uncertain respond.

quality. be to the Any strong against offer reduction what real properties rent given weighed we made for be would estate backfill to expect the demand

adjacent lot Fortunately, one least are stores, sites well. Lobsters and these Steakhouse knows tenants of LongHorn of our located to Olive preferred already which a at means Red Garden

back over of over, turn to to it turning past to the FCPT. Gerry, mentorship I'd also years for thank service it I'll Before Gerry X you. and like

Gerald Morgan

Josh. Thanks,

cash $XXX.X material for base basis, cash $X.X cash the stock-based million of Cash and collectibility For of noncash of XX.X% the XX $XXX the rental million quarter of million, rent leases reported quarter, quarter of representing rental rent or compares changes quarter. a and revenues and a balance X.X% million is remains there our annual the the sheet increases rental rental months. first and of last G&A compensation including base were credit $XX.X XX.X% benefit the $X.X rent at weighted our to income other X.X% for quarter, for after average place impairments. annual reserves on prior of X-year straight the no million our collected grew cash X.X%. current nor quarter and We adjustments and We in income line any rate end year in escalator cash excluding in excluding was acquisitions to over run as basis, first on year-over-year expense,

our net X.Xx. fixed EBITDAR was Overall the very healthy to first quarter adjusted ratio in coverage leverage, X.Xx, our debt charge was a and

X.XX% know $XX have and liquidity $XXX our the debt issued rate layer million team through take can. and of maintain care into maturity and in will revolver March, to of of as the of comprised as and full with we of of We a continue at of November offering, debt of XX-month cash rate we reference $XX quarter. XXXX. of The exercisable sheet a fix committed, remain XXXX maturity. beginning million the interest $XX our maturities We entered We mentioned, of conjunction us March to capacity loan term Patrick only we conservative in matures and before million balance extend million I swaps million $XXX with by and the did the in extension that

X.XX% the rate determined Including the current of margin ratings, investment-grade is by X.XX%. credit our effective interest

our are We bank of on the loan. support partners appreciative existing from very the

others at here over Four of colleagues Four last Corners too to want Board. FCPT and Q&A. last earnings I going my their a great X-plus amazing As the forward. this an and and and all mentioned, I, for hands over back years quarter is is is for special call collaboration Corners. with at my the support our is in it which that, Board, And to know investor it place, turn I'll Carla thank

Operator

Instructions]. [Operator

first Our Paolone from JPMorgan. comes question from Anthony

Anthony Paolone

Gerry, first And thanks, the all, the for help of over years. all

cost everything. just yields. So on first good of is luck capital My versus with question

And you at X. think Like now, so capital could about just thereabouts to to blended of you into where yields think high a seems been Or for more? maybe Xs transactions feel cost do if it be you like your enough? we deals and like you've that's like do right lean you need think doing

William Lenehan

X.X It's to close. rates. handle been able things a darn X great with to after of the question, consistently We've acquire X X, X.X cap Anthony. years It's

We've accretive to a slightly rates, close. higher price, market It's begins a but XX-year really work. slightly quite a with is it's lower cap stock it little So slightly the higher super been not where or cautious.

credit on So we're being We're playing for term. our We're the acquisitions. lowering quality our long patient. not

Anthony Paolone

so a sizable on costs turn robustly do see capital pipeline bit and the could a you now line your right up better, you And more faster bit do that or like does you if a that has... pipeline it

William Lenehan

could be feel little be right. were That's -- we again like different. accretively, in numbers informs confidence the that we a the that numbers and bit capital could a our exactly the if deploy there's up market that to that to patient And we buildup slightly better, lined the extent

Operator

next comes Baird. Wes Our question from from Golladay

Wesley Golladay

strong and a demand Gerry the I Red about want the to in Patrick. just go Lobster unit to Congrats, back scenario. for worst-case the comment

having on maybe you in maybe your you how where Just just it, of views would situation, if put us the TIs, to give quickly to look mark-to-market if and you the a in see turn you can unit, release can this if had you would, choice? some you

William Lenehan

leases I We will Honestly, Wes, percentage there's The are those buildings properties. I sold the master likelihood with We weaker getting of get is rent high lease ground They're back. healthy. them these think well properties. that covered. a from $XX don't mean rents. a we X be foot

think good your So answer that's I these directly to that in locations. likely. don't question, are But

they're LongHorn everyone, to Red often Pat Olive just Lobster As brand a remind or very Darden mentioned, ago. a next was a an to decade Garden,

unlikely. So it's I think

if likely we'd we get think make back I ground money. properties, the lease

I if highly not unlikely entire they think the concerned. master but it's reject I'm they did, lease,

As as couple of have tenant. on buildings bargain isn't the It of far would $X that the context TIs, in be part of TIs company a billion new you'd whole terribly a with the meaningful.

background, distressed So that handle I Josh it's my Jim's a in properties it we it as a comes restructurings, well negotiation. And equipped But of it to investing that of about are unlikely. in the would say as mentioned, would be just don't and experience think have But again, we're we now, I background think if to it. part hard think pretty lot uncertain. I

Wesley Golladay

the we Is are And Is ] just the on medical third-party pricing? just volume because then realistic there? And volume are Okay. more when closed the opportunity more it the bigger just look you [ seeing far what as you transactions? of for Is deals goes? rather that savings you've as pipeline, at seeing retail? more -- deal

William Lenehan

numbers sort looking just at automotive low of restaurants. and small looking at medical retail. it happened. that's We're service. Yes, looking We're how at We're

as are like Equity seems it's pipeline I larger public on XX maturities. think to the face on acquisition months people I deals And capital, now being difficult to markets. just that environment. of debt is note are X, portfolios only discussed starting thing a higher the the been more cost be would there with private acquisition partners seeing

more pager we're hit that's So seeing ] that, yet. of but [ nothing

Wesley Golladay

me. just Okay. And last then one for

properties. do in do private And at? escalators what get think versus value redeploy of have capital are what higher annual front, buy what lot market. selling? On component you're the the of an then you that spread you the think Do also the new would you assets you demand the spread another you of -- can in type that the disposition be be creation will for on a high initial and

William Lenehan

It won't the last first. answer be lower, question be lower. won't It to

extensions. We've tenant-friendly We seen some escalations. higher have some seen more on discipline lease

be we are but daily, mid-Xs Very certainly dispositions, often, portfolio, get incoming like to needs as to compelling. we existing incentivized inquiries our something far As almost the weekly. to those in there be sell -- so

very and XXXX They're buyers, -- to financing. so the And often I would also mentioned of a exchange. that they part get need

and And so of work do. bunch are the a closing to rates it's XX-XX that means

So an option. it's

you compelling very leased tenants mathematically yet. But say, us are As buildings for that of been desirable. hundreds have investment-grade to it hasn't just we

Operator

R.J. from And James. our from comes Raymond next question Milligan

R.J. Milligan

years. have retirement. all And of your queue, past your questions congratulations X answered, just the role. help the for wanted really I my Actually, the been I relationship new and to thank stay on the Patrick, but more in you, Gerry, on importantly, over congratulate appreciate

Gerald Morgan

R.J. you, Thank

Patrick Wernig

R.J. Thanks

Operator

Instructions]. [Operator

comes Kammert Our Evercore. Jim next from from question

James Kammert

a cadence your $XXX from larger given to on comment scale one-offs. market cost largely that you've you -- portfolio would of are portfolios just refinance a of that you et there, building than which are transaction the time. precluding think pipeline require sense is the a curious bigger to from if right, there million to about one-offs wider mean versus capital their pay over out perspective, how yourself pretty time makes But what think -- optionality there of how a some that of a spread steady Bill, I'm Four cetera. about evolve there, does off, out would Corner's bigger magnified maybe the have they been the pressures your or you at see potentially you because

William Lenehan

is for a What crux The Or argument's we've when million is seen that's Yes. a one the It's a pool less tenant? because sake million to analogous pool it $XXX so. that one though really it of well-diversified million $XXX question. is, tenant you're existing at of buy it diversified market concentration of great the buying that, a is of our is portfolio? you trades tenant in discount $XXX

we're efficient. look very would a at as that I buying So well-diversified pool

So today's a would $XXX a leaseback cap of wouldn't rate, however of tenant pricing get I demand premium. premium say one sale in million discounted want to or market you it.

bank REITs just And where capital fickle thing I they'd higher higher. we've level feeling that generally, that are debt my to capital loop more market is to think -- bit the thing price a hesitancy in stock other the and in the capital noticed there's people are, market like are acquisitions a most more markets the other noticed a is require is where raises, we've that if their dear, see because the of we little little close

years capital advantage. a transaction a requires So that ago, an X raise, X, that was

reason a to causes to wanted pause. that capital today You the go markets

James Kammert

Very color. it's just just in what those, value from perspective, let's shadow looking is Just pipeline dollar but a them, say, fluid X And of on your ballpark, loop, larger ago? or you're months know to X call your kind I situation, today, the close good curious that at. portfolios versus what

William Lenehan

transactions we're clear, very on, or even want large nothing just is are the I to more imminent These kicking probable. be but tires quite that

past. looked an bank in probable. Just them since or of It's just that a a than a at to things more we're that be seem some lease -- transactions inception, that we've selling imminent ago, net been that looking was had Brinker, is the year handful done but we've they we observation we've at, with have, we've prevalent looking large nothing with

Operator

Bill remarks. question, final over will final I for to our was that And back hand

William Lenehan

anyone you. reach questions, another you, Great. If out. please everyone, has call. any efficient and Thank conference Thank

Operator

for today's call. you concludes joining. And Thank this

your You may disconnect now lines.

Four Corners Property Trust (FCPT) 2 May 242024 Q1 Earnings call transcript