FCPT - Earnings call transcript Q3 2024 | Four Corners Property Trust, Inc.

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Operator

Good morning all and thank you for joining us for the FCPT Third Quarter 2024 Financial Results Conference Call. My name is Carly, and I'll be coordinating your call today. [Operator Instructions] I'd now like to hand over to your host, Patrick Wernig, to begin. The floor is yours.

Patrick Wernig

Thank you, Carly.

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

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

please be For fcpt.com. found a risks, more SEC our of description to detailed at filings, potential some refer which can

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

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

the With that, I over will turn call Bill. to

William Lenehan

morning. our make to discuss introductory financial position. results Good and on our will will joining Josh market, I further and comment capital results. you Thank remarks. the for discuss third will us investment quarter Patrick

go call saw we in to out on the year: the resources, over make to at we team pencil on our theme time didn't which lot when accretion on the to cost past industry of rise growth. its like of a and confident start XXXX, net a market we've shifted We of be paused spectrum the we'd spent I'd ready external lease risk were to diluting patient. math quality. cost the portfolio and to cut back, We growth. internally focused We When the investment discipline. today's were declined capital return

both capital debt drop. of This equity saw on the cost past our quarter and side

million full the And the today, leverage over in we million equity. And back we've have with and years. We turned $XXX so X on as much it as turned off. in revolver $XXX capacity we vigor raised nearly lowest machine forwards, the in had on equity we acquisition

outlook the about next QX for excited and year. are We

our shifting portfolio. Now to in-place

with well collections perform occupancy. rent continue to and very high We

our strongest in third reports in the was This of portfolio the amongst Our industry. Xx coverage for majority rent coverage remains quarter that figure. the the this

dining generally casual sector and leaders, operators are national FCPT's and a they industry. the outperform As reminder, brands

for the at Brinker plus Garden increase example, August For growth growth ended a quarter quarter the and sales X.X% September. Longhorn X.X% of Garden. full Olive and recent those the same-store ended to plus plus for in XXXX, In XX% reported slightly sales decline May LongHorn plus for same-store most recently reported X.X% and figures moderated Chili's ended for year XXXX. X.X% a Olive Similarly,

seeing in our not real expect is the As success or in and sourcing thresholds. the we for do quality is coming of high-quality be the our -- towards look forward a pipeline on quarter It quarter. XXXX. guidance The very and but busy volume, we team QX deals acquisition consistent to our continue that be year, rest our with we we acquisitions, that busiest active. do the will believe will months note give We trend typically

So releases following please each of watch our close. as we will be deal the out for they press cadence day announcing typical

stores, near-zero car subsectors, general management, portfolio to theaters, pharmacies, dollar box retail, such portfolio investors for big as remind wash exposure has our we As to problem gyms, that want or merchandise.

ripple consumer positioned. a while very is through spending potential softening portfolio operators, well may in our believe retail So we our

XX of update bankruptcy Red any company payment. September. affirmed Lobster. provide early rent remain in stores on without final to like cut The open All were disruption We'd a exited our and of or

and increases pay few stores the over continue In months, others rent. percentage past of fact, had rent most our to

Darden than the portfolio. our have milestone slightly a making continue On a portfolio, brands our portfolio, recognize now foundation XXX half final note, now have up diversification new to a while strong in to our less reached Darden we efforts. that in we with is of We

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

Joshua Zhang

Thank you, Bill.

million $XX majority at transaction the with During for from XXX% the coming quarter, with quarter. Bell. cap and were acquisitions the a XX rate, a and Taco Wild from quarter restaurant, in last remainder the this line X.X% acquisitions, Buffalo acquired a Wings Bloomin' The we properties one-off

For our restaurant, have medical and evenly the auto pretty split between retail. been service acquisitions year,

As service opportunities we retail evenly see categories long the sectors stated but expect us, from over that attractive vary auto new these acquisitions still may and before, We are medical the between roughly restaurants, be are all to actual that we split term. quarter-to-quarter. will

scored XX a a $XX XX the only high-quality behind are strong original and mentioned, spin long-term Brands portfolio Outback lease. very this properties under in net The is seeking leased transaction third restaurants on our approach Bloomin' Brinker. high to of X Brands over coverage Bloomin' and single Brands our Italian X.X%, with are similar scorecard, and Darden operator As of fits is leases entities. acquired billion public our Bloomin' master corporate The well comprised largest to $X.X rent with X,XXX restaurants million largest was to They Steakhouses now Carrabba's and quarter portfolio XX in our at Grills. sales. tenant and

acquisition and half the have year, on not when opportunities, we have pricing that we idle. spend was quality and acquisitions. our turned very deal One of volume active on disciplined mentioned, our being machine the remaining for thresholds point muted, Bill is did back emphasize new been I'd first As new pursuing

to our Coupled an past we credible and several cost capabilities. leverage advantage improved an up and manner. our have turn, continue organized extensive just in we track to as sourcing of and systems These the built in data efficient network attentive of as adaptive transactions reputation in full of process signed capital. has opportunities, and with buyer, our take augmented internal have, for established systems analytics an team underwriting month Our deals

opportunities increased properties lease actively QX, remain additional X.X% prior the also an Per the increase The future retail on outlook in supply net the Group's X,XXX Our report, Boulder of overall market to quarter. on over single-tenant positive. market

our the opportunity to set to we is grow in industry, expect transaction term. volume still the As rebounding continue across near

our deals of the several outside attractive for landscape, but past traction can We accretively. price were purchased in that years now, be on this range are getting very

XX%. restaurants is X%. nonrestaurant by at at portfolio at leases, our at largest X,XXX followed Automotive Overall, retail XX%, medical now with our stands sector

will time. steady our to over We continue diversifying approach

disposition the we did properties QX year. sell front, this any in not of On

are a strategy. inquiries receiving reverse properties continue on issuing our we to our still new dispositions, of attractive frequently to and an as alternative However, consider portfolio as active capital strategic and both management part

turn it to Patrick, I'll over back you.

Patrick Wernig

Josh. Thanks,

million, rate some reported the year. share the of QX compared through for from and growth basis, quarter X.X% average from of million rent me in X.X% benefited last our annual start both financial cash is AFFO last $XX.X XX a rental annual our income This the which at in acquisitions to figure going million, in-place Let rent $XXX quarter. per leases QX up cash by rental highlights and X.X%. for place of On for base We $XXX of weighted cash escalator months. current of remains year. quarter $X.XX, representing was X-year as is growth last end run

excluding G&A the to compensation, of Cash X.X% $X the cash and last stock-based period for expense, was for rental year. quarter million, same X.X% income compares representing

G&A for XXXX. cash expect million will $XX approximately to be continue We

our not we As related conservative capitalize compensation investment a approach team. the do reminder, to any and take a costs of

sheet We just changes of XXXX progress already and on were rent is XX.X% extensions. made nor quarter, XX.X%, there of any collectibility our were balance XXXX, Portfolio third in impairments. for credit X.X% have great and maturing and or no occupancy respectively. lease XXXX collected annual the and we rent material We've today there base X.X% reserves base to

particular, occupancy high asset on communications with collections lease teams. resources maturities. In and Our tied so our is the to dedicated be efforts future directly company our and can that in we our of has and tenants remain accounting management proactive tight

including to some minutes of a in rates the ours. see We've equity capital and multiples on new sector Now issuance. been spend improve pleased like few We've also seen I'd debt all-in of the balance relief from sheet. to cost state significantly,

last new acquisitions out which supports So today, more to of than capital much efforts is our quarter, cost our build attractive pipeline. our looking

equity weighted outstanding $XX.XX. our we that is for not ATM $XXX great program equates was We've million gross X% just forwards roughly over to been quarter. at our from in of market and in $XX.XX. how million raised of efficient demonstrates raising of price raised cap, average fee which the July, a had at-the-market increasingly Today, and this only Since proceeds. raising This perspective viable capital, $XXX a have of at equity via equity area also busy a of few a we months price very but success in significant

weighted years. of outstanding maturity we average our Regarding have debt, a X

specific both timing We million loan, coming our have and million $XXX comment We due $XXX won't undrawn strategy. or on revolver, in November XXXX. term

year, maturity lenders those debt improve maintaining profile. great seen lending to and already a conservative a versus communication committed deal on in XXXX and are sheet we market our balance with our laddering last are maturities. has sentiment The QX We

We address in expect of in those and time advance expiration. well to

With in of respect of our been net the EBITDAre lowest at forwards as to equity This to our adjusted down is inclusive September X.Xx, leverage QX. overall of leverage, to QX since the X.Xx end ticked outstanding net debt compares to has XXXX XX. and

a is coverage Our X.Xx. charge healthy fixed ratio

We equity have October undrawn million fully cash of forwards as unsettled of of as of $XXX as well of liquidity $XX as million our comprised revolver X/XX, XX.

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

Operator

comes Paolone of question [Operator Instructions] from first Our JPMorgan. Anthony

Anthony Paolone

to about talked I cost your just engaging just getting just seeing capital But acquisition purely guess costs? more back about are of what capital is, your of things is vigor. you come key just you the well? to terms because you this and first all business Or question being more into more of as market in

William Lenehan

number couldn't pipeline quite we've both. the basis months. that some were able for points it's acquisition cap where rate a in think last time on couple to we last the move that into of that of I of just worked transactions we XX had bridge XX, We

seeing market also we're more the liquidity generally. in So

Anthony Paolone

busy and the portfolios think Or pipeline next one-off we the it's like transactions? you larger months what some there keep going how are typical few just the that? sounds do in Or mix? about Is to

William Lenehan

what much don't number than It's a the years, the of think mix. different gamut. property I over individual Yes, last portfolios, seen you've small it's

Anthony Paolone

last And just then one. Okay.

you're think risk, whatnot? just you're broadly Just seeing can tenants seeing growth you the or talk size where or or or about, restaurant as of concepts you about where either in contraction space, credit

William Lenehan

been large end range. really issues companies, consumer the has on of X-wall that. have say, great credit been focusing Chili's Darden that. high have strong successful. the sort that a to example And is is of of of brands off. to very public strategy our the provide example economics very in think would then paid level, some the a great entities are I creditworthy really value We're able because their I seeing of Well, bottom

prices raise to Our much inflation. are had as tenants proven they X-wall economics, and as large, overall haven't

So they provide consumer. a great the value to

Operator

Our next of from Fargo. comes Kilichowski Wells John question

William John Kilichowski

Maybe see do candidates' persist to you catalyst mention of therefore, done just, the excuse made for or election. volatility? How kind continuing to certainty putting on uncertainty maybe that that on kind you the the before fact the me, made rates? Bill, and impact into how And push the markets get us to premium given trying that in there rate comment then waiting was of of inflation, much of election close capital sort a had policies quarter, cap actually does -- you be a the people see last deals market was to

William Lenehan

deals get period There's saw to And we advantage current to where new a question. purchase we period. say concerted signing that in agreement lot I up wanted they where and would took sale that. of prior the under we were a

the for happens remainder What remains year, seen. be frankly, to of the

advantage the We honestly, to the But election race. different outcomes with of I obviously, Obviously, second-order difficult have the effects. think close competitive call. I'd interest. is assessing and watch little very in very competitive assessing a little that then, too say that's advantage we probability very in

William John Kilichowski

And jumping maybe the consumer. to kind just then Okay. of

changed the behavior be you've That think much I level consumer today. to on very that has I mix. the consumer a and of doesn't noticed? last what conversation coming on lower-end quarter, of terms the mean then in in is QSRs on focus in lot ground seem data the some

William Lenehan

of that many that's a in gone shouldn't finding luxury, I are think, the tenants X say would in very consumer the brands as we at a good inflation that performing well, high have surprise is which end little pricing, goods, up consumer we inelastic, the exposure in the as pricing which have luxury be I very years. last XX% cases, has of to

temporary of that's But normal of life, much car Chili's, consumers more based, to the economy in the the couple that every stores, segment in, the stability. part I that's more a weeks. everyday we're play seeing that think pretty over it's necessity way distracting American's Olive that But of last I medical will seems decent say tire be election we washes, effect. retail, Garden,

Operator

of Our next question comes from Citizens Mitch Germain JMP.

Mitch Germain

the continued. Since like active coming Did through the front August, real obviously, the in in Brands raising that deal then, the happened see over funding a the deal. course volumes Fairly to acceleration of capital just you pipeline to curious, I'm raising sharp capital Bloomin' you? time? obviously, what

William Lenehan

I were So time, scoring the your We and equity. accretively. we lot interesting think of we fund, same that Mitch, is opportunistic And were a high to question, found match acquisitions answer were really in right? that at raise priced the

So we on our didn't sit hands.

Mitch Germain

Got you.

of your companies. public that at kind large some the of point? out franchise this of take Does the deals pipeline with investing mentioned You

William Lenehan

We the focus whether versus We on strong don't franchisee. has public credit. tenant overemphasize

some franchisees we would the portfolio. that are are in there public we've very small that companies avoided. There So welcome large some

the So pricing been look able that few we tenant. to works in we but buy well assets. months, last that us, able of underlying have very what's to for been the really And found, not to some we get high-scoring we've the credit only

Mitch Germain

well? the Got in more to markets, then as that equate And liquidity acquisition does more competition you.

William Lenehan

on working close our of It's always being as things changed, changed competitive, a cost on we we October it. early And couldn't frame, over pricing. in stated, months get to year. stayed say busy were Mitch, were next that able Josh the few to. unfortunately. of deals, the in accurately started in active. time But working we would transactions I when just that really And relationships, very with And these cultivating that capital agree to number We the see you'll September, we the very

Operator

question Our Wes comes Instructions] of from Golladay Baird. [Operator next

Wesley Golladay

with term over a the Just raise a placement? would end you unsecured loan running bit, private the potential at debt looking note a at a prefer moment an long or

William Lenehan

loans, private bonds we and the Yes, overequitizing think term basis. balance are a I sheet on assessing notes, public daily

Wesley Golladay

been got that. maybe a equity volatile, and markets a on follow-up quick have of now. And The capital good cost you've

and just volatility, for I guess, historical right guess up so your And on runway? the of longer view now just this little advantage window a change taking of I does kind maybe bit building

William Lenehan

equity we're was attractive so. I think done X, seen we've price active in sort when our you've what our leverage us below really as of do and of has stock raising gone to

So market dependent. definitive in and we've acted I how been think we've

Wesley Golladay

Is How Okay. upper had said And looking good then the Bloomin' that quality Brands I just acquisition, the quartile at know you they like they're really assets? was or strong of it performers? coverage.

William Lenehan

would done date. be all of top of acquisitions the very the scores to in They we've tippy

Wesley Golladay

Fantastic. One one. last

there? XX. where there shuffling Looking change top your from little of tenants, Did anything WellNow a XX now is a was at XX to bit going

William Lenehan

No, would the way we that what as sort is view define consumer tenant. facing tenant of and consumer the

WellNow tenant. guarantor to We still think, I from rebranded those WellNow in -- the X were their Indiana medical on of in another as leases. of some have X Ohio and their properties Illinois and And retail

ways, as but you nothing's what many in is changed. anything define almost how else, tenant So a that's

Operator

next Evercore. Our Instructions] of Jim comes [Operator question from Kammert

James Kammert

much improvement, obviously XX-basis-point escalators just -- enough kind how Bill, the more acquisitions, the annual Are and over and you're curious you've capital the sort rate's it. your just think about you much curious the cost and when overall cap in escalators and You of do got sound of come -- of ambitions? the at transactions. the you your I'm to you do into said, negotiations. optimistic IRR looking get line, but negotiation how about to

William Lenehan

I'm Jim, optimistic guy. an

at per examples X. always escalators as a say way also the X X.X% both every of structured, often XX% would X, the it's those very is, occasionally very to than that which Very, extensions X years. end the other almost reminder, few year, I So very lease. And the X-year

sometimes flat the and well terms at, terms we've more those X-year we remained exists would percent rent net at, Walgreens, look very in those XX-plus its say X of in probably only combination entirety. tenant-favorable extensions, we exception had of which have maybe consistent. what of So which of more lease what terms XX with we very, avoided buy, XX% being of I than look that don't the but

So to the wondering we would into it's that something really a It's were be whether honest. interesting. It's hasn't, negotiation, it question. come great and

James Kammert

Okay. tenants. understand. That's But again, very there know helpful. I if, just leverage, private was of didn't particularly sponsored or the any, if to incremental privately some the I with

William Lenehan

Yes.

landlord-favorable more we very point. final Where credit touch. we often, to one it's Just want that matched don't see terms, with

Operator

Lease from Net comes of question Hostert next Our Observer. Sean

Sean Hostert

both raising it master Bill, about Is the lease, or XXXX, that those you on renewals? sort doing XX Are next been when net company as how side, anything the Darden also is to roll. that how about is comes well, all-or-nothing investing time enter think years Curious I long-term performance? over think the about you plays the now deploy as can those where guys thinking to but you which think extension the and Obviously, of to to those and those there are you it. periods. you potentially leases always leases have there over but relate it talk X to starting the very out just money leases capital 'XX start

William Lenehan

public. It's all Olive leases. point. profitable, at higher individual restaurants. Those lease are They in XX% They spin almost documents. you dining sales. than do those find. form, robust individual LongHorns casual this AUVs leases. the Xx The cover our can Gardens, It's But are are average original

master leases. I subject and anticipate X-year very, rate. They're or not renewal it's individual high extensions, not leases, multiple But individual a to leases. very So they're would nothing, all

Operator

further We questions. currently no have

remarks. Lenehan to hand So to I'd for Bill like any closing back

William Lenehan

the And next we you, to year. very, at over and talking to very anticipate, again, busy we weeks this everyone. everybody, few forward Nareit. end of Thank a investors Thanks, look Great.

Operator

As to would we everyone conclude call, we thank joining us. like today's for

lines. your disconnect now may You

Four Corners Property Trust (FCPT) 31 Oct 242024 Q3 Earnings call transcript