FCPT - Earnings call transcript Q4 2024 | Four Corners Property Trust, Inc.

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Operator

Good morning all, and thank you for joining us for the FCPT Fourth Quarter 2024 Financial Results Conference Call. My name is Carly and I'll be coordinating the call today. [Operator Instructions].

And I like to hand over to your host, Patrick Wernig, CFO. yours. is floor The

Patrick Wernig

Carly. you, Thank

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

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

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

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

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

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

William Lenehan

morning. Good

our further results our Following Josh financial will investment remarks, capital will introductory will on position. discuss cadence, and comment typical market, I make the and Patrick

was In strong its us. year XXXX a totality, for

acquisitions half second the paused sector a companies The for was similar year rates half backdrop down of the and for first very spreads. created to FCPT Rising underwriting largely lease net a lease investment credit whole. strong interest net our volume remain small challenging was credit to of acquisition We We quality attractive real of waited as XXXX. the and and brands, instead zone loosen to criteria. for committed with refused box estate. our incremental strike improved

willingness transact appropriate pricing. at Fortunately, by early found QX, our cost of to we more capital had improved, seller and

back acquisition X.X% $XXX As with zone, million we the blended at immediately We machine acquisitions a cap on return ended to green year of the vigor. turn rate. the with we

growth. fund up to significant we we've to year, forward built look As new the new liquidity

continuing with are quality While we our are to opportunities see that not consistent do guidance, give thresholds. we

is our same add sustainable approach. to the expect steady and pipeline manner the our of investment core that to We in

we seen volatility, we've recently. deals priced not movement far have rate much in cap as As

year, in to or we early be we captured near While XXXX. cap same expect rate the at it's in the

new to continuing the in months. will forward starting also our and end, look increasing that build that be to Shifting in-place XXXX fantastic team in our To portfolio. we hires some are investment our with to coming capabilities

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

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

As branded FCPT's generally a that dining and outperform leaders reminder, are the industry. core tenants nationally casual sector operators

ended X.X% months Brinker Olive same-store growth example, same-store grew astounding recently ended For X reported Garden LongHorn quarter sales an for XXXX. Chili's December the Similarly, November and X% XX% of for sales reported and XXXX. the growth

FCPT's restaurants. high-end Consistent casual proven to with local past performance, be dining mom-and-pop or dining run than tenants have fine stronger

are Our wide variety high-performing well-capitalized, tenants servicing points. consumers and a of operators price

portfolio the car lease inflation or investors portfolio that management, labor exposure our X will big we that or retail. net tenancy such payments. impact rent subsectors, near any pharmacy, for washes issues are signs theaters, yet our As has portfolio to issues in experiencing as want and not material problem We high or box rent to remind X

they few very strict is properties the balance bought we occasions very, very, these where it risk. sectors, passed out the On because have criteria to in underwriting very

Plus. Lots, recent exposure Rubio's no Joann's, bankruptcies, of Zips have also string Wash, Car City, high-profile Home Conn's retail the or including We to Fridays, Big TGI Party

any have avoidance also agencies. For to of the properties we leased doubt, government do not

costs do steel, should rates. renewal directly our If would were does business that tenant on not materials such anything, have tariffs a not of benefit negative rely construction. higher as model note we would If cause direct that anticipate business building I impact. inflation Further, to new replacement

to our efforts. like also diversification to highlight would We continue

XX% our base brands. -- LongHorn XX%, XX% combined XX% is Our our now on its and of Garden, make now respectively. Chili's X Olive of and portfolio all largest brands X% basis up Darden a of across rent,

Over Josh. to you,

Joshua Zhang

Bill. Thanks,

at rate. $XXX During XX for properties X% a acquired cap FCPT the quarter, fourth million

While momentum the we as capital XXXX's volume, achieved are with second pleased the we proud $XXX of of year half the our in cost especially million improved. we acquisition are of

half second annual invested the XX the In of of volume, December $XX of our team acquired In we million QX, XXXX, XX% over $XXX our of annual weeks alone. acquired few last including representing in properties, XX% our across volume. million over

worked yield targets, have press past. each meet and are for see the brands as the of can in We are we assets on not volume releases you our in with operators compromising quality investment or our with to reach many that

organized we medical, patient restaurant, evenly retail sellers this being sectors. service and quarter investments The execution. Conversely, superior pretty and split auto between offer are while to seeking were

the vary plan may X year service investment sectors, XXXX, XX% the based for on restaurants As retail the so made have quotas we of opportunities XX%. auto investments do our volume not our approximately from with medical and We or at any find specific acquisitions full thresholds across up quarter-to-quarter attractive. at XX% to

over these expect the we the split roughly be will However, new term. categories long even investments between

As sectors as automotive compound continue medical we develop and are seeing we retail to such, in. success in newer relationships our here

service a operator in newly X sites. million top example, For we sale QX, leaseback for with executed $XX a built automobile

investment-grade million of $XX a a their $XX of X portfolio million sale also with centers. system acquisition care care primary for completed as clinics well for urgent health leading retail leaseback X as outpatient We a

FCPT operators to real properties on and in estate industries. these reputation team respective were our as reliable both relationships with top scored leased our new underwriting partner. our corporate sectors Further, scorecard investments acquired were all to establish all a highly in continues their for The as tenant

not we any properties in did On XXXX. disposition sell the front,

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

restaurants. base rent of coming from at annual service For leases our a whole, X% our and with operators portfolio as we casual X,XXX have dining from quick year-end, XX%

largest by automotive ABR, followed at sector ABR. of XX% our retail Outside of is X% at medical of restaurants,

to to diversifying continue expect time. We steady our over approach

expanding an continue set can we investments. further opportunity for see forward, to Looking

lease net retail single-tenant year-over-year. overall Group's the market increase in XX.X% Boulder the there QX, are market report, X,XXX properties representing on a For

still of will transaction industry, With recovering pool expand in across volumes opportunities accordingly XXXX. the anticipate the we

Although our typically every day our are the quarter we QX our and for disclose fourth slowest releases is historically, everyone continue we follow to as close. acquisition quarter we expecting to momentum encourage press

you. Patrick, back to over

Patrick Wernig

about and I'll balance Josh. talking state by of Thanks, capital the sheet. start our sourcing

million utilize of a year and the Today, was at-the-market were equity in product demonstrates $XXX $XXX At which are we ability have activity to heavily In QX on still we weighted we half FCPT, the second $XXX very months, raised program. scale. over of we of at efficient the our capital total, raising. on the million In unsettled alone. our during forwards. million to year, highly equity focused That active equity few

overall net EBITDAre XX. as Our QX coverage to ratio With inclusive in remained fixed outstanding adjusted charge of net X.Xx, is leverage, X.Xx. December of to our forwards a debt healthy respect equity

all-in which credit extended rate. revolver ] Additionally, This of as term $XXX X.X% is and weeks loan, hedged fully to increased capacity a facility upsized January. in interest million at announced [ ago, our incremental our X we

of Importantly, X.Xx, facility with for X maturities all net recast years. taking extension conservative November all unsettled equity liquidity added for a debt while a future more This X-year forwards. leverage also option our provides FCPT to maintaining pro XXXX we of nearly care forma acquisitions, term loan, including

forwards unsettled have equity Following million in and liquidity undrawn between now the facility cash, $XXX approximately refinancing, revolver capacity. we

before Assuming Xx an reaching no issuance, capital net approximate have available leverage. further equity million of we $XXX

volatile capital. we diversify While thoughtful how treasury continued remain markets sources are raise rates be and elevated, and our we and when around to capital

continue expect approach. disciplined that us to can You

QX some is Now of last per and QX turning for QX of our to year. X.X% reported We up year. the which highlights $X.XX share, financial AFFO from

share of to X.X% Our full XXXX XXXX. year. rental cash growth last from representing is QX quarter of $XX.X the for AFFO year compared income up was X.X% million, $X.XX per

X.X% XXXX million full rent of cash $XXX.X XXXX. Our year increased versus

quarter X.X% stock-based leases was million, rate income million, the is average annual cash G&A quarter. in-place On as escalator excluding basis, of representing Cash weighted a base cash compensation, rental our rent X-year current $X.X rent for cash $XXX.X of annual X.X% remains for expense, end run and

year or cash full million illustrates of This XXXX. at in continued rental X% cash and our XXXX G&A efficient of X.X% was progress the efforts $XX.X scale. in benefits income The and versus our X.X% growth improving

for We in cash G&A $XX to range are million XXXX. be $XX.X of expecting million the will

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

XXXX, XX% with as We've progress of re-tenanted also for renewed At our XX% our on of maturity or profile, do As lease XXXX, of lease But of indicating extending had of to intent those of our X.X% successfully XXXX lease team XXXX represented lease so. significant their ABR. made start to expirations. rent. annual lease or XXXX maturities tenants already down base FCPT's the renewals properties that just is managing X.X% it year-end

any today for reserves no balance collectibility the There credit impairments. XX.X%, XX.X% rent Our were fourth nor or sheet portfolio is base our occupancy collected we and quarter. material of to changes

it turn back Carly will we that, to With questions. over for

Operator

[Operator Instructions].

Anthony Our of first comes Paolone JPMorgan. from question

Anthony Paolone

talk aren't, risk a coverage appreciate if the necessarily sounds I here. the rents just it credit better underlying even And at at like margin and aren't or quality rents particularly about bit more if portfolio. even about Great. you areas just trends the curious worse the or the risk. they can at seeing in comments aren't if which But

William Lenehan

portfolio, the are brand. obvious casual notable a dining our that's that our don't growing. I to think in there's particular being have brands exception, Chili's But what we in but standout that pretty

sectors is and avoided that King, turn And their defense. QSR are is where number and we've predominantly of a having doing the well. Burger are to which attention in Our places the to exposure we're our pretty defensive, competitors play other

oriented. So to us be we allows it feel very offense that

outperforming COVID have the that inside restaurants service quick and dramatically trends had period those All was with down. go you to example, where normalized. sit For drive-thrus

our consistent different exposures. very across it's So all

Anthony Paolone

work forth. with you item balance Okay. only and sheet then just on the And facility other did so the had the I was obviously

in you're this far at like shape bond point? But we public -- good think issue there. about might how should how So a you from be just being off

William Lenehan

having upsize was something that of lot spend Well, of our time of as The option. it's revolver anticipation an going working to we're on. a

have the supportive more bonds term So private evidenced, well. attractive in also as very attractive the moment, as we've we pricing loans But of Patrick market historically. raise pricing. That's very at note us. But borrowed to public at capacity have been

we in of like being ready. of time buffet of on we'll that anticipation side. a the a XXXX something have spending feel be options it's we debt So But lot on in

Operator

Katorincek next from of comes Our question Montgomery. Kyle Janney

Kyle Katorincek

years cadence as overall few service roughly percent you Exposure between of last retail Should grew around rates? I of think mentioned medical X% retail year of And a non-restaurant the expect over going and a a XX% more split last similar a segment this cap X% in function we Is auto were current forward? to the acquisitions roughly. year portfolio.

William Lenehan

wouldn't the a to with little to. brands bigger. plan the I bit that lot exposures is are tend a As -- retail, and have be the smaller. buildings exposure to established but out Josh points you'd competitive then be price way, have says, don't that surprised And very want if are Casual we medical dining, it a QSR we bit that continues. trend the we've exact

to a it's deployed into bit sector. that get capital So little easier

that buckets fill thresholds per new So always interesting. similar imagine preordain. we're to obviously, find se we But we past. or we're I And I don't up the sectors hit think for looking being that could to it trying

lot on constantly research that. we're a of So doing

Kyle Katorincek

'XX where in starting from you anticipated? lease to are And get leases then versus pretty and from significant back? any structures light. have initial is And market? roll the pricing rollover locations 'XX, But Do on a changes transaction. the Today, the any escalated other Okay. perspective, lease those Darden you to those expect 'XX

William Lenehan

options has X.X% multiple Yes. typically to options growth. rent extension X-year or The with extension X- tenant their benefit,

because approaching majority of -- given, that's I this Xx. anticipate anticipate will the anticipation, an tenant renew vast, and So coverage has the those would vast would a not is I but

Operator

[Operator Instructions].

from comes question next of UBS. Our Michael Goldsmith

Michael Goldsmith

You the third talked the zone last about quarter year returning and of to the that followed. green in acquisitions

you do green rates, about interest the outlook in for being about and acquisition XXXX? good feeling the in movement the good given feel still zone Just

William Lenehan

Yes.

green we the we well that importantly, zone more think in I when the green now. acquisitions. zone we we capital use even for raised perhaps But were have substantial in to are

of $XXX and capital So call of the to it, to at low our leverage the be range. end $XXX at million our range high million end be of

compared good last shape that category pretty in are a the in years, in our And done peers. funded having we've really puts think acquisitions. for rare couple I what we given So to of frankly us XX

Michael Goldsmith

points. it rent just talk collected the driving you decelerated And that? by that. or a sequentially bit declined looked presentation, then sequentially what's appreciate about in I Can basis XX like little

William Lenehan

think material. don't I anything there's

that's of we've couple last just Some the in lot -- a of acquired December timing on of in assets weeks.

a so there's to And over new rents there. address. takes month to sometimes it shifted But read-through no big a get

Operator

from John comes Fargo. question next Our from Kilichowski Wells

William John Kilichowski

picking follow-up the I'm but through the flow, you're it positive market pipeline team, just right question expanding seeing that to like just on is here of I'm up. from on last a I just kind the make your sure comments, Maybe your been heightened curious in underwriting acquisition very sounds you're getting general. great. deal and coverage read has want

allowing to acquisition deals maybe the to deals? on keep in you from on last the elevated What's environment, cadence in That a anecdotally side. influx really back market of as the capital much? competition so source different not hearing and coming you're seeing many private Or this competing quarter, competing given is that's are you maybe really We're coming and

William Lenehan

were been where there certainly large hundred million of that a a was lot about north few a lot dollars. has attention, There talk handful of of a transactions of Yes. very deals

are sizable. properties, certainly but heads all those, we look on So individual We one very small of at portfolios. down

when we where are buy was use think have can capital we we understand that and buy I people we that don't things. that leverage accretive, things raised

level. less not leverage we're using reliable, in movements corporate borrow things acquire tenure and buyers the we when the we make levered the at So

couldn't has being I would and has price we around even the we've has job constant to some been market of and give fantastic being them there in And such lot acquisitions and QX, in points get of X XX, a price. in with could done. we years, on when for a on Josh them of closed on working And say The off. as seller around cap contact deals we for were lean and get hoop bit disagreement little that we just paid hanging on organized. have of And done up this the super a conditions basis whipsawed sort we rate, really XX ask the

proven waiting happen, to environment very, for So more very acquisition it's I sale very think -- transactions valuable. a than simply large we're accessing broad leasebacks for and that's

William John Kilichowski

anything just maybe you impacted been I'm the And new by to the by they've we're your for a of sure jumping policies bit tenants side here. then on early different but area at a administration? And this, the have from seen labor or all that any heard

William Lenehan

San She's contact it's constant We with runs an and woman X steakhouses the leader. we've Antonio, business We exceptional haven't. question. business. in that operate been in an interesting who But

the all mention be haven't the really would strategy standout found We have particularly a in there. And call. impacting not anything political of and sorts country, yet the seen more monitoring changes that's particularly be broadly, the could -- things impact economy to in our we're businesses because that or in of we

Operator

Instructions]. [Operator

Hightower Our next question with from comes Barclays. Rich

Richard Hightower

question I out to think, just Bill, maybe last flesh there. the

also been how Or is much underwriting? constantly that future, mention least the exploring new the reiterate few would you prospectively it have kind would changed? guess How changes in is verticals be last as did way at far not has months of affecting any And in you're that industry that currently, as to for about You risk of think the investment. assessment? announced say or that sort affecting you that I that clear, just you goes, in policy that

William Lenehan

Yes.

obviously seen of change been yet, used far pace ton than have Washington greater in is people but the to. haven't most change We a

we've closely. not might So historical we're impacted, be source, -- few of see we're strategy. many our what give monitoring particular last don't it can anything I of our significantly months any change particularly But they're that that subsectors seen trying estate scorecard, cetera. I examples et but the in you real part to acquisition

the So impacting keeping we're sure. but our don't see them ears ground I FCPT, for to

Richard Hightower

Got it.

this prior then give you of But the guys Or mean, at would maybe company's what Okay. on capital contingent philosophy say you this on not that I the decision in far if the as spelled sourcing capital of forward as calls. the to forgive more guidance, uses or side have out informs maybe And that's side? me point history?

William Lenehan

Well, simple Sure. would I -- is say think I company to be our simple. it's very purpose-built and very,

not accurate. relatively company forecast flows. We're our the the ability investors acquisitions box. when the it dispositions of job earnings and the task. And Street out being our we certainly the of cash onerous black an our Street announced very ability and And they done modeling So not the close, has a because a good gives is to

of and But I I intention short essentially reason peers, acquisition equity, most XX the modulate business then think perhaps think our buildings, differentiates XX volume into cost is whether time our is we period issuing to the strategy Four cash that. our it important turning our our than buying for is core a to because when of do bigger with Corners or what quite our is is of capital. And our and stock it's which

very I our because that to throughout difficult policy my price a individual going [indiscernible] to wide stocks can't of for provide me is year, and and volume trade forecast stick tend to bands, And so be at acquisition modulating both what it's stock to very, meaningful.

Operator

from Baird. Feygin Alec with question next comes Our

Alec Feygin

the be the up other you me scale on to and employees? maybe as And platform So G&A. in side? expect on for new puts any ramp would the we Should XXXX first continue one G&A takes to

William Lenehan

Sure.

dollar the should has. get that at G&A our the of absolute very been increase don't for probably started this size But low the dollar our We is company, case years. with low. we And of continue as And to people. much now is given we that as XX thing X of just company G&A one we amount think amount XX. capacity. it's I attention We're the

the We we have not young and if level, will is grow moderate. by lean overhead cash business we've and capital cost several impressive have of is our the as incredibly years. to that hiring quite to hiring C-suite we at developing that intention acquisition this they our doing accretively we largest we're ever very because lateral grow yes, last young had, because are incoming But people. we much grow have typically But and and the overall class in the continue people

Alec Feygin

speaking the All negotiations right. mentioned some speak with hoop price? sellers on a around on you've capitulated about And not pipeline just hanging gone way with those pipeline, sellers. can of how you have you that that your and maybe deals of yet large have the been And

William Lenehan

We on guidance Yes. is typically typically quarter. quarter. is QX typically the slower give pipeline. don't QX busiest a

to our per enormous an points, of be little up amount. simply if think to what a that there's business any is But I changes a we growing our the being is owners share could we -- a don't basis But this simply accretion. amount good And the delta to do that without shorter. one drop vast accretive acquisitions XXX again, of QX usually to XX shaping were is grow to price I or QX -- to -- from year. know acquisitions

to not we that do sure something going we're on So focus because I'm not it. it's

Operator

[Operator Instructions].

Mitch from JMP. comes of Germain question next Our

Mitch Germain

different scorecard. time? comments, and you've modify Bill, often And I'm change at about the look variables considering you that you underwriting curious them, and the mentioned or how Josh over them in inputs his you're talked audit the it you or about

William Lenehan

the scorecard So balanced. The relatively scorecard we've changed minimally. is

scorecard answers. change could you'd that the ingrained sure language -- in surrounds different company. culturally I'm individual not the is components you the We So slightly. get

it when tire So this team, Burger that we a And King we store know what around as is helps. a a XX. some say this consistency is means really or XX having

isn't of So there ton a change.

pretty effort. all in what we're found result efficiently it on. we issues buy this scored accurate darn credit to a way to little when on the time is things of on. we be as go back poorly we've a look negative It's our all that them, acquisition not that end far and and as And and spending get Obviously, But we be deals very as is survey aligned scorecard passed that very, the portfolio. our communicate very, didn't there had we at tends we

another that a it's that But wouldn't out doesn't have property mean come moon, Y. scorecard weird standard property possible the can grounding a helps And that can't scorecard decision-making. it capture. of keeps And But you of organized a modestly making exercise value. I things sloppy of a you a that appropriately that's doesn't it every captures That avoid sort in blue because us that with every of reason lot once in sure put helps and of that have us one a think and against standard something reason outcome. pricing of quality of a we're the X you

Operator

next Jim of Kammert Our comes Evercore. from question

James Kammert

if vast the what that were realize the options. I share extension 'XX, rates think you you did coming tenant? replacement leasing of is where of representative the sort have But maybe you renewals a recovery preponderance actually can your or about from

William Lenehan

really had the positive, recovered Jim, that Yes. rents when been we tenant. to we basically the replace and have It's

heightened costs wouldn't get lose replace we on the tenant, in replacement on focused over low that, a that think rents. The historical that. to due dynamic you your if that's lease struggle the is fact and But largely to net I skis I rents. you'd

We've rent. that's great the of very we've company that the a sleep brought to the done fortunate environment wouldn't to these just no a lease you is really at market small, case, been into we're another favorable think leasing. big a sample of think I the job things. size net that, And But and yourself but one I more same lose We've in you tenant, for to replacing rents. ahead there's resources low been so deal, find get the

James Kammert

say what would pipeline, competitors you widely relationship then more deals of XX or that marketed, about transaction 'XX, of Fair X visibility the investment think with X were maybe proportion say, enough. folks you in X or bidding or tent. And Corners X closed or you're you the Four inside there thinking let's the versus if about where

William Lenehan

Yes. There on there's a hundred multiple we might like of we're isn't often very there's the deals you the dollar for size million dynamic It's offers. that see where see where a on interesting. deal a of call the on that working dynamic with XXth month,

On the best XXth the month, of there's final. and

involved, X, On the best Very X. the there here's of XXth of X, bidders becomes marketing we XX there's know what but again even becomes to They month, and seller things property, buy final the be we not a or materials. there broker becomes a may like and directly often know may not to may buy. for us, it's kind be like the or may

mean together. be, That every look, a flog take which agreed it. lot to have been sort But have flavor. chase of price just transact once with to what portfolio before more there's a a in cut where And attractive we'll is and but put them to process, out a and can you. fully typical would formal That's formal of than marketing deal get materials and the we'll a doesn't we'll if that larger while, this it's are price a you marketed more market slightly the this price,

Operator

have currently We much. very you further questions. no Thank

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

William Lenehan

by was overwhelmed session. for Thank interest. remarks thank the Well, minutes note prepared substantive you, Q&A a I'll the of everyone. you that XX

very we're QX, in start 'XX, position great line, off strong below to target a bottom Just leverage.

busy, young was that pipeline raised substantial at have very the We team very pricing that talent. and that's attractive growing and us will keep capital with exceptionally a

'XX, any excited reach So really you out have questions. if about please we're and

Operator

thank to concludes We'd This today's like joining. for call. everyone

lines. disconnect now may your You

Four Corners Property Trust (FCPT) 13 Feb 252024 Q4 Earnings call transcript