Four Corners Property Trust (FCPT) 13 Feb 202019 Q4 Earnings call transcript

Good day, and welcome to the FCPT Announces Earnings for Fourth Quarter 2019 Conference Call. [Operator Instructions]. Please note that this event is being recorded.

I would now like to turn the conference over to Gerry Morgan. Please go ahead, sir.

Chuck. you, Thank

the on is Lenehan. Bill Joining call me today,

to call, make beliefs forward-looking During currently assumptions the which will this of available information and on course statements, we are by us us. made and based

Our actual known factors to are that ability affected our or and control unknown beyond predict. will results be by

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

Investor description to be detailed more of section the our found filings, a risk, refer our website For please our can SEC which in at Relations of potential www.fcpt.com.

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

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

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

thank as under XXXX fourth joining everyone. Gerry. to us you, our gets outlook morning Good quarter Thank and you for results And way. discuss

Our and at portfolio increase in to an expected AFFO $X.XX fourth coverage achieved We EBITDAR the quarter. performed times. as per remained share in X.X strong

I’d unusually acquired high like the of volume to quarter. fourth the attention the end properties at of draw your to

We the quarter XXXX. will properties, of effect first of results our see the impacting full in these

combined properties million these quarter, the acquired In quarter for of the the alone. last XX in with closings price XX we closings, separate a over fourth $XX of purchase $XXX.X and million week of

properties XX price purchase combined we of a year, for million. the acquired For $XXX

fourth type of offer continue fourth I To quality The from that to portfolio. a the the and statistics of to support granular two acquisitions. are example great diversity the add quarter assets tenant we acquisitions quarter statement,

quality, guaranteed the properties over corporate to restaurant of XX% with these or leases by are brand. with, First, on respect

of taken of assets. PREIT. to outparcel properties WPG, which result properties Brookfield, and different our the These the of Seritage have have the diversification, XX half quality acquired and strategy given our to represent been perseverance, worth Second, from time with but of XX portfolio. the in were transactions acquired the it Over respect quarter, with were new the brands, XX closings

over characterized corporate brands, now and rents ground in franchisor leased million brands the transactions. entity. outparcel national are as strong leases, properties many are We’ve to lower or announced are $XXX These substantially by

adjacent restaurant Our expansion qualities restaurants buildings selective locations, remain of comparable select our sizes to properties similar they but retail, approach. has with outside are recent and highly continued, The quality high as or lease in share structures. net lot we

pipeline, rental FCPT XXXX, representing retail properties, is If year-end non-restaurant revenue non-restaurant owned the of FCPT’s exposure as total of of X.X% we X% the of announced XX representing the As revenue. the properties, year. to outparcel XX include end of total

we made $XXX approximately months, pipeline Over conveyed. tranches will which XXXX the yet million and enrolling meaningful closed four expect not outparcel past started on transactions, of become in we’ve close our the as XXXX be properties but to announced, progress with available

to We non-restaurant to forward and leveraging in lease our net closing look sectors. deal restaurant and grow infrastructure, the both sourcing,

reporting same of with largest Chili’s, sales in recent Garden, This Our store holds continue quarter perform of for well. tenants our LongHorn and to most brand X% X.X%, true growth the exposures, Olive X.X% some respectively. and overall

brand particularly growth. to Olive XX% make of with another and at Garden, were north digital sales the of which XX% orders of quarter We go up impressed now strong of growth after

FCPT’s very large very, portfolio and avoided acknowledge has the would remains healthy. by in them portfolio and other some we While weakness brands, restaurant

the growing our team, capabilities. team: on the both growth to of maturation Finally, pleased the First, very existing who a couple be members, comments and members the of new have of we team contribution continue with of the

based XXXX, fortunate culture. by step toward step but the and mind add to enough We to expect team team with continue it, to in do our been we’ve to

Counsel our last real-estate who strategy. General critical Second, Jim’s to week as Brat, been transaction Chief also and a serve to deep has note of was acquisition company’s Officer. experience congratulations you, promoted Thank our Jim Transaction to Jim.

Now, Gerry will our results. you take financial through

in income cash on generated a in leases XX, rent December fourth the rental fourth in We XXXX level million Bill third line from December adjustments, run rental in is quarter highlighted. This which is basis, cash base $XXX.X acquisitions, growth increase and non-cash, current and quarter million. Bill. straight a Thanks excluding many rental place for as the run the rate quarter the after our highlights the of cash $XX.X X.X% of versus rate closed annual of as

$X.XX at escalator approximately average remains a XX-year increase cash weighted in share, quarter-over-quarter reported X.X%. X.X% results. We annual or Our rent per AFFO

respectively the after the million expenses $X.X of and cash, stock administrative and year, for quarter million $XX.X and general excluding reported based full In compensation. we

management we incremental approximately This management for XXXX, we guidance $XX are expenses. is For reflection of additions general cash, teams setting systems. supporting making a and property administrative million of increase to the asset and and investment, are

on support quarter net million of activity fourth remaining a gross our in balance settled for the with forward $XX.X revolver equity our the $XXX into to including Turning times, our debt-to-adjusted ending of quarter at had X.X ended of agreement million balance an investment at to $XX the on and offering capitalized EBITDAR We We facility. well sheet standing million $XX proceeds average quarter. the price $XX.XX sales April fully entered we the last million.

times committed leverage remain to EBITDA. a balance X.X and six to sheet of debt under maintaining to net We times debt conservative staying

it turn remarks. I’ll to closing over Bill for back now

up it open Q&A? we can Operator, to

[Operator And there? Crossett, our Berenberg. come Yes, with question ahead. Crossett you Mr. first sir. go Instructions]. from will Nate are Please

Yes, can hear me? you

you and live question. your you're can Yes, ask

Yes.

Prime, sense Seritage Washington is get left from much of wanted a and how Brookfield, acquire PREIT. to Just to

in What's million amongst four? left closing You have XXXX. those $XXX

balance in all is of date, million a year-end closed the transactions. expect to We've number The to those different $XXX from but close XXXX. those we outparcels small

that shy So $XXX it's just million. of

these be kinds transactions? then expect to be types larger about we should of year. announced thinking should and How Okay, similar agreements of this we

like that different working time. We're on transactions the all

dispositions dispositions, you any remind see on think kind Can just about about I in how didn't just of dispositions? us XXXX. you Okay. What one

week, all typically opportunistically. We we it get it into do but do every market. the We inbound opportunistically, exchange time, XXXX the inquiries

thanks. Okay,

Thanks Nate.

And our ISI. ahead. McGrath Sheila come from will of Evercore next Please question go

morning. good Yes,

in the of quarter acquisitions your portfolio the average $XX $XX. below square rent in-place well a was the foot, On

driven this location by is or mostly well wondering, are below these the Just rents market characterize in-place ground you leases market? would

a Sheila. Thanks just it's would I leases. say of more quarter in ground mix the

is do right ground portfolio you percent the Of versus the leases of portfolio what know… you disclose now,

I of argue the very modest kind given of so to coverage, our I rents don't. guess the We well five performance ground and you'd provide akin ratios on would a I over XX% would times very color that's is Darden, see is portfolio lease. the

I the low would to roughly the buying, we've capital price been transactions outparcel because then XX% number, just leases you're are exact story. cap deploy that low. the been rate And ground an applying It's is them and disclose property have credit just purchase rents to hard don't say that that it's a healthy we of so very but too

you're going to continue to that think these more I see transactions. announce as we of

you store on one, be us Krystal will last an if update the One great. could just these affirmed? expect leases do you locations, give Okay,

We healthy will. sales. rent stores to that low there. communicated moderate they very change rent rent They've Those with multiple anticipate sales, in don't are times us any to the to

you. Okay, great. Thank

Sheila. Thanks,

go ahead. from Raymond James. will question next Please Mings our with Collin come And

Bill. morning, Good Good morning, Thanks. Gerry.

morning, Good Collin.

morning. Good

single-tenant dual for discuss say less just you've curious the properties want for thoughts, just market than market assets is start to recently. to on be Bill, multi-tenant of these I'm I the efficient properties? multi-tenant and your acquired the some may

I think the pricing tad tends a better. to be

can warranted Sometimes net typically would lease you roof also or properties buying be coverage, estimated. newer I that don't get on say, but we're the there.

and the there's some multi-tenant. would also in brand we Verizon example, bought / for was format that Potbelly say built So just I ‘XX prefer

to going go. so the to brands, those And that's direction exposure get to you're

attached But two is in -- each and a case know center along a not anything from it's brands those cry strip this lines. it's you far other to almost every or different

would generic think tend more boxes. they be say to I I thing last is the

bespoke So a easier refill the a to are ability than building. these stand-alone lot

just how little there you a lines, coverage higher about coverage on -- bit maybe the and a a along from I And you the maybe underwriting coverages? coverages properties, think about talk rent is helpful. standpoint? I do think tenants threshold maybe and just mean That's just a as mean, those about

is the coverages think I tends to banks four-wall one Collin economics the clear point there probably be and use are cases like make is as I'd as very where similar. The the a restaurant. not stores sell

the times, sort have you Garden So what branch, understand be brands. to of revenue proposition or bank individual but overhead an we of allocate it national may high the the an for for corporate of tended an covers but is. you example, do how brand significant A economic example, with deposits, that cautious service JPMorgan store Verizon five quality to to Verizon to and stuck store, individual subscription very Olive

along correct without you then a don't maybe these be Okay. type of to these closed Bill, I component. multi-tenant I'm wrong, has without believe Would with open at properties restaurant thus or component? a either And far dual anything looking but some of me a lines been if restaurant

them, much at but a but I They drive in Great at often U.S. here, traffic, dual would that day the anchoring restaurant. one at Clips, the looking think look tenants we restaurant at it very have I Just we of would any without have Cellular end restaurants so case. a was actually look we think a because

you other Okay. your you've that front. as two of just in been how deal with curious potential as even about success me just acquisition curious, I OP think of potential as up kind coming deal announced first, maybe from that's mean think source flow? on had of you then, about some unit And ones I'm much a pipeline, one here, is terms – sellers, discussions

it for unit have work. regularly, stars the to about talked but deals align sort those of to We OP

for but with it's good frankly normal looking such it's and – have to normal properties, we have as just mentioned, successful. raise way equity you way sometimes pay that dialog rare that we're always We capital and easier to people, they to in but access are

me turn over. it one last And from Okay. one I'll and

that coverage move slightly, bucket did actually in to didn't again actually of added terms the notice uptick that in and tenant of the any it properties change are got a properties added a to non-Darden that that the just in other recognizing pool? a of increased kind it function the bucket or Was much, reflecting is Just this of brand’s quarter. health but lot

I the I'd say wouldn't it's takeaways have that. from grand latter. any just

over. Fair enough! it turn I'll

Collin. Thanks

our Anthony And question next ahead. with Paolone come go will from JPMorgan. Please

Bill, outside note Can now? of or point you're any you areas to this you attracted are particularly restaurants. that at at right either Thanks. redlining looking areas

centers, two The time we're attracted out much like sectors. more day dialysis would to and stay away the clinics. tended to things new big along it not be box use medical tested call I'll We've say I from lease service lines, things number certain those there throw would care, and stay we've Topgolf to spend trampoline on net untested cases and like net some just we're tended auto from parks, paradigms. tended say of would to lease, sticking of open retail; a away minded, we've I to different

year Okay. – just level the as talk generally you in flow just the though at deal you quarters, last of speaking? about Can few say like the you're seeing comparison to the know we that start

at the I a large activity closed of we what that had acquisitions. fall guess say I A It's strong. on of of still last is the would significant contracts of those year. portion signing end flurry very

Our the sure transaction quite acquisition robust, new those very but remainder team working we're leads busy. on of team focused on pipeline very the and acquisitions make busy is the stays Jim closing that to is

you're consistent of up and you the what pretty of or move if it versa Got What that you're starts is buttons variety are duration or of kind there, been it. lease yields needle really vice your to move hot the And yields still. things last you you question, that you're at of really up about seeing and know you term, but then credit the just industries, in like down, or seeing? pipeline like would mid-sixes, looking most just have when the the want said out kind on think shorter

other like priced moment, it's where away sector the Honestly, think get the pleased lease it’s of and the far credit. within cap net that rents know But outcome we're whether how of that us, you credit, property we obviously, getting discipline of competitive transaction, very and lease. with stand actually typical we factors net, the what is, dynamic But and I see triple remain like transactions we're it's content the very these pricing what outparcel rate good credit competitive etcetera, the is lot the and kind to and a demographics truly feel reasonable been outparcels the a on good better in, duration, than we've how – etcetera. from rates, low our disciplined of interest transactions at thing differentiated are

lot. thanks a Okay,

Thanks.

question next come Thalmann. Ladenburg Please will our from Massocca And John go with ahead.

morning. Good

morning. Good

Good morning.

ticked that affirm they the It at what be So, it's occupancy small, leases, know to doesn't look drove helpful? slightly. like down inclined was are given Krystal, there that? but any color sound would they kind of I

it’s timing. I mostly think John

be I the up medium back leased think in we term. to here expect those buildings

So, was Krystal being kind just off temporarily seasonal?

building. No. It Krystal's was not

Okay.

have them buildings going Again, tenants very shortly. are those to we rent think in paying

and part deals, of buying portfolio the one would of from about of be didn't kind the of an kind dynamics more think you'd the and a feel some building, of recent out of was type obviously that these RIE acquisitions, lot come of come I lot that asset one out it comfortable that? if that with when then, transaction And Understood.

wouldn't replicate happen terrific a outparcel in that proud part that able we're that of asset the new a be build. we're building hopes but great to that build one. XX% at credit, new of scale, a Frankly, Yes, transaction, a construction get to and to it and like brand was one you I spectacular so buy. be cost, that'll It's buying anyone's particular we'd very terrific that REI it's We is up a an but of. be mentioned the looking

It sense, those do retail, kind of need to of bigger these some similar dynamics, you box correct? but makes would

Probably the pricing. on to be competitive

from very it that's Okay, much. me. Thank you

like to I any Please closing This concludes for back our the Lenehan Bill remarks. over question-and-answer session. would ahead to sir. turn go conference

Thanks road that to We on thanks meetings, callers first our we'll time recent everyone This the interest. everyone! with international Thank call were the for to for many time you we've the able everyone the the is and those Again, had us, today. also non-deal of so thanks conclude joining us for during see call. recently joining dialog you on and show.

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