Four Corners Property Trust (FCPT) 28 Oct 202020 Q3 Earnings call transcript

Good morning and welcome to the FCPT Third Quarter 2020 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. CFO. Morgan, Gerry sir. ahead, Please go

Thank you, Judith.

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

Our control and duration and the COVID-XX by uncertainty actual are to to of be beyond predict. that including our related severity factors, ability the known scope, the pandemic results will or unknown affected

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

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

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

morning. discuss you, to Good our third for us everyone, results. Thank joining quarter

As FCPT's of we formation. the Xth approach anniversary

made our and the team, in of the proud portfolio. are high-quality progress We building diversifying and growing

We October. are for level collections and third quarter and very for the contractual results the XX% of of pleased rent with the strong quarter

While recent this the important that it's Corners one has differentiate challenging and to history, types different owns. between restaurant very kinds for restaurants of the operating specifically most periods been properties in Four of

levels. service as sales and Our even proven the case near have in operators have They're some all their assets resilient part to sectors casual quick urban many an XXXX chains. and In in suburban, are restaurant models, XXXX These branded the business of typically returned exceeded have course. not quick of and large dining they're adjusting levels. service operators, all

benefit well. and to operators their to we portfolio On technology believe continue to continue course, restaurant that situation to-go As investment very in portfolio could capabilities. we from predict of and perform will recap coming run from the strong third quarter, quick long hard a our the of be off-premise FCPT the that said like in fluid second in their for collections, last those The months scale and believe and, we a should operators. But quarters.

and over payments For quarter defer approximately rent - X% agreed XX% and the of the with incremental remaining X.X% X Today, favorable defer third to we part In of abate with X% X% modify representing quarter, either the - rent properties. rent, approximate and payments the until modifications. XX.X% of working to than of were contractual we've deferrals lease of an to quarter, second we're no terminate additional or rent the of collected less as amendments then second tenants their there leases abatements. portfolio release or collected to

Antonio, window which tenants time Our Kerrow our work team's Steakhouses that to we real the resulted we return the third hard Kerrow also July. doing Xth new to Olive with are restaurant, provides be COVID. and in continues acquired located by our in operates what impacted in a X We LongHorn wonderful adapt. in into to next understanding to subsidiary, a $XXX,XXX. San Kerrow's Garden LongHorn Kerrow construct of ground quarter broke positive EBITDA to which October brand in profitability The

been $X.X the second achieved reported variances. represents from We which increase year-over-year impacted the which to quarter. $X.XX COVID-related in and share a of returning AFFO per by and $X.XX, results Now, second increase a quarter, our had X.X%

creditworthy properties be In going targets X.X%. cash properties pass case, the we This pipeline. that for acquired that every found the the price shape. I acquisition substitutes we of combined of But remind our that our would our portfolio some liked. most We activities sharpened in had in focus second everyone XX purchase stable is decided after resumed to we $XX average acquisitions, we on. sellers weighted our strong very million clarity that half meant at initial from on to an quarter, almost to there June, yield were we Turning in in of we the and

the recent building. comments guaranteed leases leases, to of And Stepping qualities acquisitions, XX leases back, corporate operator to are of low corporate equates the the with brand's the like on XX typically to the acquisitions. tenant and by of I'd make the rents. owns Speaking X the additional XX constructed these or FCPT where very entity. ground are the land This

year-to-date $XXX most quarter. we the - totaling second have into over today, acquired properties through the or made for the even the for For million, pause investments with

are year. busy wanted volumes to for of for large we're tax-driven in right seeing get now, highlight potential the I trying is sellers possible which law that typical We this the time to with of now, tax ahead changes. quite But specifically, transactions

we've and Secondly, be difficult strategy our were transactions close in to they're the pay process. leases quarter and now the rents the can $XXX given These over properties. in lengthy ground the since of dividends. outparcels. initiated typically Almost acquisition outparcel volume of strong XXXX, XXX acquisition and outparcel representing to effort continues million, preponderance to closed operators. properties, low half the we personalization But October legal due compelling And corporate

and invest idea the on retail COVID-XX. restaurant million of buildings. of to regarding vacant capital. the for with brands. remainder acquire we to into and turn have fundamental good Now, from some venture October them from to up to like will real located of that how or but due position about where to to Lubert-Adler credit retail well to so locations standpoint. see ourselves some stores properties. avoided vacant this Lubert-Adler the impact locations convert million estate years, been and announcement I'd with can thinking contributing there's an we've areas in in communities buy invest Many These the in these the turn for opportunity in a X, XX to will began This strong the local were the could up support economic new $XXX concerns, re-tenant in XX brands July FCPT made We recovery we $XX of these venture are operators and we strategic growing to

In We from re-tenanted but obligation the property addition, long-term portfolio right properties the are tenants think FCPTs stabilized. to ownership relationships and will have this is venture for not for such brings Lubert-Adler are they enjoy the FCPT the great far, Us, strengthen a Albertsons. transactions bring and with really Toys experience to working the table, record to existing we we once us “R” much them. with purchase impressed and vacant a with including track and Thus the and re-leasing of very strong properties, ShopKo, as what vehicle

turn to financial some Gerry I to over of operational before Finally, update. it the discuss results, and

highly Real combination team from Our a net Real I an Truman the returning the Estate learning Counsel; Kristi as on believe interested Human effective. Claremont continue expect which time our as on bios Kelly go work website office to QX in collections we board in and to to the you're We Analyst. continues highest and becoming remote made Everyone's additions group days, wonderful some on third with full we quarter joining lease in hope more. for sector, that if and Investment basis. posted coming summary, and McKenna forward to remains rent Estate the new in with us of Manager; Samantha Controller; Resources In

we on portfolio good We were exciting at are pace working Lubert-Adler. and building new with strategic And to again. acquiring be a a properties venture

will Gerry through Now, financial results. you Gerry? take the

Thanks, Bill.

excluding $XX.X We level return in generated million adjustments. non-cash results $X.X in quarter. with the Our quarter the more quarter. line after and rental normalized related items income impact straight on second rental accounting rental third in cash and X less million comments to the income of for quarter of COVID-XX third this other of

rental quarter. –rent third the deferrals no in had we First,

paid may the you in rent by in still which $X.X cash expect second and deferred quarter, to recall, we As the the of end second quarter the year. we of recognized million be

expected did part abate are second for be deducted with of the life any that to then we a amendments rent several $X.X period, of rent rent. company agreed required not as incentive part to where lease current complete treat cases abated We did the in rent and amendments, revenue we we AFFO as as as from of amortized the last abates the in against we had abate appropriate quarter to the which million $X.X guidance third on quarter's future line to quarter straight remaining rent revenue abated over quarter third abate. accordance lease adjustments. rent call the leases disclose GAAP in had Secondly, lease the recognize million the of the we revenue GAAP in the as rental in rent We QX

FFO from rent from We of the NAREIT abated FFO. deducting AFFO. are rent the in deduct $XXX,XXX remaining We did third accordance the abated definition not quarter with of

balance XX% at approximately referenced This are as credit QX to taking of or or our collected rent abated contractual XX% for means and QX deferred also Bill collectability Finally material after account on the had collected rent we collections mentioned, in leases and and the current September our in $XXX.X annual run remains On weighted change above. - no over into we impairments XX as and reserves XXXX rent the in base annual XX, quarter, of rent XX-year approximately cash in no at place also sheet escalator a quarter. rate for X.X%. had million the third cash basis, average is

November of the X leases increases each original year, year. the including X.X% reminder, all As of a by on rent this Darden on

to million number increased rental properties EBITDAR X tenant third includes financial coverage note prior Following last through see coverage or time will historical we payment operations may year-to-date is will to is extended today. be expectation and point a again financial to for to periods the you that reporting up also This Similar levels. the in our current tenant rent This excluded because we other we our is quarter, be careful from $X.X term Bill, It items. allowance pandemic includes made longer our have purchased in quarter. representative normalize, present return and among invested exchange the rent as tenant COVID-XX enhanced of of on tenants quarter much not operations. reporting to we this no want million we $XXX.X that that of a

to in of for due rent per impacted for above. the share Our negatively third business year-over-year results. quarter represented in and mentioned AFFO Kerrow were $XXX,XXX our abated Results approximately I quarter per a the share operating adjustment to as results $X.XX increase COVID-related variances by $X.XX second $X.XXX

program $XXX in on and we million over stock million and X.X with proceeds revolving $XX availability to full ATM of issued million. ended $XX.XX average via the common gross $XX.X shares operating We the balance million Turning of credit sheet no reserves. our of balance of for quarter, at of a weighted the line the quarter price cash

third the to in X.X strong Our leverage quite net committed X charge X.X quarter of We at debt coverage with leverage EBITDAre of times and times remain target net end. a fixed quarter debt metrics times. below maintaining a X remain to to adjusted

of Finally, our to represented ratio of paid per of full third Bill quarter comments. for dividend $XX.X a AFFO. closing share, payout we With back that, XX% which

Gerry. Thanks,

in call, on we anniversary the As of when open we're I Xth mentioned, founding. closing our next week our

grateful to to counsel, all are investors supporting our of always you, Board throughout. who and meaningful our We members, debt us who provide have and been equity

otherwise X the Over derive upcoming approach, opportunities prudent joint to questions speaking virtual of tax-motivated whether COVID-related the from and look the or forward marketplace, investment in portfolio. or we've available vacancy capitalization, venture. to are with We in in last now answer our they and conservative been any quarter in in take during the stand to of the selling many from years, advantage NAREIT meetings the ready you our

will for With out. Q&A. that, we reach please Judith turn over it to So back

question-and-answer [Operator from will We the Instructions] Please go is with Crossett session. first begin Nate ahead. now question Berenberg. The

good morning, Hey, guys.

Nate. Good morning,

looks Hey, obviously, how you the some can was into of end strong us wondering on pipeline the I color going XQ, year. with if give a the

Brookfield close also, You potentially? this the mentioned Can agreements? you and can much quantify left remind us sales. tax-driven Seritage for on how to you try the and And us

Sure.

depending we're in year. deals, be So imagine all tax-motivated transactions, presentation on an far of don't And going the and end election, weeks. exactly filing we'll be as to that much very could mall-outparcel quite but appendix. of see overall, couple detail on very been busy, the as busy ramping it's But a on the pipeline the the outcome these the how will the know updated last of

say simply So or pipeline about we we're I'd guidance don't provide but talk busy. very amounts,

Okay.

back eventually from recent curious, venture - to acquire Lubert-Adler, Did full to million the you did the how stabilized? just [indiscernible] could with you to Or guys. is this something them $XXX for about? that them? come On they I'm you? you go is Did And just once where come everything trying I'm

Sure.

it's buy properties. difficult non-income-producing So as a REIT to very

bring in work brought expertise in We we and so, introduced outside over our And very specifically investor who a we're wanted excited to an capital, for with And well that to known capital outside by platforms, both Lubert-Adler. of it. were with decade. we've

So think thus in. expect has of strategic - we ways really for looking it full it's really acquisition are XXXX for as relationship far. that been And well invest as be working we who significant be will for to number ownership, potential will we that a and properties I eating grow. the for XXXX our a being our terrific do tenants acquiring the volumes,

guys it venture? is is who you or doing of Okay, sourcing the it it…? most Is guess, that potential I legwork or is in the for properties them like

in are worked actionable. already obviously, with every list collaboratively. We we're counterparties that ample even market that But, providing we've are of day. are this mall And working properties an the

just Okay. weightings properties, of retail just potpourri is the the it types And stuff? of a maybe of is or going through be run on mostly restaurants to it

to that other to brands restaurants. mostly pre-COVID, that will Captain restaurant. come source from be Ponderosa, certainly, property brands will won't Sizzler, Red away work the we that with. D's, those property things these the types will are But were I largely really that it brands be made through. And were pre-COVID. we of difficult But has the going vacant be kinds it like how think think I the Roof, struggling Fuddruckers, And Huts, COVID of see Pizza struggling like shy

Okay.

taken you the that? new or high-quality looking of dialogue when immediately And them or mean, I to and we're these are have joint of they're a the So, right we in successful saying kind how can restaurant when now, guys brands you is you them, for locations? venture, you for with - say so, and assets, go kind location

I think going grow Chili's this. and that out winners DJ's Bell also marketplace, that's And, for this real solution we in precisely but and provide Darden, like growth. it. and coming to Taco brands brands like The want estate KFC, of are to

Thanks. Okay, me. that's it for

the in last been with we've And constant dialogue months. over those few brands

Okay, thanks.

Judith, Nate. Thanks, question? next

next The from go Sheila ISI. ahead. question with McGrath Please Evercore is

the work a on terms property will if pricing acquisitions pricing? the envision wondering you much bit And cap if to agree Yes, I advantage? favorably more on you you Bill, good do on how that pricing once morning. so, on could compare will the the venture, is rate How market, give and these us in detail the the joint about REIT to auction an was how on little leased? mechanism might

Sure.

a have can cap purchase - purchase negotiate So isn't to obligation the and therefore basic we and credit. reciprocally but points at. fair price, to to we would XX the properties. have against table fixed a price. don't And there rate that purchase demand the that The the an to or I in math transaction work We'll out them fact basis XX if is the rate with note earn in crediting cap brought promote we that promote to

want of we promote, partners. property. to obviously, ownership generating they the our which so, be is frankly, I with not understand But fair And think well-located long-term and motivation, to clearly fees be high-quality but our

fair very and straightforward Lubert-Adler dealings. it's been a has thus negotiation, far, their So in

looking So on to we're that. forward executing

mall bought relationships you And then, on the leased properties. mostly

those enable purchase and this back properties. vacant to if possibly go wondering Just would venture you to partners

Precisely. already doing And we're so.

that lined the revenues? mentioned, X.X% will one. Darden Gerry, And on into that you X. statement? Or Okay, November already you how in I rent Is we income think, one straight increase said last see the that great.

part in line. you'll see it's just straight that our increase revenues. income, capped cash I'm of Yeah, already our the quarter saying in fourth

Thank you. perfect. Okay,

Sheila. Thanks,

James. The is with next question ahead. Raymond from go RJ Milligan Please

guys. Hey, good morning,

in Just the the question. non-restaurant been quarter The X and than past. bit mix properties little in it's acquisitions higher a towards third was

forward going mix that envision acquisitions? you how curious Just for

greater. A is non-restaurants. Yeah, coming - master time. plan so, obviously, these nothing we properties so think change evenly specific… certainly, widened of are specifically, are aperture our lot Seritage address But that to more as we've a bit we distributed a sensible. deals will restaurants to behind we're RJ or not between buy the we've property like And But The been mix there's that that of that going have other into feel deals, pipeline. look over we were looked can in not is planned a it's the amount types, we little which and through year-ago just something then properties the and

[indiscernible]. Okay

Thanks, RJ.

Please John is Massocca Thalmann. ahead. go question next from Ladenburg with The

Good morning.

Good morning.

as that, if So build publicly the lockdown, do fact risk, maybe today, of looking it's look second of tenants outside context either portfolio go is maybe your current helpful? first being to slightly of and in think longer restrictions do term? or it they've any you to traded, at known, you portfolio are done up reserve we color publicly the be and would kind X a commercial light in stand end there little these volatile portion into capital roughly today that what if at a of the of of some kind Just a what at the but kind the environment,

Very small.

structured for a disposed could kind something view about into of portion term term, but of, that maybe fully potentially investment And the I is of kind lease in kind it's you recent that or be of business an obviously, of Kerrow, guys? think of a into Okay. longer keep? then, restaurant you longer net been want kind to insightful either that months, of Or more industry,

Sure.

an Valley, and business, Kerrow, business. obviously, runs by who San to are to that they're important professionals. Antonio, in from Kerrow in understand here day well-run in that been runs valuable managing keep extraordinarily Kerrow, report the is day, but X how it's who very business And partners that Mill true it's overseen her think I So operating. to that mind

a It it very and think a day-to-day allows going us So that. I put it's I'll proven we obviously what's but it's to which with grow explore land understandable to that able provides And we an wouldn't purchase able further a learnings be had to risk into this on of Xth some can to we exactly sort leave little we normally basis. valuable, in numbers, which to of were mindful be that of at in way that property, explore Olive negotiate want understand some our tenants Garden noise growth summer bit and as process. adjacent very as it on

So, insightful certainly changes contact daily again, business additional plans no revenue, creating but in making today. were very she We what with very well in exactly going the they Kerrow which on was was during the as were run, spring. on of ways

That's much. very it me. for you Thank

Sheila [Operator McGrath go Instructions] question is Please Evercore. The with from follow-up next ahead. a

was adding any wondering, if fourth I Yes, quarter and in going you're the G&A expect XXXX? we up personnel into acquisitions, should since increase ramping for with -

at look wouldn't fourth going much forward. as quarter I as

I don't substantial. anything increases. capability, number properties' change of more But Lubert-Adler on maturing of be I to careful we've G&A. from as surprising that, the in but offset think we our economics team, the in some bringing very We're just nothing been G&A But think folks. addition will increase have a G&A venture. the as will the to now, And

just how should some the modeling on immaterial we about be stream that? or or should And think JV, then, fee other of it's sort we income

capturing to paying. create I or that of pipeline the tenants, not this, once really XXX% intend management leases, not business. promotes. It's of great lease mean, long-term ownership It's have a properties to are asset Sheila, doing our for is providing we reason forum onetime an

it the we're does, unfold. of it, on to I execute So the amount how it additional it incur will that's going to thinking way that I'm will think in it certainly the venture. some joint of the offset, - But overhead order plan

Okay, great. Thank you.

session. Morgan registered. Mr. over like would to to remarks. concludes questions are I any our question-and-answer There more conference closing turn Instructions] This the for [Operator no back

Bill?

to like available all's If None questions. anyone reach everyone. Thanks. would Thanks, me. out. for chat, We're Hope certainly for well.

you. Okay. Thank

concluded. Thank now for today's attending presentation. has conference you The

now You disconnect. may