Four Corners Property Trust (FCPT) 2 Nov 222022 Q3 Earnings call transcript

Ladies and gentlemen, hello, and welcome to the FCPT Third Quarter 2022 Financial Results Conference Call. My name is Maxine, and I'll be coordinating the call today. [Operator Instructions]. I will now hand over to Gerry Morgan to begin. Gerry, please go ahead when you're ready.

you. Thank

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

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

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

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

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

third included operators, We XX.X%. acquisition on cash and highly at third cash XX yield the of year-over-year. attractive AFFO top are the of in acquisition per for ground detail, X.X% rental for on in quarter remarks, place our strong the September XX has month increases financial and properties we outparcels which of rents Gerry the acquisitions million as discuss capital of to portfolio quarter but million and the quarter at near-term were reflecting higher continued well the with you results. reported $XXX Thank investment details remain of will acquired rental $XX the joining review XX represents including environment increase us the these in results. perform The pipeline, corporate-operated, exceptionally confident the X.X%, and the at existing to This XX. X% am with rent introductory make rent of you, will XX rents we revenues trailing interest are in quarter levels. our share, acquisitions at remaining of XX.X% third the soon in with Gerry. acute basis, as for Patrick rate to see XX.X% will higher months. around then a a operators of properties the increases are aligning mall especially at we occupancy environment collections discuss or year-over-year going $X.XX some best-in-class discuss morning. an became expectations the cost I benefit to properties capital on evidencing Good leases, in and cap We portfolio This brands, and grew Thank more rental of and environment. response in the to further rent credits been initial of entrenched low closing rates. last over pricing improve in place. more Patrick continue sellers' XX XX

We are to months portfolios actively above basis points have bidding where XXX points XX they a would few ago. basis on priced

already agreement seeing momentum delay QX in investments, and we pricing are a that closing. in We note many between is shift in but circumstances, there price of this our

inception, Since cases, this goal. also, capital, on our of have this we properties business incentives careful align cost been pipeline. have we've in in selective to pricing our sensitive to We to readdressed run and

has acquisition not on acquisition paid team For our volume. example,

In an don't properties a $X.X provides price for four when head provide This our X.X% us portfolio cash million, a alternative demand us of of capital team-based sold also are weighted properties rate. combined quality. sales and validation average quarter, of clear our source strong to The of and markets a capitalization portfolio for have acquisitions, approach allowed the to a we We flux. keep acquisition has we guidance. in representing

are which has and sales on casual tenants' and survey continue many downturn are to of as dining that operating focusing are XXXX approximately most compared the meals XXX% on in pressure approximately Quick quarter, recent October weekly operating XX. have XXX% our to restaurant to expecting levels most put Restaurant restaurants affordable, levels operators pricing. results reported a on recent sales Moving although weekly according performance. of on at service strong to keeping Baird's

even EBITDA reflect in at high-levels industry. for rent performance. net within portfolio coverage cushion how periods that this for environments. to These cash landlord to amongst ultimately is estimated setting our we on and Xx of This of We challenging provide inflation store that XX% importance the Our the of a leads rent reports stable the level economic where stood strongest coverage statistic. is that believe when impact the flows Xx coverage lease

opportunistically sheet. balance at amendment at of Gerry. continue credit utilizing investment our as alternative in our in source $XX.XX additionally, $X.X on equity our a years existing five reduced to raised certain of by expect million equity an support per of term extended average the which the debt raised we program week, maturities to would to announced and We dispositions and $XX additional quarter quarter accretive facility, also dispositions of price And years. to prior the the to raising than delever. Last an often proceeds. in or capital loans fund share $XX Thanks, and $XXX more the and circumstances. pipeline in million of at million We've XXXX million Turning dispositions helped pricing looked in We third rates.

conservative, first due turn our it $XX with until remains the XXXX. debt are to that, I'll maturity over With staggered million Patrick. leverage maturities fully not of and of June Our

closed investments Thanks, Bill. QX. by discussing start I'd like exposure to sector the of in

X% medical our other XX%; XX%; retail. for accounted and was remaining restaurants new comprised investments; quarter, the the was of retail auto service of XX% For

QX. softening There and Since rate rates. been a significant cap been a environment. April, market from on Turning shift the has expectation to sellers' the cap general we've observing of

on net local However, momentum past accelerated borrowing buyers trend a both the over institutional potential weeks, the The lease, rising out level. the costs that has of considerably. in XX and spinned pool for

be investment reduced cap in time are going on very or particularly the now rates and seeing selective to investments. of many above that opportunities; result though, prudent we near clear To a be As is competition, X%. interesting some we're new the think

where As deploy think sector in criteria; within the capital, our they established two, high or one, the tenant's cap a in the FCPT's we that profile previously whether credit we still interest sense and fits well to operate about: environment. how rate makes rates consider

price highly investment XX introduced rates where XXX what year. this we focused we're positive with but would mentioned know regularly priced remaining to with are to earlier, basis we that we the discipline best protecting pipeline. So on basis earlier assets this We'll the to submitting niche sticking spreads. offers have exercise continue at Bill higher cap than points are those now points in

close deals those in pipeline coming of and expected the are the in Some to months. are already

the outparcel Speaking more seeing we've corridors. and of sale out We leaseback the to capital continue more of pipeline This a that tenants related year, influx rest present of XXXX. We're built properties is rise attractive relative and anticipate costs, with those source the a a well-located opportunities retail in opportunities. high-quality into directly making debt in will basis. real on sales estate more to themselves

an as two a candidates disposition or front, their in underperformance the X.X% completed disposition Bill on properties of Applebee's, These King's the for at profitability. based stores store versus of Burger a were four comprised On million and quarter respective cap $X.X level we specifically the rate. selected brands Popeyes. Those sale mentioned, as were

time, particularly real cap while net our cap for are my quality. We that reacting about and pruning outlook landscape comments, for still the portfolio and changing with pleased To XXXX. in lease reiterate optimistic our strong achieved the we're off QX for I'd rate to we're

a for financial on Gerry, to discussion portfolio and results. turning Now, our

a impairments of reported current and non-cash XX.X% compensation $X.X Thanks, for Pat. as cash generated is cash escalator $X.X quarter. collections in expense, adjustments. We rental our million credit average annual five-year We quarter reserves cash stock-based the excluding XX X.XX%. the for nor On of leases material September balance No $XX.X Cash representing run million, annual excluding to the income cash rate weighted any rent quarter. after in of rental for million of $XXX.X collectability our million income. or the was changes in quarter and our place base X.X% straight-line other G&A third is sheet rental basis, rent third

balance the to sheet. Turning

capitalized are fund well to growth. We

As of share. agreements million At million three per $XX in million were of program million the third we X.X highlight ATM This via liquidity. capacity; of million million raised aspects net facility, forwards settlement. held in upon XX, of of that $XX.X forward announced we price prior quarter of bank of quarters, sales shares million $XX Pat and the proceeds of made Bill our we credit $XX.XX this from equity average $XX I September is million amended revolver $XX.X $XX mentioned, quarter quarter million up $XXX the with start anticipated third and October On we to and into wanted over and under an including at million of had with the cash $XXX $XXX refinancing. an forwards undrawn XX, entered available of

by First, due and of were and the amendment in term the extended in XXXX to in mature XXXX XXXX due unaffected loans Existing and million $XXX XXXX tranches term loan XXXX XXXX. stacking. private layering debt amendment. on Overall, We $XX our until and is first notes conservatism June maturity coming using not maturity million of to remain debt now committed due XXXX. our

basis SOFR and hedges where their of facility hedging to points bank the to the finally, on everyone transaction. a of credit XX the increased regular that have million basis in adjusted converted on fix to size an points term remind the variable we by new facility existing QX we program fund to all for programmatic partners reiterated you and rate we this rate much SOFR interest to term ongoing additional basis by of I investments. the Second, loans. FCPT $XX the for our margin X extend proceeds we Thank on rate who LIBOR over improved loans. And amended from the support

of on hedged in including term comment. the notes posted yesterday. on interest the loans rate all-in More our on fixed of our our also capital be all XX% presentation million website for issued, found fixed debt. private spread on million currently we has Corners the loan including Overall, investor the $XXX final information over of are average hedges an $XXX A XXXX. We rate X.XX%, Four can credit of rate $XXX outstanding have term rate million of at the of

the our X.Xx approximately is and Pro leverage, facility press swaps fixed have our forward Maxine treasury settling leverage remains described for XX-year for and in contemplated the coverage disclosed Xx fixing net that, $XX X.Xx, our debt remaining With million to to increased And we target As at below investor respect the X.X% approximately effectively forma rate in overall was with charge quarter the base equity issuance. also place, and turn release, well credit EBITDA third Q&A. we the deploying of to starting at leverage. debt of over healthy in it earnings forwards for estimate above, a X.Xx. we'll for our back long-term

Thank you. [Operator Instructions].

Paolone first Our comes ahead. go question Please Tony from from JPMorgan.

Your open. line is now

you'd first you the I yields, basis talked to mentioned Hi, guess, XX you. question, Thank Great. you'd about portfolios. Bill, point move in basis about mentioned you it, XXX when point talked think I

And this of wondering larger just type is movement are seeing across that you being so everything? like transactions? Or only seen just if for

Across board. board. the the Across

Okay.

to here? talk this to the into don't you're your wondering sort lean opportunity kind and just pipeline whether ability to to pool, buyers' but about of like the if how of Okay. you of movement you just more And know seeing the perhaps you size this size volume, manage that and I dropout and it. an And gives of do movement can

Yes.

is target-rich spring, reflect of think we -- said a I would acquisition year think environment. this what half the more the we provide second I will

half And be in that worked advantage able pipeline and well. that's modulated take pricing so second our year, of the of so out really we to we'd the

we So do how you stronger? think think the be will the about quarter Or fourth should near-term?

don't going years. own buildings for Yes. to I XX these -- I we're -- don't really

priced as have situated. the of an year, And some we're in pricing don't it mid-Xs on about feel cap we happy, where good rates our I very pipeline pipeline, competitors we that's last that very of we've at of market. and into -- basis, to frankly, acquisition that the very And I or we quarterly did. very properties close So we're didn't we're drop we many our happy with mentioned, a but as think readdressed

year. assets the So well I next think our prior I the on price us modulating mentioned, year and up of in as spring for bidding remainder discipline, of has set beginning the this very our

-- just the one on Okay. just thoughts. side I And thing your if ask could on tenant and

you get back recessions, in people's we happens buffering discretionary ends you more kind pulling the the I get in Just and is there's think credit if sort think see with just underlying what next are that trends how do of another dining hit a mix. income you'd Do bit the if of historically, in now a discretionary similarly casual the downturn, about tenant recession? you you really delivery of of up will? sort delivery item? Or think thinking

Yes.

levels. So been frankly. delivery Darden as delivery our in a casual conservative has But of of and dining have they're Brinker has been exposure as set has don't coverage dining on conservative our and a ton pretty casual tenant, so well, very most we -- at rent

more set we've for up been difficult times. So

our June rents Just reminder, COVID, July. as we a of collecting XX.X% or by through were

built for times. conservative So difficult portfolio we a have very

our the very to for well-positioned in we have we holds of environments. there, that so cost -- difficult portfolio capital capital And a our think macro extent

for the time. Thanks Okay.

Thank you. Appreciate the questions.

you. Thank

from question next Rob from Please comes Our ahead. Stevenson go Janney.

is open. line Your now

Bill, transactions, non-restaurant morning. better Good are in et restaurants, or one better rates, the cap over opportunities cetera? other seeing you

do any because because, across just whole main frankly, market But QSR is we're affected really three to dividends aperture in Board, QSR, we're borrowing in being cost the seeing of strategy seeing is having has the in a our would just premium. interesting reflect high the industry. across Xs. the But I paying that really now to even really stuff by broader stuff acquisition mid not particular typically readjusted trades a our to at pricing good verticals.

guys And you then of have minus about basically Okay. from plus or funding available question, looks two current the like other forward quarters acquisition unsettled deals.

or more. XXXX, is hung to better Do XX, on forward and $XX are equity of in right If How to more of current in sure just is we'll price have what? Is we Or the stock million no as stock price the have number goes about forwards it many do capital you amount thinking make won't. guys matter the simple peers. as XX, the there minus become environment? to it plus you the in right aggressive has than Your there? you here

it's you think of We're be the I that the to market-sensitive second forward. arguments opportunistic. put try we two and price-sensitive,

price in source. felt the us saw summer was it opportunistic making attractive now you when As our be stock an that we're funding clear we

Appreciate guys. Thanks, Okay. the time.

Yes. Great questions.

from from comes Please Our ahead, next Evercore. question go Wendy Wendy. Ma

open. now Your line is

Hi, everyone. my morning, taking Thank you questions. good for

question So have I just XQ's a very quick about acquisition cap rate.

-- recent rates So for but you improvement XQ, in cap and the mentioned below your computations that the levels. actually cash acquisitions, XQ XQ are your for the

-- XQ lower? curious So cap goes special just reason that is I there rate I'm just acquisition any

Yes.

one, QX. So just in two things, QX, a mix

and the properties in tended higher them acquisitions we're with mentioned, was more -- or QX. competitors you regime for I of raised set higher. if price at one think And pricing reporting our acquisitions see to probably would the sale capital properties is readdressed now a that say I mix of we some would have negotiating days to that to earlier. time lastly our paid just properties that recall. signing mention forward, where as a cap is. and We the in property condition on going in But and a reflect real allow then we've reports, QX your than also are X.X% was in cap is take in what purchase And what QX, number keep survey, I our rate, XX pricing then pipeline. rates. agreement, roof agreed up I QX diligence, will the I time, price QX mind, environmental reports, of title XX inspections that site June, due to causes May, inspections,

you. Instructions]. Thank [Operator

from ahead. Our next question Ladenburg go comes John from Massocca Please Thalmann.

line open. now Your is

is now -- a priced of now How the cap? as quick more of at that's was priced range that that's stuff basis X of of that that area roughly that, of on a a expansion, cap mentioned think out basis question And target Just in much kind was to bifurcation kind you that much that above level of speaking, attractive expansion? points. is the of about kind XXX points how kind because we rate maybe your X.X XXX stuff of

Sure.

might it's combination, lower. deals QSR to trying XX on said points XXXX to basis XXX that sold a points, points team the they sneak in XX we to little basis but have points points, XX to say basis would us, basis I'll to XXX year need relay So the exchange acquisition earlier you're John. It's XXX they basis work market points I a this basis that a right? that harder.

there's Now who who from the high-yield gamut. that have business of buyers re-traded looking proceeds to want folks around close. on and financing. can't an lease now the It's at get rely markets and alternative. It's It's net they they the attractive surety whole would finance additive want typically as capital [ph] who been deals are individual market their

interesting year. were we're year We're stuff it our of the this or plenty so we this of half capacity seeing have next execute earlier beginning to work year to happy of playing to on. business really the second of plan that And very slow sort

not we So us because to a it's selected. on now feel diverse close many, really point, coming of that to And range well-positioned. acquisitions, capital the frankly, we they're earlier they your we back really have John, bid and But know were to deals.

the as on that I think bar the high for Maybe about side. Apologies -- setting acquisition Okay.

job, my but actually That's I it. appreciate

a little there the back very Or on to market, of you kind competitive still or that that potentially has to? bit side, point last is look demand that rate-sensitive? maybe price where more granular the side even maybe months broken interest become you both disposition about the buyer a compete with is As on and a still of I for on acquisition over is six sell you that the even think have kind or XXXX

Yes.

So you're but had buying $X with has that we Whether I the whether everyone applies. billion do have XXXX, you're treasury rate. same success same compete them, selling. portfolios, rate would just We reflect the treasury buying

mortgages. have and I reflect XXXX Xs attractive powder periods pledging make capital in in borrowing we also that but XXXX even are And prior are us mortgage gives low Xs. or now typically so by rates buyers high rates in the very exchange buyers, which we do, acquisitions. market, that -- don't properties for to those very would their dry at benefited exchange raising That

So the not ability is there. to just financing get positive leverage through

And so buyer it attractive the REIT makes a counterparty. more

Thank you. This concludes for session today. our Q&A

remarks. I'll closing you back So hand for Bill to

Well, happy call. has Cheers. joining to than everyone, thank If reach you, questions, be We'd please anyone more for our out. any help.

you, This Thank and joining. gentlemen. today's you Thank concludes ladies call. for

now may lines. You your disconnect