Four Corners Property Trust, Inc. · NYSE:FCPT
Four Corners Property Trust — Net Lease Summit (July 2017)
34 slides from Four Corners Property Trust's conference presentation, Jul 25, 2017
Slide 1: Four Corners Property Trust Net Lease Summit Presentation
Four Corners Property Trust NYSE: FCPT Net lease summit presentation
Slide 2: Forward Looking Statements and Disclaimers
Forward Looking Statements and Disclaimers Cautionary Note Regarding Forward-Looking Statements: This presentation contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include all statements that are not historical statements of fact and t
Slide 3: Discussion topics
Discussion topics Overview of FCPT Acquisition Methodology Restaurant Net Lease Market Update
Slide 4: FCPT Management Team
FCPT Management Team William Lenehan President and CEO o: 415-965-8031 c: 415-264-1159 Gerald Morgan CFO Former Board member and Chair of the Finance and Real Estate Committee at Darden Restaurants, Inc. Private investor in net lease retail real estate Member of the Board of Directors of Macy’s, Inc
Slide 5: FCPT Acquisitions Team
FCPT Acquisitions Team Patrick Wernig VP, Acquisitions pat@fcpt.com 415-965-8038 Joshua Zhang VP, Acquisitions josh@fcpt.com 415-965-8037 Former investment banker at JPMorgan Chase & Co in the Real Estate division Worked with Darden Restaurants on the creation and spin-off of Four Corners Property T
Slide 6: Company Overview
Company Overview Overview of fcpt
Slide 7: Overview of FCPT
Overview of FCPT Four Corners Property Trust (“FCPT”) is an investment grade rated REIT primarily engaged in the ownership, acquisition, and leasing of restaurant properties 506 properties, diversified by geography and brand, 415 of which are leased to Darden under long-term triple-net leases 5 init
Slide 8: Overview of FCPT (Continued)
Overview of FCPT (Continued) Strategy to grow and diversify portfolio through acquisitions and sale leasebacks Low leverage and flexible unsecured capital structure to support diversification strategy Post-spin investment activity to date: Acquired 91 properties, across 15 restaurant concepts, for $
Slide 9: Portfolio map: 506 properties, 44 states, 20 brands
__________________________ Note: Map and figures updated as of 6/30/2017; Excludes six owned or ground leased properties that comprise the LongHorn San Antonio Business, which are operated by a taxable REIT subsidiary (“TRS”). 506 Properties 44 States 20 Brands 3.6mm sq ft national footprint with in
Slide 10: Acquisition criteria
Acquisition criteria Properties: Single-tenant restaurant properties net leased to credit-worthy tenants operating well-known brands Existing leases or new sale-leasebacks Minimum deal size of $1 million Geography: All 50 states and Canada, currently in 44 states Tenant: Corporate or strong franchis
Slide 11: FCPT Properties in Chicago Metro and Greater Midwest
_ Note: Map and figures updated as of 7/19/2017 8propertie 2 States 3 Brands F C P T P R OP E R T I ES I N C H I C AGO METRO & GREATER MIDWEST 800 North 8th Street, Dundee, IL 701 N. Milwaukee Ave, Vernon Hills, IL 16601 Torrence Avenue, Lansing, IL 1650 Olmstead Drive, Portage, IN Eight locations i
Slide 12: Summary capitalization and financials
___________________________ EBITDA and leverage metric calculations based on current run-rate NOI including closed Q2 2017 transactions less Q1 2017 annualized G&A. Scheduled minimum contractual rent for the full year of 2017 for the portfolio as of 6/30/2017. Properties acquired in 2017 have rents
Slide 13: Acquisition Philosophy and Underwriting Criteria
Acquisition Philosophy and underwriting criteria Acquisition Philosophy Acquire nationally recognized branded restaurants that are well located with creditworthy lease guarantors Purchase assets only when accretive to cost of capital Increase diversification by targeting different brands, meal price
Slide 14: Conceptual Underwriting Strike Zone
“Ted Williams described in his book, The Science of Hitting, that the most important thing, for a hitter, is to wait for the right pitch…and that's exactly the philosophy I have about investing...wait for the right pitch…and it will come…it's the key to investing.” – Warren Buffett Conceptual Underw
Slide 15: FCPT closed acquisitions
FCPT closed acquisitions Note: Figures updated as of 6/30/2017. 1. Tenant of the three Buffalo Wild Wings sold its operations in April 2017 to a larger operator of 64 Buffalo Wild Wings restaurants
Slide 16: FCPT closed dispositions
FCPT closed DISPOSITIONS FCPT Closed 2016 / 2017 YTD Dispositions Note: Figures updated as of 6/30/2017. FCPT remains a net acquirer of real estate While the company receives many unsolicited offers to sell properties, only opportunistic and attractive cap rate offers are considered All proceeds fro
Slide 17: Current Public Net Lease REIT Trading Landscape
Current Public Net Lease REIT Trading Landscape Source: Company filings, Bank of Montreal, SNL Financial Note: Pricing as of 7/14/2017; ~45% of OLP’s NOI comes from retail properties.
Slide 18: Restaurant Net Lease Market Update
Company Overview Restaurant Net lease market update
Slide 19: Vast addressable market within restaurant industry subsectors
Vast addressable market within Restaurant industry subsectors The restaurant industry represents a significant piece of the US economy US retail sales were $4.7 trillion in 2015 Spending on food services comprised 13.3% of all retail, or $620 billion There are three subsectors within the industry Qu
Slide 20: Industry Benchmarking
INDUSTRY BENCHMARKING Subsector Breakdown Predominately Son % Freestanding Revenue Sector _Industyy _Net Leases 1 2 3 4 5 otal Quick service; Burger $80 314% 163% Yes MeDonalt's (46%) BurgerKing (12%) Wendy's (11%) Sonic Drivein(6%) Daly Queen (5%) 20% Pieza $38 149% 7.7% No Peza Hut (27%) Domino's
Slide 21: Chain restaurant sales and traffic trends
Chain restaurant sales and traffic trends Source: NPD, Black Box Intelligence, Morgan Stanley Research
Slide 22: Thoughtful brand selection aimed at protecting cash flow
Thoughtful brand Selection aimed at protecting cash flow Average Unit Sales Volume ($000s) The restaurant industry represents a significant piece of the US economy US retail sales were $4.7 trillion in 2015 Spending on food services comprised 13.3% of all retail, or $620 billion There are three subs
Slide 23: Rapid franchisee consolidation within restaurant industry
Rapid Franchisee consolidation within Restaurant Industry Units Owned by the Top 200 Franchisees Average units per Top 200 Franchisees Source: Restaurant Finance Monitor (June 2017). +7.1% CAGR +6.4% CAGR The franchisee industry is highly fragmented, but undergoing consolidation and growth by top pl
Slide 24: Food inflation
Food inflation Source: BLS, Morgan Stanley Research Eating out has become more expensive as Food Away From Home (FAFH) costs are rising more rapidly than Food At Home (FAH) costs
Slide 25: E-Commerce disrupting method of buying goods
E-Commerce Disrupting Method of Buying Goods Sources: U.S. Census Bureau, BI intelligence estimates, Goldman Sachs, Cushman & Wakefield research and U.S. Department of Commerce Digital’s Share of U.S. Retail Sales by Type of Retailer Relative to other retail sectors, the food & beverage industry has
Slide 26: Net leases: where do they fit?
Net LEASES: WHERE DO THEY FIT? Fungible Real Estate Net Lease Secured Bonds Unsecured Bonds Return Considerations: Market Rents Leasing / Occupancy Operating Expenses Capital Expenditures Management Costs Many Other Variables Initial Investment Yield Renewal Probability Rent Growth Interest Rate Rep
Slide 27: Valuation backdrop
Valuation backdrop Source: The Boulder Group Cap rates have fallen, along with interest rates and bond yields, to historic lows but have recently seen a slight uptick
Slide 28: Drive-thru considerations
Drive-thru considerations "The number one reason for excess property in our system is lack of drive-thru at the location. When we relocate, we sell, sublease, or terminate the lease early on the old location." -CDO, National QSR Chain While parking has always been critical to a restaurant’s success,
Slide 29: Brands recognize the economics of drive-thrus
Brands recognize the economics of drive-thrus "Drive-thrus create incremental revenues and profits compared to traditional stores and represent a fast-growing and highly profitable format for Starbucks, comprising just over one-third of our U.S. company-operated stores but contributing nearly 45% of
Slide 30: The impact of rent setting: assumptions and credit metrics
The impact of rent setting: assumptions and credit metrics Below is an illustrative income statement of a QSR set at 8% rent to sales 1) Represents the $ amount of EBITDAR that could be lost before falling below the stated coverage threshold.
Slide 31: The impact of rent setting: credit cushion
The impact of rent setting: Credit cushion Where rents are set impacts the decrease in EBITDAR a property could sustain before dropping below breakeven (1.00x coverage) ___________________________ 1) Represents the $ amount of EBITDAR that could be lost (gained) before falling below (reaching) the s
Slide 32: The impact of rent setting: rents and replacement cost
The impact of rent setting: Rents and replacement cost High rents provide less incentive for tenants to renew
Slide 33: The impact of rent setting: rent escalations
The Impact of rent setting: Rent escalations Further, contractual rent escalations must also be set prudently While higher rent escalations can provide a higher return on investment over the life of the lease, the initial rent coverage will dissipate if sales growth is outpaced by increasing rent ob
Slide 34: Four Corners Property Trust Net Lease Summit Presentation
Four Corners Property Trust NYSE: FCPT Net lease summit presentation
Four Corners Property Trust — Net Lease Summit (July 2017) on 6ix