Four Corners Property Trust, Inc. · NYSE:FCPT
Four Corners Property Trust — Q3 2024 Earnings Presentation
43 slides from Four Corners Property Trust's earnings presentation, Oct 31, 2024
Slide 1: Investor Presentation October 2024
Four Corners Property Trust NYSE: FCPT INVESTOR PRESENTATION OCTOBER 2024
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
Slide 3: Contents
CONTENTS 1 COMPANY OVERVIEW PG 3 2 HIGH QUALITY PORTFOLIO PG 11 3 ASSET SELECTION & PRIMARY SECTORS PG 19 4 CONSERVATIVE FINANCIAL POSITION PG 32 5 APPENDIX PG 35 OCTOBER 2024 3
Slide 4: A Unique Platform Within Net Lease
A UNIQUE PLATFORM WITHIN NET LEASE HIGH-QUALITY PORTFOLIO • Portfolio built to be e-commerce resistant, with tenants providing in-person services • Strong tenant rent coverage, national brands and low rents provide for high tenant retention and limited vacancies TRANSPARENT, ANALYTICAL, DISCIPLINED
Slide 5: FCPT's Differentiated Approach
FCPT’S DIFFERENTIATED APPROACH Thoughtful, Tactical, Granular “Shareholders First” 1 Portfolio Building 2 Superior Capital 3 Approach Raising & Allocation o Portfolio is led by Darden, an o Focus on the most efficient means o Hyperfocused approach leads to investment grade restaurant to source capit
Slide 6: FCPT Key Highlights
FCPT KEY HIGHLIGHTS PORTFOLIO1 FINANCIAL 1,176 leases $0.43 AFFO per share (Q3)4 156 brands $0.41 FFO per share (Q3) 99.6% occupied $0.27 Net Income per share (Q3) 5.0x tenant EBITDAR coverage2 $132 million at 7.2% cap rate of acquisitions YTD 1.4% average annual escalator Over $380 Million liquidit
Slide 7: Consistent Annual Acquisition Growth
CONSISTENT ANNUAL ACQUISITION GROWTH FCPT has consistently delivered growth and diversification through new acquisitions. We focus on credit-worthy tenants, high quality real estate and efficient execution PROPERTY COUNT 1111 1153 1023 919 799 699 610 475 515 418 +57 +40 +95 +89 +100 +120 +104 +88 +
Slide 8: Portfolio by Brand Annualized Base Rent
1,176 Leases / 156 Brands PORTFOLIO BY BRAND Annual Base Rent of $229.2 million1 35% Olive Garden (vs. 74% at inception) FCPT PORTFOLIO ANNUALIZED BASE RENT 21% Non-Restaurant Exposure 49% Darden (vs. 100% at inception) 314 leases 35% 116 leases 10% 82 leases 8% 10% 29 leases 2% 8% 13 leases 2% 35%
Slide 9: Lease Maturity Schedule
LEASE MATURITY SCHEDULE 7.3 years weighted average lease term 99.6% %ANNUALIZED BASE RENT1 Darden Spin occupied2 as of 9/30/2024 Other 4.5% < 4.4% of rental income 7.7% 6.8% matures prior to 2027 8.5% 7.9% 7.1% 6.3% FCPT has had very high renewal rates on lease 4.9% 4.5% 5.3% maturities to date 4.5%
Slide 10: Company Momentum Since Inception
COMPANY MOMENTUM SINCE INCEPTION AS OF 9/30/24 Team members 4 35 + 31 $94.4 million $229.2 million + $134.8 million (+143%) Annual base rent1 Properties 418 1,176 + 758 (+181%) 5 156 + 151 Brands 100% 49% - 51% % Darden2 15 years 7.3 years - 7.7 years Weighted avg lease term Equity market cap $848 m
Slide 11: High Quality Portfolio
CONTENTS 1 COMPANY OVERVIEW PG 3 2 HIGH QUALITY PORTFOLIO PG 11 3 ASSET SELECTION & PRIMARY SECTORS PG 19 4 CONSERVATIVE FINANCIAL POSITION PG 32 5 APPENDIX PG 35 OCTOBER 2024 11
Slide 12: Unique and Highly Secure Net Lease
UNIQUE AND HIGHLY Ground 81% structurally SECURE NET LEASE Leased superior to regular way net lease 11% • Our portfolio is primarily outparcel properties in high density retail corridors High Quality • ~81% of rent featuring unique benefits structurally Ground & superior to regular-way net lease. Th
Slide 13: FCPT's Strong Portfolio Performance
FCPT’S STRONG PORTFOLIO PERFORMANCE FCPT has one of the highest-quality portfolios in the net lease sector and has established a strong track record over time (even through the COVID-19 pandemic) RENT COLLECTIONS 99.5% 98.8% 99.6% 99.6% 99.7% 99.8% 99.8% 99.8% 99.7% 99.9% 99.8% 99.7% 99.9% 99.7% 99.
Slide 14: Geographically Diverse Portfolio
WA GEOGRAPHICALLY MT ND ME DIVERSE PORTFOLIO OR ID MN VT NH SD WI NY MA WY MI RI • Lower income taxes and growing IA PA CT economies has accelerated a population NV NE IN OH NJ UT IL DE shift toward low-cost of living states in CA CO WV MD the southeast KS MO KY VA NC TN • FCPT’s portfolio is primar
Slide 15: Diversification with National Brands
DIVERSIFICATION WITH Sq Ft Sq Ft / Unit NATIONAL BRANDS Rank Brand Name 1 Olive Garden # 314 (000s) 2674 (000s) 8.5 % of ABR1 35.3% 2 Longhorn Steakhouse 116 650 5.6 10.0% 3 Chili's 82 450 5.5 7.5% TOP 25 FCPT 4 Buffalo Wild Wings 29 177 6.1 2.5% PORTFOLIO BRANDS 1 5 Cheddar's 13 112 8.6 2.1% 01 03
Slide 16: Balanced Credit Among Top National Brands
BALANCED CREDIT AMONG TOP NATIONAL BRANDS FCPT's Top 25 Brands Total Unit 2023 Total Publicly 1 2 # Brand Count Sales ($mm) Traded? Over the nine years since FCPT’s 1 Olive Garden 920 $5,067 Yes (DRI) inception, we have targeted brands 2 Longhorn Steakhouse 575 $2,806 Yes (DRI) 3 Chili's 1,214 $3,
Slide 17: Casual Dining: Size & Scale vs. Top Franchisees
FCPT CASUAL DINING ANCHORS vs. FRANCHISE TIMES TOP 200 FCPT CASUAL DINING: STORE COUNT (2023) SIZE & SCALE vs. TOP FRANCHISEES 1,914 1,605 1,189 • Publicly traded casual dining operators maintain a significant size and scale 398 304 advantage over hundreds of franchisee 165 131 103 tenants in the ov
Slide 18: The Benefits of FCPT's Darden Leases
THE BENEFITS OF FCPT’S DARDEN LEASES • After 9 years of diversifying through new acquisitions, Darden is now ~49% of FCPT’s rent roll by ABR1 • Darden is a strong anchor tenant for our portfolio and one of the preeminent casual dining operators globally o BBB / Baa2 credit, $11 billion in revenue, $
Slide 19: Asset Selection & Primary Sectors
CONTENTS 1 COMPANY OVERVIEW PG 3 2 HIGH QUALITY PORTFOLIO PG 11 3 ASSET SELECTION & PRIMARY SECTORS PG 19 4 CONSERVATIVE FINANCIAL POSITION PG 32 5 APPENDIX PG 35 OCTOBER 2024 19
Slide 20: FCPT's Primary Sectors
FCPT’S PRIMARY SECTORS • Our portfolio is principally leased to restaurants, auto service and medical retail tenants Low Rent & Fungible Real Investment Estate • The intentional focus on (small / medium these subsectors reflect a Basis building size in multi-tiered filter that favors attractive fung
Slide 21: Acquisition and Underwriting Framework
ACQUISITION AND UNDERWRITING FRAMEWORK CREDIT CRITERIA REAL ESTATE CRITERIA ~50% ~50% • Guarantor credit and health • Location • Brand durability • Retail corridor strength & demographics • Store performance • Access / visibility • Lease term and structure • Absolute and relative rent • Pad site and
Slide 22: Selective Approach to Net Lease
SELECTIVE APPROACH TO NET LEASE • FCPT’s initial portfolio was established in 2015, fully constructed after the advent of online shopping • FCPT utilizes a consistent underwriting process that examines credit and real estate quality prior to investment • Our disciplined underwriting approach has ult
Slide 23: Restaurants
RESTAURANTS • FCPT seeks to acquire nationally recognized branded restaurants from premier lease guarantors located within the strongest retail corridors • FCPT has increased its restaurant diversification since inception by targeting a variety of meal price-points, cuisine types, and geographies •
Slide 24: Restaurant Industry Targets
RESTAURANT INDUSTRY TARGETS FCPT prioritizes tenant credit, fungible real estate, and concept durability in its restaurant investments • FCPT pursues mature, national brands FCPT’S CURRENT FOCUS FCPT GENERALLY AVOIDS1 with significant scale in terms of units, Casual Dining In-Line Real Estate revenu
Slide 25: Real Estate Characteristics: Casual Dining & Quick Service
FCPT REAL ESTATE CHARACTERISTICS: CASUAL DINING & QUICK SERVICE Olive Garden HOUSTON, TX • Adjacent to Willowbrook Mall and several other shopping centers, with ample parking • Excellent visibility and prominent Farm to Market 1960 Road – 34,500 Vehicles per Day retail position along frontage of Far
Slide 26: Auto Industry
AUTO INDUSTRY • Principally targeting auto service centers, including collision repair and tire service leased to credit worthy operators. We have made select investments in gas stations with large format convenience stores, car wash and auto part retailers at attractive, low bases • Focus is on pro
Slide 27: Auto Service Industry Targets
AUTO SERVICE INDUSTRY TARGETS FCPT targets categories for the long-term with high renewal probabilities • FCPT targets categories in the Auto FCPT’S CURRENT FOCUS FCPT GENERALLY AVOIDS1 Industry that are not tied to Collision Service Centers High Basis / Franchisee traditional, gas-powered vehicles
Slide 28: Real Estate Characteristics: Automotive Service
FCPT REAL ESTATE CHARACTERISTICS: AUTOMOTIVE SERVICE Discount Tire Coralville, IA • Outparcel to Coral Ridge Mall, a Brookfield Properties center Coral Ridge Ave – 28,000 Vehicles per Day • Hard corner and mall ring road provide plenty of vehicle traffic, access, and parking • Grouped with several o
Slide 29: Medical Retail
MEDICAL RETAIL • FCPT’s largest medical retail exposures are focused on outpatient services: urgent care, dental, primary care, veterinary care, and outpatient / ambulatory surgery centers • Medical retail is e-commerce and recession resistant given its service-based nature, large customer base and
Slide 30: Healthcare Industry Targets
HEALTHCARE INDUSTRY TARGETS Healthcare delivery occurs across a spectrum of real estate and operator cost structures • FCPT target operators provide services FCPT’S CURRENT FOCUS FCPT GENERALLY AVOIDS1 that require in-person interaction, while (Pharmacy & High Accuity) having lighter asset needs and
Slide 31: Real Estate Characteristics: Medical Retail
FCPT REAL ESTATE CHARACTERISTICS: MEDICAL RETAIL To Walmart, Meijer WellNow Chicago, IL • Adjacent to Walmart, Meijer, Whole Foods, Macy’s, and other S Western Ave – 31,000 Vehicles per Day major anchors • Signalized hard corner provides plenty of access and exposure to vehicle traffic W 95th Street
Slide 32: Conservative Financial Position
CONTENTS 1 COMPANY OVERVIEW PG 3 2 HIGH QUALITY PORTFOLIO PG 11 3 ASSET SELECTION & PRIMARY SECTORS PG 19 4 CONSERVATIVE FINANCIAL POSITION PG 32 5 APPENDIX PG 35 OCTOBER 2024 32
Slide 33: Conservative Financial Policies
CONSERVATIVE FCPT maintains a well-laddered debt maturity and 100% FINANCIAL POLICIES unencumbered assets to provide financial flexibility • Weighted average debt maturity 4.0 years • No near-term debt maturities prior to November 2025 DEBT MATURITY SCHEDULE ($ MILLIONS) Conservative leverage Undraw
Slide 34: FCPT's Consistent Leverage Range
FCPT’S CONSISTENT LEVERAGE RANGE FCPT has a stated leverage target of 5.5x-6.0x, but has been below or in the lower range of its target since inception Discipline around our leverage is embedded into company culture and our approach to funding growth FCPT HISTORICAL LEVERAGE1 5.8x 5.7x 5.7x 5.7x 5.7
Slide 35: Appendix
CONTENTS 1 COMPANY OVERVIEW PG 3 2 HIGH QUALITY PORTFOLIO PG 11 3 ASSET SELECTION & PRIMARY SECTORS PG 19 4 CONSERVATIVE FINANCIAL POSITION PG 32 5 APPENDIX PG 35 OCTOBER 2024 35
Slide 36: Underwriting Geared Toward Higher Sales Volume & Brands
UNDERWRITING GEARED TOWARD HIGHER SALES VOLUME & BRANDS Brand Average Sales Volume ($000s)1 Casual $7,000 Dining Quick Service $6,000 FCPT focuses on national brands with strong sales volumes and market appropriate rents Fast Casual $5,000 $4,000 $3,000 $2,000 $1,000 $0 FCPT pursues properties withi
Slide 37: Historically Tight Leasing Market Is Keeping Vacancy Low
HISTORICALLY TIGHT LEASING MARKET IS KEEPING VACANCY LOW U.S. gross construction vs. demolition of retail space U.S. retail vacancy rate Despite an increasing number of retailer bankruptcies, the decade-plus long slowdown in retail space deliveries due to the Global Financial Crisis and the COVID-
Slide 38: Sustainability Framework
SUSTAINABILITY FRAMEWORK Our commitment to sustainability and Environmental, Social and Governance (ESG) principles creates value our shareholders. We continuously review our internal policies to advance in the areas of environmental sustainability, social responsibility, employee well-being, and go
Slide 39: Glossary and Non-GAAP Definitions
GLOSSARY AND NON-GAAP DEFINITIONS NON-GAAP DEFINITIONS AND CAUTIONARY NOTE REGARDING Tenant EBITDAR is calculated as EBITDA plus rental expense. EBITDAR is Adjusted Funds From Operations “AFFO” is a non-GAAP FORWARD-LOOKING STATEMENTS: derived from the most recent data provided by tenants that discl
Slide 40: Reconciliation Schedules
RECONCILIATION SCHEDULES RECONCILIATION OF NET INCOME TO ADJUSTED EBITDARE (In thousands) Three Months Ended September 30, Nine Months Ended September 30, Unaudited 2024 2023 2024 2023 Net Income $ 25,612 $ 24,192 $ 74,388 $ 71,003 Adjustments: Interest expense 12,324 12,276 36,929 32,245 Income tax
Slide 41: FFO & AFFO Reconciliation
FFO & AFFO RECONCILIATION ($000s, except shares and per share data) Three Months Ended September 30, Nine Months Ended September 30, Unaudited 2024 2023 2024 2023 Net income $ 25,612 $ 24,192 $ 74,388 $ 71,003 Depreciation and amortization 13,572 13,382 40,312 37,308 Realized gain on sales of real e
Slide 42: Footnotes
FOOTNOTES PAGE 6 FCPT KEY HIGHLIGHTS Figures as of 9/30/2024 1. Weighted averages based on contractual Annual Cash Base Rent as defined in glossary, except for PAGE 18 THE BENEFITS OF DARDEN LEASES occupancy which is based on portfolio square footage. See glossary on page 39 for definition 1. Annual
Slide 43: Thank You
Four Corners Property Trust NYSE: FCPT THANK YOU INVESTOR PRESENTATION OCTOBER 2024
Four Corners Property Trust — Q3 2024 Earnings Presentation on 6ix