Four Corners Property Trust, Inc. · NYSE:FCPT
Four Corners Property Trust — Q2 2023 Earnings Presentation
40 slides from Four Corners Property Trust's earnings presentation, Aug 2, 2023
Slide 1: Four Corners Property Trust Investor Presentation August 2023
FOUR CORNERS PROPERTY TRUST NYSE: FCPT I N V E S T O R P R E S E N T AT I O N | AU G U S T 2 0 2 3 www.fcpt.com 11 | F C P T | A U G U S T 2 0 2 3
Slide 2: Forward Looking Statements and Disclaimers
F O R W AR D L O O K I N G S T AT E M E N T S AN D D I S C L AI M E R S 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 histor
Slide 3: Agenda
AG E N D A Company Overview and Q2 Update Page 3 High Quality Portfolio Page 11 Conservative Financial Position Page 25 Appendix and Selected Supplemental Slides Page 28 33 | F C P T | A U G U S T 2 0 2 3
Slide 4: Top Ten Points About FCPT
4 | FCPT | O CT O B E R 2019 T O P T E N P O I N T S AB O U T F C P T 1. Strong Portfolio: 4.8x tenant EBITDAR coverage2 with nationally established brands and a focus on low rents. Recently constructed, e-commerce resistant portfolio High-Quality Portfolio1 2. Minimal Number of Near-Term Expiration
Slide 5: 2023 Year-to-Date Acquisition Summary
2 0 2 3 Y E AR - T O - D AT E AC Q U I S I T I O N S U M M AR Y FCPT closed $301 million of investments 2023 Acquisitions by Subsector ($ millions) 1 year-to-date through July 31. The subsector 2023 Closed YTD split by acquisition volume was 40% Volume % Total Cap Rate restaurant, 36% medical reta
Slide 6: Acquisitions by Year
AC Q U I S I T I O N S B Y Y E AR Property Count 1,098 1,023 +75 919 799 699 610 515 475 418 Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 YTD Volume Spin +$94 +$99 +$263 +$199 +$223 +$257 +$286 +$301 ($ millions) Cap Rate - 6.6% 6.8% 6.5% 6.5% 6.5% 6.5% 6.5% 6.7% FCPT has been built with a deli
Slide 7: Private Note Offering
P R I V AT E N O T E O F F E R I N G FCPT entered into an agreement to issue $100 million of senior unsecured notes on June 5, 2023. The 10-year Notes are priced at a fixed interest rate of 6.44% and a 5.39% yield to maturity including a $8.1 million interest-rate hedge gain. The Notes mature in J
Slide 8: Select Transaction Overview: Darden Portfolio
S E L E C T T R AN S AC T I O N O V E R V I E W : DARDEN PORTFOLIO On May 24, 2023, FCPT announced the signing of a definitive agreement to acquire up to 14 Darden restaurant properties (13 Cheddar’s Scratch Kitchen properties and 1 Olive Garden property) for a purchase price of $85.0 million on ini
Slide 9: Company Momentum Since Inception
C OM P AN Y M OM E N T U M S I N C E I N C E P T I ON November 2015 As of 6/30/2023 Representative Brands Restaurant Team Members 4 +34 38 +$113.2 million Annual Base Rent1 $94.4 million $207.6 million / +120% Properties 418 +659 / +158% 1,077 Brands 5 +138 143 % Darden2 100% -49% 51% Weighted Avera
Slide 10: Strong Recent Restaurant Results
S T R O N G R E C E N T R E S T AU R AN T RESULTS Baird’s weekly restaurant survey shows both quick service and casual dining restaurants continue to preform near or above prior year levels. Specifically, our three largest brands are continuing to leverage rising sales volumes and benefit from mod
Slide 11: Agenda
AG E N D A Company Overview and Q2 Update Page 3 High Quality Portfolio Page 11 Conservative Financial Position Page 25 Appendix and Selected Supplemental Slides Page 28 11 | F C P T | A U G U S T 2 0 2 3 11
Slide 12: FCPT's Strong Portfolio Performance
FCPT’S STRONG PORTFOLIO P E R F O R M AN C E 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% Q1 2020 Q2 20201 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Occupancy2 99.6% 99.6% 99.6% 99.6% 99.7%
Slide 13: Sun Belt Focused Portfolio
SUN BELT FOCUSED PORTFOLIO Lower taxes, the pandemic, and a shift toward work-from-home has accelerated a shift toward low-cost of living and high-quality of life states, especially in the warm weather climates of the Sun Belt ND WA MT MN ME SD WI ID MI VT NH OR WY NY IA MA NE CT RI PA OH NV IL IN N
Slide 14: Low Rent / High Coverage Portfolio
L O W R E N T / H I G H C O V E R AG E PORTFOLIO Tenant Rental Coverage1: FCPT’s portfolio is characterized by low rents and 5.5x high EBITDAR to rent coverage of 4.8x1 4.8x 49% of the portfolio is the original Darden spin 2.7x properties where rents were purposely set low as evidenced by strong
Slide 15: FCPT Evolution Since Spin-Off: Tenant Diversification
FCPT EVOLUTION SINCE SPIN-OFF: SIGNIFICANT PROGRESS ON TENANT DIVERSIFICATION Brand Exposure by Annualized Base Rent (ABR) Other Darden2 2% 14 leases 8% 83 leases 11% 20% 115 leases Other Restaurants 22% 104 leases Other Darden 315 leases 6% 57 brands 14 leases 74% 300 leases Auto Service 38% 9% / 1
Slide 16: Auto Service Net Lease
AU T O S E R V I C E N E T L E AS E FCPT’S INVESTMENT STRATEGY Current Portfolio of 133 leases (9% of annual base rent) in auto service sector1 FCPT is targeting auto service centers (including collision and tire), auto part retailers, car washes and gas stations with large format convenience st
Slide 17: Medical Retail Net Lease
M E D I C AL R E T AI L N E T L E AS E FCPT’S INVESTMENT STRATEGY FCPT’s medical retail portfolio includes 74 leases (7% of ABR)1 FCPT’s largest medical retail exposures are urgent care, dental, primary care clinics, veterinary care, and outpatient / ambulatory surgery centers Medical retail i
Slide 18: Medical Retail Net Lease: Outpatient Trends
M E D I C AL R E T AI L N E T L E AS E : OUTPATIENT TRENDS Over the past two decades, the availability and access to outpatient treatment has risen dramatically and resulted in more frequent visits across the population. Simultaneously, hospital admissions have declined as the healthcare system mi
Slide 19: Medical Retail Net Lease: FCPT Targets Within Healthcare
M E D I C AL R E T AI L N E T L E AS E : FCPT TARGETS WITHIN HEALTHCARE The delivery of healthcare services occurs across a spectrum of real estate and operator cost structures FCPT’s target operators provide services that require in-person consumer interaction, while having lighter asset needs an
Slide 20: Medical Retail Net Lease: FCPT's Investment History
M E D I C AL R E T AI L N E T L E AS E : FCPT’S INVESTMENT HISTORY • Since 2021, FCPT has invested $224 million into medical retail across 80 leases • Year-to-date in 2023, FCPT has already meaningfully outpaced medical retail investments in prior years • Within the FCPT Focus categories, the most e
Slide 21: Medical Retail Case Study: 9501 S. Western Ave, Chicago
M E D I C AL R E T AI L C AS E S T U D Y : 9501 S. WESTERN AVE, CHICAGO, IL Chicago Medical Center - Situated in a dense retail corridor in west Chicago - Strong demographics / traffic - National anchor tenants adjacent to target property - Fungible boxes with reuse potential outside of medical - De
Slide 22: Medical Retail Case Study: 9501 S. Western Ave, Chicago
M E D I C AL R E T AI L C AS E S T U D Y : 9501 S. WESTERN AVE, CHICAGO, IL 22 | F C P T | A U G U S T 2 0 2 3 22
Slide 23: Medical Retail Case Study: W North Ave, Melrose Park
M E D I C AL R E T AI L C AS E S T U D Y : 620 W NORTH AVE, MELROSE PARK, IL Melrose Park Multi-Tenant - Adjacent to Gottlieb Memorial Hospital, two colleges, and several nationally recognized anchor tenants - Heavy traffic and dense demographics - Re-tenantable box and desirable retail corridor - D
Slide 24: Medical Retail Case Study: W North Ave, Melrose Park
M E D I C AL R E T AI L C AS E S T U D Y : 620 W NORTH AVE, MELROSE PARK, IL 24 | F C P T | A U G U S T 2 0 2 3 24
Slide 25: Agenda
AG E N D A Company Overview and Q2 Update Page 3 High Quality Portfolio Page 11 Conservative Financial Position Page 25 Appendix and Selected Supplemental Slides Page 28 25 | F C P T | A U G U S T 2 0 2 3 25
Slide 26: Conservative Financial Policies
C O N S E R V AT I V E F I N AN C I AL P O L I C I E S As FCPT continues to grow and diversify, the Company is committed to maintaining a conservative balance sheet with financial flexibility Continue to maintain conservative leverage and coverage metrics Net debt to adjusted EBITDAre ratio is 5
Slide 27: Summary Capitalization and Financials
S U M M AR Y C AP I T AL I Z A T I O N AN D F I N AN C I AL S Capitalization Current Trading Metrics ($ million, except per share) 6/30/2023 Annual base rent2 ($ million) $207.6 Share price (6/30/2023) $25.40 Implied Cap Rate 6.2% 3 Shares and OP units outstanding (millions) 90.7 Annualized Dividend
Slide 28: Agenda
AG E N D A Company Overview and Q2 Update Page 3 High Quality Portfolio Page 11 Conservative Financial Position Page 25 Appendix and Selected Supplemental Slides Page 28 28 | F C P T | A U G U S T 2 0 2 3 28
Slide 29: Maintaining Acquisition Philosophy and Criteria
M AI N T A I N I N G AC Q U I S I T I O N P H I L O S O P H Y AN D C R I T E R I A Acquisition Philosophy • Acquire strong restaurants and retail brands that are well located with creditworthy lease guarantors • Purchase assets only when accretive to cost of capital with a focus on low basis • Focus
Slide 30: Investment Opportunity Sourcing
INVESTMENT OPPORTUNITY SOURCING FCPT is principally building its acquisition pipeline through five channels: 1) Large Sale-Leaseback Transactions: These transactions can be large in scale, and typically have a competitive bidding process amongst institutional investors. Given other forms of capital
Slide 31: Rising Inflation Has Both Positive and Negative Effects in Net Lease
RISING INFLATION HAS BOTH POSITIVE AND NEGATIVE EFFECTS IN NET LEASE Interest Rates / Inflation Interest Expense: Unhedged Debt: Overhead: Investment Dividend Yield: New debt Unhedged portion Increases Spreads: Lower premium in Negative issuances have of the credit facility personnel and G&A Decreas
Slide 32: Lease Maturity Schedule
L E AS E M AT U R I T Y S C H E D U L E Lease Maturity Schedule (% Annualized Cash Base Rent1) 99.9% occupied2 as of 6/30/2023 13.6% 13.2% 12.3% Weighted average lease term of 8.1 years 10.4% 10.1% 10.0% Less than 7.5% of rental income matures 7.1% prior to 2027 3.0% 2.7% 2.3% 2.0% 2.0% 1.8% 1.8% 1.
Slide 33: Brand Diversification
B R AN D D I V E R S I F I C AT I O N FCPT Portfolio Brands Square Feet % of Square Feet % of Rank Brand Name Number (000s) ABR Rank Brand Name Number (000s) ABR 1 Olive Garden 313 2,664 38.2% 16 Texas Roadhouse 12 88 0.9% 2 Longhorn Steakhouse 115 645 10.8% 17 Oak Street Health 6 55 0.8% 3 Chili's
Slide 34: Acquisition Growth
34 | FCPT | O CT O B E R 2019 AC Q U I S I T I O N G R O W T H Annual Cash Base Rent ($ million)1 +11% CAGR 208 195 196 178 181 185 162 169 175 158 148 156 139 142 144 130 131 121 126 127 109 110 94 94 94 96 101 102 105 105 108 4Q15 4Q16 4Q17 4Q18 4Q19 4Q20 4Q21 4Q22 Number of Properties +13% CAGR 1
Slide 35: Q2 2023 Acquisitions Summary
Q 2 2 0 2 3 AC Q U I S I T I O N S S U M M AR Y 2023 Acquisitions Summary # of Operator / Purchase Price Initial Cash Initial Term Close Tenant Location Properties Guarantor ($ millions) Yield1 (years)2 Date Q1 2023 Total 10 $19.9 6.9% 7 Q2 2023 Acquisitions Detail: VCA VA 1 Corporate $1.2 7.6% 3 4/
Slide 36: 2023 Acquisitions Summary (Continued)
2 0 2 3 AC Q U I S I T I O N S S U M M AR Y (CONTINUED) # of Operator / Purchase Price Initial Cash Initial Term Close 1 2 Tenant Location Properties Guarantor ($ millions) Yield (years) Date Olive Garden IN 1 Corporate $3.4 6.5% 9 6/27/2023 FL, IN, LA, Car Wash Portfolio 9 Corporate $40.0 -- -- 6/2
Slide 37: Sustainability Framework
S U S T AI N AB I L I T Y F R AM E W O R K Our commitment to sustainability and Environmental, Social and Governance (ESG) principles creates value for FCPT and our shareholders. We continuously review our internal policies to advance in the areas of environmental sustainability, social responsibili
Slide 38: Glossary and Non-GAAP Definitions
G L O S S AR Y AN D N O N - G A A P D E F I N I T I O N S Non-GAAP Definitions and Cautionary Note Regarding Forward-Looking Statements: This document includes certain non-GAAP financial measures that employed by other REITs. condition and results from operations, the utility of FFO as a measure man
Slide 39: Reconciliation Schedules
R E C O N C I L I AT I O N S C H E D U L E S Reconciliation of Net Income to Adjusted EBITDAre (In thousands) Three Months Ended June 30, Six Months Ended June 30, Unaudited 2023 2022 2023 2022 Net Income $ 23,655 $ 28,170 $ 46,810 $ 50,456 Adjustments: Interest expense 10,051 9,031 19,969 17,406 In
Slide 40: Four Corners Property Trust Investor Presentation
FOUR CORNERS PROPERTY TRUST NYSE: FCPT I N V E S T O R P R E S E N T AT I O N | AU G U S T 2 0 2 3 www.fcpt.com 40 | F C P T | A U G U S T 2 0 2 3 40
Four Corners Property Trust — Q2 2023 Earnings Presentation on 6ix