Four Corners Property Trust, Inc. · NYSE:FCPT
Four Corners Property Trust — Q2 2024 Earnings Presentation
37 slides from Four Corners Property Trust's earnings presentation, Aug 1, 2024
Slide 1: Investor Presentation July 2024
Four Corners Property Trust NYSE: FCPT INVESTOR PRESENTATION JULY 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 8 3 CONSERVATIVE FINANCIAL POSITION PG 25 4 APPENDIX PG 29 JULY 2024 3
Slide 4: FCPT Overview
HIGH-QUALITY PORTFOLIO • Portfolio built to be e-commerce resistant, with tenants operating in-person services • Strong Tenant EBITDAR / Rent Coverage, nationally established brands and low rents provide for high tenant retention and limited vacancies FCPT TRANSPARENT, ANALYTICAL, DISCIPLINED INVEST
Slide 5: Financial Highlights as of Q2 2024
FINANCIAL HIGHLIGHTS AS OF Q2 2024 $0.27 $0.43 $0.41 Q2 2024 Net income per share Q2 2024 AFFO per share1 Q2 2024 FFO per share $240 million 100% Liquidity with ample revolver Unencumbered ABR capacity and cash 5.7x 4.3x Net debt to adjusted EBITDAre2 Fixed charge coverage 93% 4.2 years Fixed rate d
Slide 6: Portfolio and Investment Highlights
PORTFOLIO AND INVESTMENT HIGHLIGHTS PORTFOLIO1 99.6% occupied 1,154 leases 4.9x tenant EBITDAR coverage2 154 brands 1.4% average annual escalator 59% investment grade3 7.4-year average lease term remaining <5.5% expirations before 2027 6,766 SF average asset size 30,173 average site vehicles per day
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 1111 1132 1023 PROPERTY COUNT 919 799 699 610 515 475 418 +57 +40 +95 +89 +100 +120 +104 +88 +
Slide 8: Contents
CONTENTS 1 COMPANY OVERVIEW PG 3 2 HIGH QUALITY PORTFOLIO PG 8 3 CONSERVATIVE FINANCIAL POSITION PG 25 4 APPENDIX PG 29 JULY 2024 8
Slide 9: 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 10: Geographically Diverse Portfolio
WA GEOGRAPHICALLY MT ND ME DIVERSE PORTFOLIO OR ID MN VT NH SD WI NY MA WY MI RI • Lower individual income taxes and an IA PA CT increase of jobs with the ability to work NV NE IN OH NJ UT IL DE from home has accelerated a population CA CO WV MD shift toward low-cost of living and high- KS MO KY VA
Slide 11: Low Rent / High Coverage Portfolio
LOW RENT / HIGH COVERAGE PORTFOLIO FCPT TENANT RENTAL COVERAGE DETAIL1 • FCPT’s high caliber portfolio benefits from strong 5.6x 4.9x rent coverage. Rents for the original Darden spin- off properties were purposely set at sustainable 2.8x 2.6x levels, and our current investment strategy and credit u
Slide 12: Brand Exposure by Annualized Base Rent
1,154 Leases / 154 Brands BRAND EXPOSURE BY FCPT PORTFOLIO Annual Base Rent of $223.6 million1 51% Darden Exposure ANNUALIZED BASE RENT 21% Non-Restaurant Exposure 314 leases 36% 318 leases Other 21% Other restaurants 2 57 brands 10% 4% 116 leases 10% 36% 148 leases 10% Auto service 8% 30 brands 82
Slide 13: Brand Diversification
Sq Ft Sq Ft / Unit BRAND Rank Brand Name # (000s) (000s) % of ABR(1) 1 DIVERSIFICATION Olive Garden 314 2,674 8.5 36.2% 2 Longhorn Steakhouse 116 650 5.6 10.2% 3 Chili's 82 450 5.5 7.6% TOP 20 FCPT 4 Buffalo Wild Wings 28 171 6.1 2.5% PORTFOLIO BRANDS 5 Cheddar's 13 112 8.6 2.1% 6 Red Lobster 18 130
Slide 14: Selective Approach to Net Lease
SELECTIVE APPROACH TO NET LEASE • FCPT’s initial portfolio was established in 2015, and so does not include properties acquired many years ago that have lost favor. We have the advantage of constructing our portfolio following the advent of online shopping • Since inception, FCPT has developed a con
Slide 15: Lease Maturity Schedule
LEASE MATURITY SCHEDULE 7.4 years weighted average lease term 99.6% %ANNUALIZED BASE RENT1 occupied2 as of 6/30/2024 8.6% < 5.5% 4.6% 3.6% 4.3% 2.7% of rental income 2.1% matures prior to 2027 2.3% FCPT has had very high renewal rates on lease maturities to date 7.9% 8.1% 6.9% 7.3% 7.3% 3.3% 2.8% 4.
Slide 16: Strong Recent Restaurant Results
STRONG RECENT RESTAURANT RESULTS BAIRD RESTAURANTS SURVEYS: WEEKLY SAME-STORE SALES VS. YEAR PRIOR +35% +30% +25% +20% +15% +10% +5% 0% -5% “ -10% Overall -15% Casual Dining -20% Quick Service • Baird’s weekly restaurant survey shows both quick service and casual dining restaurants continue to perfo
Slide 17: FCPT's Casual Dining Outpaces Brand Averages
FCPT’S CASUAL DINING OUTPACES BRAND AVERAGES FCPT Casual Dining Sales, 2019 vs. 2023 2019 2019 Brand Brand RTS1 AUV2 Olive Garden 301 Stores 4.7% $4,658,000 LongHorn Steakhouse 108 Stores 5.0% $3,281,900 Chili's 60 Stores 6.7% $2,502,100 Total “ 469 Stores 4.9% 2023 2023 Brand 1 2 Brand RTS AUV Oliv
Slide 18: The Strength of FCPT's Darden Concentration
THE STRENGTH OF FCPT’S DARDEN CONCENTRATION • After 8 years of diversifying through new acquisitions, Darden is now ~51% of FCPT’s rent roll as of 6/30/2024 • Darden is a remarkably strong anchor tenant for our portfolio and the preeminent casual dining operator globally o BBB / Baa2 credit, $11 bil
Slide 19: Darden Performance Since Spin
DARDEN PERFORMANCE SINCE SPIN Darden has improved its performance beyond pre-COVID levels and maintained its strong credit profile Inception Pre-COVID Current1 Darden Restaurants Darden Rating BBB / Baa3 / BBB BBB / Baa2 / BBB BBB / Baa2 / BBB (Fitch/Moody’s/S&P) Sales per Store - Olive Garden ($ mi
Slide 20: Darden's Size & Scale vs. Top Franchisees
DARDEN vs. FRANCHISE TIMES TOP 200 – STORES DARDEN’S SIZE & SCALE 2023 vs. TOP FRANCHISEES 1,914 • Darden maintains a significant size and scale advantage over hundreds of franchisee tenants in the overall restaurant 398 304 165 131 103 industry • Compared to the Top 20 U.S. and Darden Median Top 20
Slide 21: 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 22: Diversification: Auto Industry
DIVERSIFICATION: 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
Slide 23: Diversification: Medical Retail
DIVERSIFICATION: 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 c
Slide 24: 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 FOCUS that require in-person interaction, while Hospital having lighter asset needs and smaller Ambulatory surgery / Outpatient treatment
Slide 25: Contents
CONTENTS 1 COMPANY OVERVIEW PG 3 2 HIGH QUALITY PORTFOLIO PG 8 3 CONSERVATIVE FINANCIAL POSITION PG 25 4 APPENDIX PG 29 JANUARY 2024 25
Slide 26: 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 4.2 years • No near-term debt maturities prior to November 2025 DEBT MATURITY SCHEDULE ($ MILLIONS) Conservative leverage • Net
Slide 27: 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 LEVERAGE1 6.0x 5.8x 5.7x 5.7x 5.7x 5.7x 5.6x 5.6x
Slide 28: Company Momentum Since Inception
COMPANY MOMENTUM SINCE INCEPTION AS OF 6/30/24 Team members 4 36 + 32 $94.4 million $223.6 million + $129.2 million (+137%) Annual base rent1 Properties 418 1,154 + 736 (+176%) 5 154 + 149 Brands 100% 51% - 49% % Darden2 15 years 7.4 years - 7.6 years Weighted avg lease term Equity market cap $848 m
Slide 29: Contents
CONTENTS 1 COMPANY OVERVIEW PG 3 2 HIGH QUALITY PORTFOLIO PG 8 3 CONSERVATIVE FINANCIAL POSITION PG 25 4 APPENDIX PG 29 JULY 2024 29
Slide 30: 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 31: Thoughtful Brand Selection
THOUGHTFUL BRAND SELECTION Brand Average Sales Volume ($000s)1 Casual $7,000 Dining Quick Service $6,000 FCPT focuses on national brands with strong sales volumes and Fast market appropriate rents Casual $5,000 $4,000 $3,000 $2,000 $1,000 $0 FCPT pursues properties within the median range of Casual
Slide 32: 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 33: 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 34: Reconciliation Schedules
RECONCILIATION SCHEDULES RECONCILIATION OF NET INCOME TO ADJUSTED EBITDARE (In thousands) Three Months Ended June 30, Six Months Ended June 30, Unaudited 2024 2023 2024 2023 Net Income $ 24,702 $ 23,655 $ 48,776 $ 46,810 Adjustments: Interest expense 12,324 10,051 24,605 19,969 Income tax expense 86
Slide 35: FFO & AFFO Reconciliation
FFO & AFFO RECONCILIATION ($000s, except shares and per share data) Three Months Ended June 30, Six Months Ended June 30, Unaudited 2024 2023 2024 2023 Net income $ 24,702 $ 23,655 $ 48,776 $ 46,810 Depreciation and amortization 13,309 11,782 26,740 23,927 Realized gain on sales of real estate - (17
Slide 36: Footnotes
FOOTNOTES PAGE 5 FINANCIAL HIGHLIGHTS AS OF Q2 2024 Figures as of 6/30/2024, unless otherwise noted PAGE 13 BRAND DIVERSIFICATION PAGE 27 FCPT CONSISTENT LEVERAGE RANGE 1. See page 33 for non-GAAP definitions, and page 35 for reconciliation of net income to AFFO 1. Represents current Annual Cash Bas
Slide 37: Thank You
Four Corners Property Trust NYSE: FCPT THANK YOU INVESTOR PRESENTATION JULY 2024
Four Corners Property Trust — Q2 2024 Earnings Presentation on 6ix