Four Corners Property Trust, Inc. Q3 FY2025 earnings call

• Celebrated 10-year anniversary as a public company, expressing gratitude to stakeholders. - Highlighted acquisition activity: Q3 acquired $82M, YTD $355M at 6.8% cap rate. - Portfolio strength: no exposure to problem retailers, 0 bad debt expense, strong rent coverage. - Diversification: Olive Garden and LongHorn now make up a significant portion of rent, with non-casual dining sectors contributing. - Balance sheet: net debt to adjusted EBITDA was 4.7x at Q3 end, with $270 million in dry powder. - Transparency: posted full list of properties on website under the Portfolio section.

In Q3, Four Corners Property Trust acquired $82 million of net lease properties at a 6.8% blended cap rate. Over the trailing 12 months, acquisitions totaled $355 million. Q3 cash rental income was $66.1 million, representing a 12.6% growth from the previous year. Annualized cash base rent (ABR) as of quarter end was $255.6 million. The portfolio had a rent coverage of 5.1x for the majority of the portfolio, and occupancy improved to 99.5%. Revenue contribution: Olive Garden and LongHorn are now 32% and 9% of rent, with 35% of rents coming from outside casual dining, including automotive service (13%), quick service restaurants (11%), and medical retail (10%).

• No formal acquisitions guidance, but Q4 is typically busy and there's a positive outlook on deal sourcing. - Has undrawn forward equity, encouraging pipeline, and below target leverage. - $270 million in combined dry powder to fuel growth before reaching mid-5x leverage target.

• Market conditions affecting cost of capital, which can impact acquisition volume. - Competition in the net lease sector, including from private equity firms. - Potential economic or tenant-related factors that could affect portfolio performance or collection rates.

Q: On underwriting standards, any adjustments that might open up investment aperture?

A: No desire to lower standards; cost of capital drives acquisition volume primarily.

Q: Funding pipeline given current cost of equity?

A: $100 million of unsettled equity forwards at $28.33, with $270 million dry powder including equity, debt, and retained cash flow.

Q: Darden lease maturities and renewal confidence?

A: High renewal expectations due to strong same-store sales, well-covered leases, and core locations.

Q: Core underwriting principles remain consistent?

A: Basic premise is similar from start, not volume-driven, focused on conservative and analytical approach.

Q: Appetite for dispositions?

A: Little disposition activity currently, portfolio in good shape, so would likely sell high-quality assets.

Q: Property disclosure and densification opportunity?

A: Acreage and parking are part of scorecard, transparency helps, but opportunity to densify limited and more for downside protection.