Press Release

FCPT Announces Agreement to Acquire 41 Restaurant Properties

Company Release - 9/20/2017 4:07 PM ET

MILL VALLEY, Calif.--(BUSINESS WIRE)-- Four Corners Property Trust (NYSE:FCPT), a real estate investment trust engaged in the ownership of high-quality, net-leased restaurant properties (“FCPT” or the “Company”), is pleased to announce the signing of a definitive agreement to acquire 41 restaurant properties from Washington Prime Group Inc. (“WPG”) for a purchase price of approximately $67.2 million cash.

The transaction is priced at a cap rate consistent with our investment thresholds and past transactions and is expected to close in two tranches. The first tranche is expected to close in the fourth quarter of 2017, and the second tranche is expected to be completed in the first half of 2018, in each case, subject to due diligence and customary closing conditions. There is a separate individual lease for each property, and the leases have a current weighted average remaining term of approximately 8 years. In addition, well over half of the leases cover only the ground (i.e., the tenant built its own building with ownership reverting to the landlord upon lease expiry), so the current rents are lower than if the rent had been set to cover both the land and the cost of the building.

The restaurant properties consist entirely of outparcels to WPG properties and are well located within highly trafficked retail corridors in Colorado, Connecticut, Florida, Illinois, Indiana, Iowa, Maryland, New Jersey, Ohio, Pennsylvania, Texas and Virginia. Approximately 83% of the net operating income is from properties on out-lots to either open air or WPG’s “Tier One Enclosed” properties. None of the 41 restaurant properties or the adjacent WPG properties are currently encumbered by property-level debt.

In addition, the portfolio includes 22 different restaurant brands, 15 of which would be new to FCPT’s current portfolio. The 22 brands in the transaction include: McDonald’s (5 restaurants), Buffalo Wild Wings (4), Olive Garden (4), Taco Bell (4), BJ’s Restaurant (3), Red Lobster (3), Chick-Fil-A (2), Starbucks (2), and one each of Arby’s, Burger King, Cheddar’s, Chili’s, Checkers, IHOP, Outback Steakhouse, Panda Express, Panera Bread, Rally’s Hamburgers, Steak N’ Shake, Texas Roadhouse, Wendy’s and White Castle. Of the 41 leases, 32 are with corporate operators and 9 are with franchisees.

Bill Lenehan, CEO and Director of FCPT stated: “This transaction constitutes a unique opportunity for FCPT, offering diversity in geography, brand, lease maturity, operators and credit. The portfolio benefits from modest rents, a large majority of corporate operators and strong demographics and traffic counts. While many of the leases have a shorter lease term than those in our existing portfolio, we expect that the low rent-to-sales figures will increase the likelihood of renewal upon lease expiration.” Mr. Lenehan added, “FCPT has significant cash on hand and an undrawn corporate revolver to finance this acquisition, and FCPT would still be well under its stated financial leverage limits pro forma for this acquisition.”

About FCPT

FCPT, headquartered in Mill Valley, CA, is a real estate investment trust primarily engaged in the acquisition and leasing of restaurant properties. The Company seeks to grow its portfolio by acquiring additional real estate to lease for use in the restaurant and related food services industry. Additional information about FCPT can be found on the website at www.fcpt.com.

Forward-Looking Statements

This news release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 which represent the current expectations and beliefs of management of Four Corners Property Trust, Inc. (“FCPT”) concerning the proposed transactions, the anticipated consequences and benefits of the transactions and the targeted close date for the transactions, and other future events and their potential effects on FCPT, including, but not limited to, statements relating to anticipated financial and operating results, the company’s plans, objectives, expectations and intentions, cost savings and other statements, including words such as “anticipate,” “believe,” “confident,” “plan,” “estimate,” “expect,” “intend,” “will,” “should,” “may,” and other similar expressions. Such statements are based upon the current beliefs and expectations of FCPT’s management, and involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of FCPT to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.

Such factors include, without limitation: changes in asset quality and credit risk; ability to sustain revenue and earnings growth; changes in political, economic or market conditions generally and the real estate and capital markets specifically; the impact of increased competition; the availability of capital and financing; tenant or seller(s) bankruptcies; risks associated with the acquisition, development, expansion, leasing and management of properties; changes in market rental rates; trends in the retail or restaurant industry; relationships with tenants; competitive market forces; the level and volatility of interest rates; the rate of revenue increases as compared to expense increases; the financial stability of tenants within the retail or restaurant industry; the restrictions in current financing arrangements or the failure to comply with such arrangements; the liquidity of real estate investments; the impact of changes to tax legislation and FCPT’s tax positions; failure to qualify as a real estate investment trust; the failure to refinance debt at favorable terms and conditions; loss of key personnel; material changes in the dividend rates on securities or the ability to pay dividends on common shares or other securities; possible restrictions on the ability to operate or dispose of owned properties; the failure to achieve earnings/funds from operations targets or estimates; the failure to achieve projected returns or yields on development and investment properties (including joint ventures); expected gains on debt extinguishment; changes in generally accepted accounting principles or interpretations thereof; terrorist activities and international hostilities; the unfavorable resolution of legal proceedings; the impact of future acquisitions and divestitures; assets that may be subject to impairment charges; significant costs related to environmental issues; and other risks and uncertainties, including those detailed from time to time in FCPT’s statements and periodic reports filed with the Securities and Exchange Commission, including those described under “Risk Factors”. The forward-looking statements in this communication are qualified by these risk factors. Each statement speaks only as of the date of this press release and FCPT undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. Actual results may differ materially from current projections, expectations, and plans, if any. Investors, potential investors and others should give careful consideration to these risks and uncertainties.

Four Corners Property Trust:
Bill Lenehan, 415-965-8031
CEO
Gerry Morgan, 415-965-8032
CFO

Source: Four Corners Property Trust