Press Release

FCPT Announces Third Quarter 2017 Earnings

Company Release - 11/2/2017 4:34 PM ET

MILL VALLEY, Calif.--(BUSINESS WIRE)-- Four Corners Property Trust, Inc. (“FCPT” or the “Company”, NYSE: FCPT) today announced financial results for the three and nine months ended September 30, 2017.

A supplemental financial and operating report that contains non-GAAP measures and other defined terms, along with this press release, has been posted to the investor relations section of the Company’s website at http://investors.fcpt.com/.

Management Comments

“Our third quarter financial results were in line with our expectations, and we have recently made good progress sourcing high quality diversifying acquisitions, recasting our credit facility, and internalizing our accounting function. We also are in a very strong liquidity position with significant capacity to fund future acquisitions.”

Financial Results

Rental Revenue and Net Income Attributable to Common Shareholders

  • Rental revenue for the third quarter was $28.8 million, a 9.4% increase over the same quarter in 2016, and consisted of $26.3 million in cash rents and $2.5 million of straight-line rent adjustments.
  • Net income attributable to common shareholders for the third quarter was $19.2 million, or $0.31 per diluted share, including a $4.0 million gain on the sale of an Olive Garden property. These results compared to net income of $15.2 million, or $0.25 per diluted share, for the same quarter in 2016.
  • Net income attributable to common shareholders for the nine months ended September 30, 2017 was $53.0 million. After excluding $7.3 million in gains on sale in 2017 and the one-time, non-cash tax benefit of $80.4 million included in the 2016 results, the Company’s net income was $45.7 million, or $0.75 per diluted share for 2017, which compared to net income of $43.9 million, or $0.74 per diluted share, for the same nine-month period in 2016.

Funds from Operations (FFO)

  • NAREIT-defined FFO for the third quarter was $20.7 million, or $0.34 per diluted share, representing flat per diluted share results compared to the third quarter in 2016.
  • NAREIT-defined FFO for the nine months ended September 30, 2017 was $62.3 million, or $1.02 per diluted share, representing an increase of 2.0% in per diluted share results compared to the same nine-month period in 2016.

Adjusted Funds from Operations (AFFO)

  • AFFO for the third quarter was $19.4 million, or $0.32 per diluted share, representing an increase of 6.7% in per diluted share results compared to the third quarter in 2016.
  • AFFO for the nine months ended September 30, 2017 was $58.3 million, or $0.96 per diluted share, representing an increase of 5.5% in per diluted share results compared to the same nine-month period in 2016.

General and Administrative (G&A) Expense

  • G&A expense for the third quarter was $2.9 million, including $0.7 million of non-cash, stock-based compensation.
  • Cash G&A expense (after excluding non-cash stock-based compensation) for the nine months ended September 30, 2017 was 9.4% of cash rental income, compared to 10.3% of cash rental income for the same nine-month period in 2016.

Dividends

  • FCPT declared a dividend of $0.2425 per common share for the third quarter of 2017.

Portfolio Activities

Acquisitions

  • During the third quarter, FCPT acquired 3 restaurant properties in two transactions with a combined investment value of $6.1 million, at an initial weighted average cash yield of 6.9%, and a weighted average lease term of 15 years.
  • On September 20, 2017, FCPT announced it had signed a definitive agreement to acquire 41 outparcel properties from Washington Prime Group (WPG) for $67.2 million in cash at a cap rate consistent with past FCPT acquisitions. The transaction is expected to close in two tranches, with the first tranche representing approximately one-third of the properties expected to close in the fourth quarter of 2017 and the remaining properties expected to close by the end of the second quarter of 2018.

Dispositions

  • During the third quarter, FCPT sold an Olive Garden property for a gross sales price of $5.9 million, representing a 4.8% cash capitalization rate and $4.0 million of gain.

Liquidity and Capital Markets

Capital Raising

  • FCPT did not sell common shares during the third quarter. For the nine months ended September 30, 2017, FCPT raised $28.3 million in gross proceeds at a weighted average share price of $24.29.

Credit Facility and Unsecured Note

  • At September 30, 2017 FCPT had $525 million of outstanding debt, consisting of a $400 million term loan and $125 million of unsecured fixed rate notes. FCPT was undrawn on its $350 million revolving credit facility, and had $82.9 million of available cash and cash equivalents.
  • On October 2, 2017, FCPT announced that it had entered into a $650 million credit agreement consisting of a 5-year term loan of $400 million and a 4-year revolving credit facility of $250 million to replace the Company’s existing bank credit facility. The recasting extended the maturities of both the term loan and the revolving facility by two years, and increased the Company’s weighted average debt maturity to approximately 5.8 years. Under the terms of the recast facility, FCPT expects to save at least $1.8 million in annual cash interest expense due to reduced margin pricing and lower unused capacity.

Real Estate Portfolio

As of September 30, 2017, the Company’s rental portfolio consisted of 508 restaurant properties located in 44 states. The properties are 100% occupied under long-term, net leases with a weighted average remaining lease term of approximately 13.2 years and an estimated portfolio weighted average EBITDAR to Lease Rent coverage of 4.7x.

Conference Call Information

Company management will host a conference call and audio webcast on Friday, November 3, 2017 at 11:00 am Eastern Time to discuss the results.

Interested parties can listen to the call via the following:

Internet: Go to http://dpregister.com/10113461 at least 15 minutes prior to start time of the call in order to register and to download any necessary audio software. Please note for those that register, the dial-in number will be provided upon registration.

Phone: 1-888-346-5243 (domestic) / 1-412-317-5120 (international). Participants not pre-registered must ask to be joined into the Four Corners Property Trust call.

Replay: Available through February 3, 2018 by dialing 1-877-344-7529 (domestic) / 1-412-317-0088 (international), Replay Access Code 10113461.

About FCPT

FCPT 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.

Cautionary Note Regarding Forward-Looking Statements

This press release 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 those regarding the Company’s intent, belief or expectations, including, but not limited to, statements regarding: operating and financial performance; and expectations regarding the making of distributions and the payment of dividends. Words such as “anticipate(s),” “expect(s),” “intend(s),” “plan(s),” “believe(s),” “may,” “will,” “would,” “could,” “should,” “seek(s)” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. Forward-looking statements speak only as of the date on which such statements are made and, except in the normal course of the Company’s public disclosure obligations, the Company expressly disclaims any obligation to publicly release any updates or revisions to any forward-looking statements to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any statement is based. Forward-looking statements are based on management’s current expectations and beliefs and the Company can give no assurance that its expectations or the events described will occur as described. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements.

Factors that could have a material adverse effect on the Company’s operations and future prospects or that could cause actual results to differ materially from the Company’s expectations are included in the sections entitled “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2017.

Notice Regarding Non-GAAP Financial Measures:

In addition to U.S. GAAP financial measures, this press release and the referenced supplemental financial and operating report contain and may refer to certain non-GAAP financial measures. These non-GAAP financial measures are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP financial measures should not be considered replacements for, and should be read together with, the most comparable GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures and statements of why management believes these measures are useful to investors are included in the supplemental financial and operating report, which can be found in the investor relations section of our website.

Supplemental Materials and Website:

Supplemental materials on the Third Quarter 2017 operating results and other information on the Company are available on the investors relations section of FCPT’s website at www.investors.fcpt.com.

 

Four Corners Property Trust

Consolidated Statements of Income

(Unaudited)

(In thousands, except share and per share data)

       
 
Three Months Ended September 30, Nine Months Ended September 30,
  2017     2016     2017     2016
 
Revenues:
Rental revenue $ 28,835 $ 26,363

 

$ 84,926

 

$ 78,748
Restaurant revenue   4,676     4,443  

 

  14,445  

 

  14,003
Total revenues 33,511 30,806 99,371 92,751
 
Operating expenses:
General and administrative 2,899 2,608

 

9,215

 

8,434
Depreciation and amortization 5,425 5,059

 

16,254

 

15,347
Restaurant expenses 4,571 4,308

 

13,823

 

13,600
Interest expense   5,463     3,549  

 

  14,066  

 

  11,588
Total operating expenses 18,358 15,524 53,358 48,969
 
Other income 172

 

10

 

211

 

88
Realized gain on sale, net   4,042  

 

  -  

 

  7,333  

 

  -
 
Income before provision for income taxes 19,367 15,292

 

53,557

 

43,870
Income tax (expense) benefit (1)   (33 )

 

  (52 )

 

  (139 )

 

  80,455
 
Net income 19,334 15,240

 

53,418

 

124,325
Net income attributable to noncontrolling interest   (129 )   -  

 

  (374 )

 

  -
Net Income Attributable to Common Shareholders $ 19,205   $ 15,240   $ 53,044   $ 124,325
 
Basic net income per share $ 0.31 $ 0.25

 

$ 0.88 $ 2.22
Diluted net income per share $ 0.31 $ 0.25

 

$ 0.88 $ 2.09
Regular dividends declared per share $ 0.2425 $ 0.2425 $ 0.7275 $ 0.7275
 
Weighted-average shares outstanding:
Basic 61,112,051 59,832,824

 

60,457,949 56,026,594
Diluted 61,256,145 59,863,109

 

60,567,152 59,469,008
 
(1) The 2016 results include a $80.4 million income tax benefit which was principally the result of the reversal of deferred tax liabilities recognized in connection with the Company’s election to be taxed as a REIT.
 
Four Corners Property Trust

Consolidated Balance Sheets

(In thousands, except share data)

   
 
September 30, 2017
(Unaudited) December 31, 2016
ASSETS
Real estate investments:
Land $ 441,462 $ 421,941
Buildings, equipment and improvements   1,100,430     1,055,624  
Total real estate investments 1,541,892 1,477,565
Less: Accumulated depreciation   (593,609 )   (583,307 )
Total real estate investments, net 948,283 894,258
Real estate held for sale 1,712 -
Cash and cash equivalents 82,865 26,643
Deferred rent 18,877 11,594
Derivative assets 2,296 837
Other assets   7,741     3,819  
Total Assets $ 1,061,774   $ 937,151  
 
LIABILITIES AND EQUITY
 
Liabilities:
Notes payable ($525,000 net of deferred financing costs) $ 518,353 $ 438,895
Dividends payable 14,820 14,519
Deferred rental revenue 7,964 7,974
Derivative liabilities 219 -
Deferred tax liabilities 164 196
Other liabilities   6,571     5,450  
Total liabilities   548,091     467,034  
 
Equity:
Preferred stock, $0.0001 par value per share, 25,000,000 shares
authorized, zero shares issued and outstanding - -
Common stock, $0.0001 par value per share, 500,000,000 shares
authorized, 61,196,087 and 59,923,557 shares issued and outstanding
at September 30, 2017 and December 31, 2016, respectively 6 6
Additional paid-in capital 469,571 438,864
Accumulated other comprehensive income 1,545 207
Noncontrolling interest 7,750 5,097
Retained earnings   34,811     25,943  
Total equity   513,683     470,117  
Total Liabilities and Equity $ 1,061,774   $ 937,151  
 
Four Corners Property Trust
FFO and AFFO
(Unaudited)
(In thousands, except share and per share data)
       
 
Three Months Ended September 30, Nine Months Ended September 30,
  2017     2016     2017     2016  
Funds from operations (FFO):
Net income $ 19,334 $ 15,240 $ 53,418 $ 124,325
Depreciation and amortization 5,414 5,051 16,231 15,330
Deferred tax benefit from REIT election - - - (80,410 )
Realized gain on sales of real estate   (4,042 )   -     (7,333 )   -  
FFO (as defined by NAREIT) $ 20,706   $ 20,291   $ 62,316   $ 59,245  
Non-cash stock-based compensation 722 412 1,920 1,158
Non-cash amortization of deferred financing costs 452 398 1,265 1,194
Other non-cash interest expense 42 (296 ) 105 139
Non-real estate investment depreciation 11 8 23 17
Straight-line rent   (2,488 )   (2,609 )   (7,283 )   (7,799 )
Adjusted Funds from Operations (AFFO) $ 19,445   $ 18,204   $ 58,346   $ 53,954  
 
Fully diluted shares outstanding (1) 61,665,465 59,863,109 60,992,881 59,469,008
 
FFO per diluted share $ 0.34 $ 0.34 $ 1.02 $ 1.00
 
AFFO per diluted share $ 0.32 $ 0.30 $ 0.96 $ 0.91
 
(1) Assumes the issuance of common shares for OP units held by non-controlling partners.

FCPT
Bill Lenehan, 415-965-8031
CEO
Gerry Morgan, 415-965-8032
CFO

Source: Four Corners Property Trust, Inc.