Print News Release

FCPT Announces Third Quarter 2022 Financial and Operating Results

11/01/2022

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, 2022.

Management Comments

“FCPT continued its strong performance in the third quarter. We acquired $70 million of high-quality restaurant and retail properties and raised over $87 million through equity issuances and dispositions,” said CEO Bill Lenehan. “Investment yields have begun to increase meaningfully, and we are poised to take advantage of opportunities where we see value given our strong balance sheet and liquidity position.”

Rent Collection Update

As of September 30, 2022, the Company has received rent payments representing 99.8% of its portfolio contractual base rent for the quarter ending September 30, 2022.

Financial Results

Rental Revenue and Net Income Attributable to Common Shareholders

  • Rental revenue for the third quarter increased 11.4% over the prior year to $48.7 million. Rental revenue consisted of $47.6 million in cash rents and $1.1 million of straight-line and other non-cash rent adjustments.
  • Net income attributable to common shareholders was $24.5 million for the third quarter, or $0.30 per diluted share. These results compare to net income attributable to common shareholders of $21.2 million for the same quarter in the prior year, or $0.28 per diluted share.
  • Net income attributable to common shareholders was $74.9 million for the nine months ended September 30, 2022, or $0.92 per diluted share. These results compare to net income attributed to common shareholders of $61.9 million for the same nine-month period in 2021, or $0.81 per diluted share.

Funds from Operations (FFO)

  • NAREIT-defined FFO per diluted share for the third quarter was $0.40, representing a $0.01 per share increase compared to the same quarter in 2021.
  • NAREIT-defined FFO per diluted share for the nine months ended September 30, 2022 was $1.20, representing a $0.06 per share increase compared to the same nine-month period in 2021.

Adjusted Funds from Operations (AFFO)

  • AFFO per diluted share for the third quarter was $0.41, representing a $0.02 per share increase compared to the same quarter in 2021.
  • AFFO per diluted share for the nine months ended September 30, 2022 was $1.23, representing $0.08 per share increase compared to the same nine-month period in 2021.

General and Administrative (G&A) Expense

  • G&A expense for the third quarter was $4.9 million, which included $1.2 million of stock-based compensation. These results compare to G&A expense in the third quarter of 2021 of $4.3 million, including $0.8 million of stock-based compensation.
  • Cash G&A expense (after excluding stock-based compensation) for the third quarter was $3.7 million, representing 7.8% of cash rental income for the quarter.

Dividends

  • FCPT declared a dividend of $0.3325 per common share for the third quarter of 2022.

Portfolio Activities

Acquisitions

  • During the third quarter, FCPT acquired 26 properties for a combined purchase price of $69.9 million at an initial weighted average cash yield of 6.3%, reflecting rent credits at closing and near-term rent increases, or 6.2% on rents in place as of September 30, 2022 and a weighted average remaining lease term of 9.3 years.

Dispositions

  • During the third quarter, FCPT sold four properties for a combined sales price of $8.6 million representing $1.8 million of gain and a 5.5% cash capitalization rate on rents that were previously in place and exclusive of transaction costs.

Liquidity and Capital Markets

Capital Raising

  • During the third quarter, the Company raised $78.9 million of equity via the at-the-market (ATM) program at a weighted average share price of $28.09. Of this total, 1,723,426 shares were sold via the forward component of the ATM program for anticipated net proceeds of $48.5 million, and 1,087,250 shares were sold and issued for net proceeds of $30.4 million.
  • In the quarter, the Company also settled previously executed forward sale agreements of 1,190,532 shares for net proceeds of $31.6 million.

Liquidity

  • At September 30, 2022, FCPT had approximately $358 million of available liquidity including $37 million of cash and cash equivalents, $250 million of undrawn credit line capacity and 2,595,477 shares remaining to be settled under existing forward sale agreements for anticipated net proceeds of approximately $71 million.
  • In addition, at quarter end, FCPT has $75 million of forward interest rate swaps in place, effectively fixing the Treasury base rate at approximately 2.6% for a contemplated long-term unsecured debt issuance.

Credit Facility and Unsecured Notes

  • As announced on October 25, 2022, FCPT amended its credit facility to convert from LIBOR to SOFR borrowings, to extend and increase term loans of $50 million maturing in 2023 and $100 million maturing in 2024 to a $90 million term loan maturing in 2027 and a $90 million term loan maturing in 2028. In the transaction, FCPT raised an incremental $30 million to fund investment activity. Based on FCPT’s current investment grade ratings of BBB/Baa3 (Fitch/Moody’s), term loans under the amended revolving facility are priced at SOFR plus 105 to 110 basis points depending on the tranche.
  • At September 30, 2022, FCPT had $975 million of outstanding debt, consisting of $400 million of term loans and $575 million of unsecured fixed rate notes and no outstanding revolver balance. FCPT’s leverage, as measured by the ratio of net debt to adjusted EBITDAre, is 5.5x at quarter-end.

Real Estate Portfolio

  • As of September 30, 2022, the Company’s rental portfolio consisted of 982 properties located in 47 states. The properties are 99.9% occupied (measured by square feet) under long-term, net leases with a weighted average remaining lease term of approximately 8.6 years.

Conference Call Information

Company management will host a conference call and audio webcast on Wednesday, November 2 at 11:00 a.m. Eastern Time to discuss the results.

Interested parties can listen to the call via the following:

Phone: 1 833 927 1758 (domestic) or 1 929 526 1599 (international), Call Access Code: 716461

Live webcast: https://events.q4inc.com/attendee/935891965

In order to pre-register for the call, investors can visit https://www.netroadshow.com/events/login?show=e37b94da&confId=42874

Replay: Available through January 31, 2023 by dialing 1 866 813 9403 (domestic) or 44 204 525 0658 (international), Replay Access Code 163029

About FCPT

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

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, announced transactions, expectations regarding the making of distributions and the payment of dividends, and the effect of pandemics such as COVID-19 on the business operations of the Company and the Company’s tenants and their continued ability to pay rent in a timely manner or at all. 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. In addition, the extent to which COVID-19 impacts the Company and its tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, among others. For a further discussion of these and other factors that could cause the company’s future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in the company’s most recent annual report on Form 10-K, and other risks described in documents subsequently filed by the company from time to time with the Securities and Exchange Commission.

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 2022 operating results and other information on the Company are available on the investors relations section of FCPT’s website at 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,

2022

2021

2022

2021

 
Revenues:
Rental revenue

$

48,719

 

$

43,673

 

$

143,526

 

$

127,350

 

Restaurant revenue

 

7,289

 

 

7,033

 

 

22,304

 

 

19,374

 

Total revenues

 

56,008

 

 

50,706

 

 

165,830

 

 

146,724

 

Operating expenses:
General and administrative

 

4,917

 

 

4,262

 

 

14,884

 

 

13,490

 

Depreciation and amortization

 

10,588

 

 

8,831

 

 

30,420

 

 

25,455

 

Property expenses

 

1,999

 

 

1,453

 

 

5,835

 

 

3,657

 

Restaurant expenses

 

6,790

 

 

6,546

 

 

20,725

 

 

17,994

 

Total operating expenses

 

24,294

 

 

21,092

 

 

71,864

 

 

60,596

 

 
Interest expense

 

(9,177

)

 

(8,311

)

 

(26,583

)

 

(24,328

)

Other income, net

 

164

 

 

2

 

 

250

 

 

10

 

Realized gain on sale, net

 

1,828

 

 

-

 

 

7,584

 

 

431

 

Income tax expense

 

23

 

 

(97

)

 

(209

)

 

(231

)

Net income

 

24,552

 

 

21,208

 

 

75,008

 

 

62,010

 

 
Net income attributable to noncontrolling interest

 

(34

)

 

(44

)

 

(105

)

 

(129

)

Net Income Attributable to Common Shareholders

$

24,518

 

$

21,164

 

$

74,903

 

$

61,881

 

 
Basic net income per share

$

0.30

 

$

0.28

 

$

0.93

 

$

0.81

 

Diluted net income per share

$

0.30

 

$

0.28

 

$

0.92

 

$

0.81

 

Regular dividends declared per share

$

0.3325

 

$

0.3175

 

$

0.9975

 

$

0.9525

 

 
Weighted-average shares outstanding:
Basic

 

81,884,974

 

 

76,250,614

 

 

80,797,829

 

 

76,094,133

 

Diluted

 

82,119,447

 

 

76,360,526

 

 

81,011,737

 

 

76,222,167

 

Four Corners Property Trust

Consolidated Balance Sheets

(In thousands, except share data)

 
September 30, 2022
(Unaudited) December 31, 2021
ASSETS
Real estate investments:
Land

$

1,056,228

 

$

966,565

 

Buildings, equipment and improvements

 

1,490,729

 

 

1,437,840

 

Total real estate investments

 

2,546,957

 

 

2,404,405

 

Less: Accumulated depreciation

 

(700,499

)

 

(682,430

)

Total real estate investments, net

 

1,846,458

 

 

1,721,975

 

Intangible lease assets, net

 

106,947

 

 

104,251

 

Total real estate investments and intangible lease assets, net

 

1,953,405

 

 

1,826,226

 

Cash and cash equivalents

 

36,669

 

 

6,300

 

Straight-line rent adjustment

 

59,873

 

 

55,397

 

Derivative assets

 

36,448

 

 

2,591

 

Deferred tax assets

 

920

 

 

864

 

Other assets

 

12,562

 

 

11,601

 

Total Assets

$

2,099,877

 

$

1,902,980

 

 
LIABILITIES AND EQUITY
 
Liabilities:
Long-term debt ($975,000 and $760,000 principal, respectively)

$

966,989

 

$

877,591

 

Dividends payable

 

27,487

 

 

26,655

 

Rent received in advance

 

11,870

 

 

11,311

 

Derivative liabilities

 

-

 

 

7,517

 

Other liabilities

 

24,800

 

 

16,014

 

Total liabilities

 

1,031,146

 

 

939,088

 

 
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, 82,822,584 and 80,279,217 shares issued and outstanding, respectively

 

8

 

 

8

 

Additional paid-in capital

 

1,027,716

 

 

958,737

 

Accumulated other comprehensive income (loss)

 

31,968

 

 

(9,824

)

Noncontrolling interest

 

2,268

 

 

2,218

 

Retained earnings

 

6,771

 

 

12,753

 

Total equity

 

1,068,731

 

 

963,892

 

Total Liabilities and Equity

$

2,099,877

 

$

1,902,980

 

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,

2022

2021

2022

2021

Funds from operations (FFO):
Net income

$

24,552

 

$

21,208

 

$

75,008

 

$

62,010

 

Depreciation and amortization

 

10,558

 

 

8,797

 

 

30,322

 

 

25,378

 

Realized gain on sales of real estate

 

(1,828

)

 

-

 

 

(7,584

)

 

(431

)

FFO (as defined by NAREIT)

$

33,282

 

$

30,005

 

$

97,746

 

$

86,957

 

Straight-line rental revenue

 

(1,648

)

 

(1,979

)

 

(4,939

)

 

(5,775

)

Deferred income tax (benefit) expense (1)

 

(118

)

 

-

 

 

(57

)

 

-

 

Stock-based compensation

 

1,206

 

 

844

 

 

3,739

 

 

3,092

 

Non-cash amortization of deferred financing costs

 

496

 

 

468

 

 

1,460

 

 

1,901

 

Non-real estate investment depreciation

 

30

 

 

34

 

 

98

 

 

77

 

Other non-cash revenue adjustments

 

543

 

 

536

 

 

1,600

 

 

1,590

 

Adjusted Funds from Operations (AFFO)

$

33,791

 

$

29,908

 

$

99,647

 

$

87,842

 

 
Fully diluted shares outstanding (2)

 

82,234,006

 

 

76,519,431

 

 

81,126,296

 

 

76,381,395

 

 
FFO per diluted share

$

0.40

 

$

0.39

 

$

1.20

 

$

1.14

 

 
AFFO per diluted share

$

0.41

 

$

0.39

 

$

1.23

 

$

1.15

 

(1)

Amount represents non-cash deferred income tax benefit recognized in the third quarter and nine months ended September 30, 2022 for income tax benefit at the Kerrow Restaurant Business.

(2)

Assumes the issuance of common shares for OP units held by non-controlling interest.

 

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

Source: Four Corners Property Trust, Inc.

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