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FCPT Four Corners Property Trust

Filed: 29 Oct 20, 8:00pm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission File Number 1-37538
Four Corners Property Trust, Inc.
(Exact name of registrant as specified in its charter)
Maryland47-4456296
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
591 Redwood Highway, Suite 3215,Mill Valley,CA94941
(Address of principal executive offices)
(415) 965-8030
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: 
Title of each classTrading SymbolName of Exchange on Which Registered
Common Stock, $0.0001 par value per shareFCPTNew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filerAccelerated filerNon-accelerated filer
Smaller reporting companyEmerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
Number of shares of common stock outstanding as of October 29, 2020: 73,445,121



FOUR CORNERS PROPERTY TRUST, INC.
FORM 10 - Q
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020
TABLE OF CONTENTS





PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
FOUR CORNERS PROPERTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

  
September 30, 2020
(Unaudited)
 December 31, 2019
ASSETS    
Real estate investments:    
Land $764,439
 $690,575
Buildings, equipment and improvements 1,306,725
 1,277,159
Total real estate investments 2,071,164
 1,967,734
Less: Accumulated depreciation (652,849) (635,630)
Total real estate investments, net 1,418,315
 1,332,104
Intangible lease assets, net 79,459
 57,917
Total real estate investments and intangible lease assets, net 1,497,774
 1,390,021
Cash and cash equivalents 17,735
 5,083
Straight-line rent adjustment 45,868
 39,350
Derivative assets 54
 1,451
Other assets 12,194
 10,165
Total Assets $1,573,625
 $1,446,070
     
LIABILITIES AND EQUITY    
Liabilities:    
Long-term debt, net of deferred financing costs $743,335
 $669,940
Dividends payable 22,163
 21,325
Rent received in advance 9,835
 10,463
Derivative liabilities 20,923
 5,005
Other liabilities 19,218
 12,596
Total liabilities 815,474
 719,329
     
Equity:    
Preferred stock, par value $0.0001 per share; 25,000,000 authorized, zero shares issued and outstanding 0
 0
Common stock, par value $0.0001 per share; 500,000,000 shares authorized, 72,769,345 and 70,020,660 shares issued and outstanding, respectively 7
 7
Additional paid-in capital 752,568
 686,181
Retained earnings 30,477
 38,401
Accumulated other comprehensive loss (28,811) (3,539)
Noncontrolling interest 3,910
 5,691
Total equity 758,151
 726,741
Total Liabilities and Equity $1,573,625
 $1,446,070


The accompanying notes are an integral part of this financial statement.
1


FOUR CORNERS PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
(Unaudited)


 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
  2020 2019 2020 2019
Revenues:        
Rental revenue $38,871
 $35,209
 $114,631
 $103,832
Restaurant revenue 4,097
 4,974
 11,696
 15,520
Total revenues 42,968
 40,183
 126,327
 119,352
Operating expenses:        
General and administrative 3,741
 3,389
 11,303
 10,766
Depreciation and amortization 7,523
 6,653
 21,670
 19,532
Property expenses 838
 346
 2,539
 1,071
Restaurant expenses 3,987
 4,805
 11,799
 14,742
Total operating expenses 16,089
 15,193
 47,311
 46,111
Interest expense (7,410) (6,665) (21,732) (19,969)
Other income 2
 153
 168
 872
Income tax expense (67) (69) (192) (198)
Net income 19,404
 18,409
 57,260
 53,946
Net income attributable to noncontrolling interest (55) (78) (180) (244)
Net Income Available to Common Shareholders $19,349
 $18,331
 $57,080
 $53,702
         
Basic net income per share: $0.27
 $0.27
 $0.81
 $0.79
Diluted net income per share: $0.27
 $0.27
 $0.81
 $0.78
Weighted average number of common shares outstanding:        
Basic 71,009,154
 68,315,915
 70,430,037
 68,274,167
Diluted 71,230,481
 68,527,187
 70,658,500
 68,495,013
Dividends declared per common share $0.3050
 $0.2875
 $0.9150
 $0.8625









The accompanying notes are an integral part of this financial statement.
2


FOUR CORNERS PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, except for share and per share data)
(Unaudited)

  
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
  2020 2019 2020 2019
Net income $19,404
 $18,409
 $57,260
 $53,946
Other comprehensive (loss) income:        
Effective portion of change in fair value of derivative instruments (19) (3,226) (27,934) (12,189)
Reclassification adjustment of derivative instruments included in net income 1,380
 (420) 2,570
 (1,610)
Other comprehensive (loss) income 1,361
 (3,646) (25,364) (13,799)
Comprehensive income 20,765
 14,763
 31,896
 40,147
Less: comprehensive income attributable to noncontrolling interest        
Net income attributable to noncontrolling interest 55
 78
 180
 244
Other comprehensive (loss) income attributable to noncontrolling interest 4
 (15) (92) (63)
Comprehensive income attributable to noncontrolling interest 59
 63
 88
 181
Comprehensive Income Attributable to Common Shareholders $20,706
 $14,700
 $31,808
 $39,966


The accompanying notes are an integral part of this financial statement.
3


FOUR CORNERS PROPERTY TRUST, INC.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(In thousands, except share data)
(Unaudited)

For the Three Months Ended September 30, 2020
  Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Noncontrolling Interest Total
  Shares Par Value
Balance at June 30, 2020 70,333,387
 $7
 $690,389
 $33,292
 $(30,168) $3,912
 $697,432
Net income 
 
 
 19,349
 
 55
 19,404
Other comprehensive income 
 
 
 
 1,357
 4
 1,361
Redemption of OP units 0
 
 0
 
 
 0
 0
ATM proceeds, net of issuance costs 2,435,958
 
 61,311
 
   
 61,311
Dividends and distributions to equity holders 
 
 
 (22,164) 
 (61) (22,225)
Stock-based compensation, net 0
 
 868
 
 
 
 868
Balance at
September 30, 2020
 72,769,345
 $7
 $752,568
 $30,477
 $(28,811) $3,910
 $758,151


For the Nine Months Ended September 30, 2020
  Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Noncontrolling Interest Total
  Shares Par Value
Balance at December 31, 2019 70,020,660
 $7
 $686,181
 $38,401
 $(3,539) $5,691
 $726,741
Net income 
 
 
 57,080
 
 180
 57,260
Other comprehensive loss 
 
 
 
 (25,272) (92) (25,364)
Redemption of OP units 45,000
 
 859
 
 
 (1,672) (813)
ATM proceeds, net of issuance costs 2,580,279
 
 65,599
 
 
 
 65,599
Dividends and distributions to equity holders 
 
 
 (65,004) 
 (197) (65,201)
Stock-based compensation, net 123,406
 
 (71) 
 
 
 (71)
Balance at
September 30, 2020
 72,769,345
 $7
 $752,568
 $30,477
 $(28,811) $3,910
 $758,151


The accompanying notes are an integral part of this financial statement.
4


For the Three Months Ended September 30, 2019
  Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Noncontrolling Interest Total
  Shares Par Value
Balance at June 30, 2019 68,418,243
 $7
 $638,988
 $42,122
 $(4,149) $5,703
 $682,671
Net income 
 
 
 18,331
 
 78
 18,409
Other comprehensive loss 
 
 
 
 (3,631) (15) (3,646)
Redemption of OP units 0
   0
     0
 0
ATM proceeds, net of issuance costs 0
   0
 
 
 
 0
Dividends and distributions to equity holders 
 
 
 (19,641) 
 (84) (19,725)
Stock-based compensation, net (1,061) 
 802
 
 
 
 802
Balance at
September 30, 2019
 68,417,182
 $7
 $639,790
 $40,812
 $(7,780) $5,682
 $678,511


For the Nine Months Ended September 30, 2019
  Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Noncontrolling Interest Total
  Shares Par Value
Balance at December 31, 2018 68,204,045
 7
 639,116
 46,018
 5,956
 7,867
 698,964
Net income 
 
 
 53,702
 
 244
 53,946
Other comprehensive loss 
 
 
 
 (13,736) (63) (13,799)
Redemption of OP units 5,966
   (1,068)     (2,099) (3,167)
ATM proceeds, net of issuance costs 59,638
   1,652
 
 
 
 1,652
Dividends and distributions to equity holders 
 
 
 (58,908) 
 (267) (59,175)
Stock-based compensation, net 147,533
 
 90
 
 
 
 90
Balance at
September 30, 2019
 68,417,182
 $7
 $639,790
 $40,812
 $(7,780) $5,682
 $678,511




The accompanying notes are an integral part of this financial statement.
5


FOUR CORNERS PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
  Nine Months Ended September 30,
  2020 2019
Cash flows - operating activities    
Net income $57,260
 $53,946
Adjustments to reconcile net income to cash provided by operating activities:    
Depreciation and amortization 21,670
 19,532
Gain on disposal of land, building, and equipment 0
 0
Non-cash revenue adjustments 799
 49
Amortization of financing costs 1,589
 1,539
Stock-based compensation expense 2,496
 2,792
Changes in assets and liabilities:    
Derivative assets and liabilities (8,049) (5)
Straight-line rent adjustment (6,519) (7,008)
Rent received in advance (628) 7,222
Intangible assets (lease incentive payments) (4,167) 0
Other assets and liabilities 945
 3,229
Net cash provided by operating activities 65,396
 81,296
Cash flows - investing activities    
Purchases of real estate investments (123,466) (81,136)
Advance deposits (refunds) on acquisition of operating real estate 1,060
 (282)
Net cash used in investing activities (122,406) (81,418)
Cash flows - financing activities    
Net proceeds from ATM equity issuance 65,599
 1,652
Proceeds from issuance of senior notes 125,000
 0
Payment of deferred financing costs (1,194) 0
Proceeds from revolving credit facility 158,500
 0
Repayment of revolving credit facility (210,500) 0
Payment of dividends to shareholders (64,166) (58,847)
Distributions to non-controlling interests (197) (267)
Redemption of non-controlling interests (813) (3,167)
Employee shares withheld for taxes (2,567) (2,702)
Net cash provided by (used in) financing activities 69,662
 (63,331)
Net increase decrease in cash and cash equivalents, including restricted cash 12,652
 (63,453)
Cash and cash equivalents, including restricted cash, at beginning of period 5,083
 93,242
Cash and cash equivalents, including restricted cash, at end of period $17,735
 $29,789
Supplemental disclosures:    
Interest paid $13,861
 $14,075
Income taxes paid $532
 $548
Operating lease payments received (lessor) $104,212
 $96,113
Operating lease payments remitted (lessee) $490
 $312
Non-cash activities:    
Dividends declared but not paid $22,163
 $19,641
Change in fair value of derivative instruments $(17,315) $(13,794)

The accompanying notes are an integral part of this financial statement.
6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


NOTE 1 – ORGANIZATION
Four Corners Property Trust, Inc. (together with its consolidated subsidiaries, “FCPT”) is an independent, publicly traded, self-administered company, primarily engaged in the ownership, acquisition and leasing of restaurant properties. Substantially all of our business is conducted through Four Corners Operating Partnership, LP (“FCPT OP”), a Delaware limited partnership of which we are the initial and substantial limited partner. Our wholly owned subsidiary, Four Corners GP, LLC (“FCPT GP”), is its sole general partner.
Any references to “the Company,” “we,” “us,” or “our” refer to FCPT as an independent, publicly traded, self-administered company.
FCPT was incorporated as a Maryland corporation on July 2, 2015 as a wholly owned indirect subsidiary of Darden Restaurants, Inc., (together with its consolidated subsidiaries “Darden”), for the purpose of owning, acquiring and leasing properties on a triple-net basis, for use in the restaurant and other retail industries. On November 9, 2015, Darden completed a spin-off of FCPT whereby Darden contributed to us 100% of the equity interest in entities that owned 418 properties in which Darden operates restaurants, representing 5 of their brands, and 6 LongHorn Steakhouse® restaurants located in the San Antonio, Texas area (the “Kerrow Restaurant Operating Business”) along with the underlying properties or interests therein associated with the Kerrow Restaurant Operating Business. In exchange, we issued to Darden all of our common stock and paid to Darden $315.0 million in cash. Subsequently, Darden distributed all of our outstanding shares of common stock pro rata to holders of Darden common stock whereby each Darden shareholder received one share of our common stock for every three shares of Darden common stock held at the close of business on the record date, which was November 2, 2015, as well as cash in lieu of any fractional shares of our common stock which they would have otherwise received (the “Spin-Off”).
We believe that we have been organized and have operated in conformity with the requirements for qualification and taxation as a real estate investment trust (a “REIT”) for federal income tax purposes commencing with our taxable year ended December 31, 2016, and we intend to continue to operate in a manner that will enable us to maintain our qualification as a REIT. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our REIT taxable income to our shareholders, subject to certain adjustments and excluding any net capital gain. As a REIT, we will not be subject to federal corporate income tax on that portion of net income that is distributed to our shareholders.  However, FCPT’s taxable REIT subsidiaries (“TRS”) will generally be subject to federal, state, and local income taxes. We made our REIT election upon the filing of our 2016 tax return.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
The accompanying consolidated financial statements (the “Consolidated Financial Statements”) include the accounts of Four Corners Property Trust, Inc. and its consolidated subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
The Consolidated Financial Statements reflect all adjustments which are, in the opinion of management, necessary to a fair presentation of the results for the interim periods presented. These adjustments are considered to be of a normal, recurring nature.
Use of Estimates
The preparation of these Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The estimates and assumptions used in the accompanying Consolidated Financial Statements are based on management’s evaluation of the relevant facts and circumstances. Actual results may differ from the estimates and assumptions used in preparing the accompanying Consolidated Financial Statements, and such differences could be material.

7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

Real Estate Investments, Net
Real estate investments, net are recorded at cost less accumulated depreciation. Building components are depreciated over estimated useful lives ranging from seven to fifty-five years using the straight-line method. Leasehold improvements, which are reflected on our Consolidated Balance Sheets as a component of buildings, equipment, and improvements, net are amortized over the lesser of the non-cancelable lease term or the estimated useful lives of the related assets using the straight-line method. Equipment is depreciated over estimated useful lives ranging from two to fifteen years also using the straight-line method. Real estate development and construction costs for newly constructed restaurants are capitalized in the period in which they are incurred. Gains and losses on the disposal of land, buildings, and equipment are included in realized gain on sale, net, in our accompanying Consolidated Statements of Income (“Income Statements”).
Our accounting policies regarding land, buildings, equipment, and improvements, include our judgments regarding the estimated useful lives of these assets, the residual values to which the assets are depreciated or amortized, the determination of what constitutes a reasonably assured lease term, and the determination as to what constitutes enhancing the value of or increasing the life of existing assets. These judgments and estimates may produce materially different amounts of reported depreciation and amortization expense if different assumptions were used. As discussed further below, these judgments may also impact our need to recognize an impairment charge on the carrying amount of these assets as the cash flows associated with the assets are realized, or as our expectations of estimated future cash flows change.
Acquisition of Real Estate
The Company evaluates acquisitions to determine whether transactions should be accounted for as asset acquisitions or business combinations in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2017-01. The Company has determined the land, building, site improvements, and in-places leases (if any) of assets acquired were each single assets as the building and property improvements are attached to the land and cannot be physically removed and used separately from the land without incurring significant costs or reducing their fair value. Additionally, the Company has not acquired a substantive process used to generate outputs. As substantially all of the fair value of the gross assets acquired are concentrated in a single identifiable asset and there were no processes acquired, the acquisitions do not qualify as a business and are accounted for as asset acquisitions. Related transaction costs are generally capitalized and amortized over the useful life of the acquired assets.
The Company allocates the purchase price (including acquisition and closing costs) of real estate acquisitions to land, building, and improvements based on their relative fair values. The determination of the building fair value is on an ‘as-if-vacant’ basis. Value is allocated to acquired lease intangibles (if any) based on the costs avoided and revenue recognized by acquiring the property subject to lease and avoiding an otherwise ‘dark period’. In making estimates of fair values for this purpose, the Company uses a third-party specialist that obtains various information about each property, as well as the pre-acquisition due diligence of the Company and prior leasing activities at the site.
Lease Intangibles
Lease intangibles, if any, acquired in conjunction with the purchase of real estate represent the value of in-place leases and above- or below-market leases. For real estate acquired subject to existing lease agreements, acquired lease intangibles are valued based on the Company’s estimates of costs related to tenant acquisition and the asset carrying costs, including lost revenue, that would be incurred during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. Above-market and below-market lease intangibles are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to the leases at the time of acquisition of the real estate and the Company’s estimate of current market lease rates for the property, measured over a period equal to the remaining initial term of the lease.
In-place lease intangibles are amortized on a straight-line basis over the remaining initial term of the related lease and included in depreciation and amortization expense. Above-market lease intangibles are amortized over the remaining initial terms of the respective leases as a decrease in rental revenue. Below-market lease intangibles are generally amortized as an increase to rental revenue over the remaining initial term of the respective leases, but may be amortized over the renewal periods if the Company believes it is likely the tenant will exercise the renewal option. Should a lease terminate early, the unamortized portion of any

8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

related lease intangible is immediately recognized as an impairment loss included in depreciation and amortization expense. To date, the Company has not had significant early terminations.
Finance ground lease assets are also included in lease intangible assets, net on the Consolidated Balance Sheets. See Leases below for additional information.
Impairment of Long-Lived Assets
Land, buildings and equipment and certain other assets, including definite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such events and changes may include macroeconomic conditions, including those caused by global pandemics, like the recent coronavirus disease pandemic (“COVID-19”) and restrictions intended to prevent its spread, which may result in property operational disruption and indicate that the carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future undiscounted net cash flows expected to be generated by the assets. Identifiable cash flows are measured at the lowest level for which they are largely independent of the cash flows of other groups of assets and liabilities, generally at the restaurant level. If these assets are determined to be impaired, the amount of impairment recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. Fair value is generally determined by appraisals or sales prices of comparable assets.
The judgments we make related to the expected useful lives of long-lived assets and our ability to realize undiscounted cash flows in excess of the carrying amounts of these assets are affected by factors such as the ongoing maintenance and improvements of the assets, changes in economic conditions, changes in usage or operating performance, desirability of the restaurant sites and other factors, such as our ability to sell our assets held for sale. As we assess the ongoing expected cash flows and carrying amounts of our long-lived assets, significant adverse changes in these factors could cause us to realize a material impairment loss.
Exit or disposal activities include the cost of disposing of the assets and are generally expensed as incurred. Upon disposal of the assets, any gain or loss is recorded in the same caption within our Income Statements as the original impairment. Provisions for impairment are included in depreciation and amortization expense. We did 0t record impairment expense during the nine months ended September 30, 2020 or 2019.
Real Estate Held for Sale
Real estate is classified as held for sale when the sale is probable, will be completed within one year, purchase agreements are executed, the buyer has a significant deposit at risk, and no financing contingencies exist which could prevent the transaction from being completed in a timely manner. Restaurant sites and certain other assets to be disposed of are included in assets held for sale when the likelihood of disposing of these assets within one year is probable. Assets whose disposal is not probable within one year remain in land, buildings, equipment and improvements until their disposal within one year is probable. Disposals of assets that have a major effect on our operations and financial results or that represent a strategic shift in our operating businesses meet the requirements to be reported as discontinued operations. Real estate held for sale is reported at the lower of carrying amount or fair value, less estimated costs to sell. There was 0 real estate held for sale at September 30, 2020 or December 31, 2019.
Cash, Cash Equivalents, and Restricted Cash
We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents can consist of cash and money market accounts. Restricted cash consists of 1031 tax deferred real estate exchange proceeds and is included in Other assets on our Consolidated Balance Sheets.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash in our Consolidated Balance Sheets to the total amount shown in our Consolidated Statements of Cash Flows:
  September 30, December 31,
(In thousands) 2020 2019
Cash and cash equivalents $17,735
 $5,083
Restricted cash (included in Other assets) 0
 0
Total Cash, Cash Equivalents, and Restricted Cash $17,735
 $5,083


9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

Long-term Debt
Long-term debt is carried at unpaid principal balance, net of deferred financing costs. All of our long-term debt is currently unsecured and interest is paid monthly on our non-amortizing term loans and revolving credit facility and semi-annually on our senior fixed rate notes.
Deferred Financing Costs
Financing costs related to long-term debt are deferred and amortized over the remaining life of the debt using the effective interest method. These costs are presented as a direct deduction from their related liabilities on the Consolidated Balance Sheets.
See Note 7 - Long-term Debt, Net of Deferred Financing Costs for additional information.
Derivative Instruments and Hedging Activities
We enter into derivative instruments for risk management purposes only, including derivatives designated as hedging instruments as required by FASB ASC Topic 815, Derivatives and Hedging, and those utilized as economic hedges. Our use of derivative instruments is currently limited to interest rate hedges. These instruments are generally structured as hedges of the variability of cash flows related to forecasted transactions (cash flow hedges). We do not enter into derivative instruments for trading or speculative purposes, where changes in the cash flows of the derivative are not expected to offset changes in cash flows of the hedged item. All derivatives are recognized on the balance sheet at fair value. For those derivative instruments for which we intend to elect hedge accounting, at the time the derivative contract is entered into, we document all relationships between hedging instruments and hedged items, as well as our risk-management objective and strategy for undertaking the various hedge transactions. This process includes linking all derivatives designated as cash flow hedges to specific assets and liabilities on the consolidated balance sheet or to specific forecasted transactions. We also formally assess, both at the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items.
To the extent our derivatives are effective in offsetting the variability of the hedged cash flows, and otherwise meet the cash flow hedge accounting criteria in accordance with United States generally accepted accounting principles (“U.S. GAAP”), changes in the derivatives’ fair value are not included in current earnings but are included in accumulated other comprehensive income, net of tax. These changes in fair value will be reclassified into earnings at the time of the forecasted transaction. Ineffectiveness measured in the hedging relationship is recorded in earnings in the period in which it occurs.
See Note 8 - Derivative Financial Instruments for additional information.
Other Assets and Liabilities
Other assets primarily consist of right of use operating lease assets, pre-acquisition costs, prepaid assets, food and beverage inventories for use by our Kerrow operating subsidiary, escrow deposits, and accounts receivable. Other liabilities primarily consist of accrued compensation, accrued interest, accrued operating expenses, and operating lease liabilities.
See Note 6 - Supplemental Detail for Certain Components of Consolidated Balance Sheets for additional information.
Leases
Effective January 1, 2019, the Company adopted ASU 2016-02, Leases (“ASC 842”), using the effective date method. Consolidated Financial Statements for reporting periods beginning on or after January 1, 2019, are presented under the new guidance, while prior periods amounts are not adjusted and continue to be reported in accordance with previous guidance. We elected the package of practical expedients which permits us to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. We did not elect the hindsight practical expedient which permits entities to use hindsight in determining the lease term and assessing impairment. The adoption of the lease standard did not change our previously reported Consolidated Financial Statements and did not result in a cumulative adjustment to equity.
All significant lease arrangements are generally recognized at lease commencement. For leases where the Company is the lessee upon adoption of ASC 842, operating or finance lease right-of-use (“ROU”) assets and lease liabilities are recognized at commencement based on the present value of lease payments over the lease term. ROU assets represent our right to use an

10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

underlying asset during the reasonably certain lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense is recognized on a straight-line basis over the lease term.
As part of certain real estate investment transactions, the Company may enter into long-term ground leases as a lessee. The Company recognizes a ground lease (or right-of-use) asset and related lease liability for each of these ground leases. Ground lease assets and lease liabilities are recognized based on the present value of the lease payments. The Company uses its estimated incremental borrowing rate, which is the estimated rate at which the Company could borrow on a collateralized basis with similar payments over a similar term, in determining the present value of the lease payments.
For leases where the Company is the lessor, we determine the classification upon commencement. At September 30, 2020, all such leases are classified as operating leases. These operating leases may contain both lease and non-lease components. The Company accounts for lease and non-lease components as a single component. Prior to adoption of ASC 842, lease origination fees were deferred and amortized over the related lease term as an adjustment to depreciation expense. Subsequent to the adoption of ASC 842 on January 1, 2019, the Company expenses certain initial direct costs that are not incremental in obtaining a lease.
See Note 5 - Leases for additional information.
Rent Concessions
In April 2020, the FASB issued a question-and-answer document regarding accounting for lease concessions and other effects of COVID-19. The document clarifies that entities may elect not to evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under ASC 842. Instead, an entity that elects not to evaluate whether a concession directly related to COVID-19 is a modification can then elect whether to apply the modification guidance (i.e., assume the relief was always contemplated by the contract or assume the relief was not contemplated by the contract).
During the second and third quarter of 2020, the Company agreed to lease concessions with certain tenants in response to COVID-19. These concessions resulted in a substantial increase in our rights as lessor, including receiving additional financial information, agreeing to extend the current term of the lease, enhancing the lease guarantee, or consenting to more favorable rent escalations in the future. As such, the Company will account for these concessions as lease modifications under ASC 842. Rent deferrals agreed upon with respect to rent owed for the second quarter of 2020 were for approximately $1.0 million of contractual base rent as of June 30, 2020 and require the full rent amount to be paid back to the Company in the near-term. In the third quarter of 2020, the Company has agreed to rent abatements as part of lease amendments for concessions of the type described above and for lease payments due in the second quarter. These agreements for abatements represent approximately $1.6 million of rental revenue recognized in the second quarter of 2020. To date, the Company has 0t abated rent for the third quarter of 2020. During the third quarter of 2020, the receivables for these abatements were recorded as lease incentives in Intangible lease assets, net on our Consolidated Balance Sheets and will be amortized as a reduction of revenue over the amended lease terms.
Revenue Recognition
Rental Revenue
For those net leases that provide for periodic and determinable increases in base rent, base rental revenue is recognized on a straight-line basis over the applicable lease term when collectability is probable. Recognizing rental revenue on a straight-line basis generally results in recognized revenues during the first half of a lease term exceeding the cash amounts contractually due from our tenants, creating a deferred rent receivable.
In certain circumstances, the Company may offer tenant allowance funds in exchange for increasing rent, extending the term, and including annual sales reporting among other items. These tenant allowance funds are classified as lease incentives upon payment and are amortized as a reduction to revenue over the lease term. Lease incentives are included in Intangible lease assets, net, on our Consolidated Balance Sheets. During the three and nine months ended September 30, 2020, the Company paid lease incentives of $4.2 million to tenants.
We assess the collectability of our lease receivables, including deferred rents receivable, on several factors, including payment history, the financial strength of the tenant and any guarantors, historical operations and operating trends of the property, and current economic conditions. If our evaluation of these factors indicates it is not probable that we will be to recover substantially all of the receivable, we derecognize the deferred rent receivable asset and record as a reduction in rental revenue. If we determine

11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

the lease receivable will not be collected due to a credit concern, we reduce the recorded revenue for the period and related accounts receivable.
For those leases that provide for periodic increases in base rent only if certain revenue parameters or other substantive contingencies are met, the increased rental revenue is recognized as the related parameters or contingencies are met, rather than on a straight-line basis over the applicable lease term. Prior to the adoption of ASC 842, lessor costs reimbursed by the lessee were presented on a net basis in our Consolidated Financial Statements. Subsequent to the adoption of ASC 842 on January 1, 2019, costs paid by the lessor and reimbursed by the lessees are included in variable lease payments and presented on a gross basis within rental revenue. Sales taxes collected from lessees and remitted to governmental authorities are presented on a net basis within rental revenue.
Restaurant Revenue
Restaurant revenue represents food, beverage, and other products sold and is presented net of the following discounts: coupons, employee meals, complimentary meals and gift cards. Revenue from restaurant sales, whether received in cash or by credit card, is recognized when food and beverage products are sold. At September 30, 2020 and December 31, 2019, credit card receivables, included in other assets, totaled $45 thousand and $81 thousand, respectively. We recognize sales from our gift cards when the gift card is redeemed by the customer. Sales taxes collected from customers and remitted to governmental authorities are presented on a net basis within restaurant revenue on our Consolidated Income Statements.
Restaurant Expenses
Restaurant expenses include restaurant labor, general and administrative expenses, rent expense, and food and beverage costs. Food and beverage costs include inventory, warehousing, related purchasing and distribution costs. Vendor allowances received in connection with the purchase of a vendor’s products are recognized as a reduction of the related food and beverage costs as earned.
Income Taxes
We believe that we have been organized and have operated in conformity with the requirements for qualification and taxation as a REIT commencing with our taxable year ended December 31, 2016, and we intend to continue to operate in a manner that will enable us to maintain our qualification as a REIT. So long as we qualify as a REIT, we generally will not be subject to federal income tax on our net income that we distribute currently to our shareholders. To maintain our qualification as a REIT, we are required under the Code to distribute at least 90% of our REIT taxable income (without regard to the deduction for dividends paid and excluding net capital gains) to our shareholders and meet certain other requirements. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate rates. Even if we qualify as a REIT, we may also be subject to certain state, local and franchise taxes. Under certain circumstances, federal income and excise taxes may be due on our undistributed taxable income.
The Kerrow Restaurant Operating Business is a TRS and is taxed as a C corporation.
See Note 9 - Income Taxes for additional information.
Earnings Per Share
Basic earnings per share (“EPS”) are computed by dividing net income allocated to common shareholders by the weighted-average number of common shares outstanding for the reporting period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. No effect is shown for any securities that are anti-dilutive. Net income allocated to common shareholders represents net income less income allocated to participating securities and non-controlling interests. None of the Company’s equity awards are participating securities.
See Note 10 - Equity for additional information.
Stock-Based Compensation
The Company’s stock-based compensation plan provides for the grant of restricted stock awards (“RSAs”), deferred stock units (“DSUs”), performance-based awards, including performance stock units (“PSUs”), dividend equivalents (“DEUs”), restricted stock units (“RSUs”), and other types of awards to eligible participants. DEUs are earned during the vesting period and

12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

received upon vesting of award. Upon forfeiture of an award, DEUs earned during the vesting period are also forfeited. We classify stock-based payment awards either as equity awards or liability awards based upon cash settlement options. Equity classified awards are measured based on the fair value on the date of grant. Liability classified awards are remeasured to fair value each reporting period. We recognize costs resulting from the Company’s stock-based compensation awards on a straight-line basis over their vesting periods, which range between one and five years, less estimated forfeitures. No compensation cost is recognized for awards for which employees do not render the requisite services.
See Note 11 - Stock-Based Compensation for additional information.
Fair Value of Financial Instruments
We use a fair value approach to value certain assets and liabilities. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. We use a fair value hierarchy, which distinguishes between assumptions based on market data (observable inputs) and an entity's own assumptions (unobservable inputs). The hierarchy consists of three levels:
Level 1 - Quoted market prices in active markets for identical assets or liabilities;
Level 2 - Inputs other than level one inputs that are either directly or indirectly observable; and
Level 3 - Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.
Application of New Accounting Standards
We consider the applicability and impact of all ASUs issued by the FASB. Other than as disclosed below, ASUs not yet adopted were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated result of operations, financial position and cash flows.
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform” which provides temporary optional expedients and exceptions to the guidance in US GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (SOFR). The guidance simplifies the accounting for modifying countless contracts (including those in hedging relationships) that refer to LIBOR and other interbank offered rates. The guidance is effective upon issuance and generally can be applied to contract modifications or existing and new hedge relationships through December 31, 2022. The Company is currently evaluating the impact of this guidance on its cash flow hedges.
NOTE 3 – CONCENTRATION OF CREDIT RISK
Our tenant base and the restaurant brands operating our properties are highly concentrated. With respect to our tenant base, Darden leases represent approximately 68% of the scheduled base rents from the properties we own. As our revenues predominately consist of rental payments, we are dependent on Darden for a significant portion of our leasing revenues. The audited and unaudited financial statements for Darden are included in its filings with the SEC, which can be found on the SEC’s internet website at www.sec.gov. Reference to Darden’s filings with the SEC is solely for the information of investors. We do not intend this website to be an active link or to otherwise incorporate the information contained on such website (including Darden’s filings with the SEC) into this report or our other filings with the SEC.
We also are subject to concentration risk in terms of the restaurant brands that operate our properties. As of September 30, 2020, FCPT had 308 Olive Garden branded locations in our portfolio, which comprise approximately 41% of our leased properties and approximately 51% of the revenues received under leases. Our properties, including the Kerrow Restaurant Operating Business, are located in 46 states, with concentrations of 10% or greater of total rental revenue in 2 states: Texas (12%) and Florida (11%).
We are exposed to credit risk with respect to cash held at various financial institutions, access to our credit facility, and amounts due or payable under our derivative contracts. At September 30, 2020, our exposure to risk related to our derivative instruments totaled $20.9 million including accrued interest, and the counterparty to such instruments are investment grade financial institutions.

13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

Our credit risk exposure with regard to our cash and the $250.0 million available capacity under the revolver portion of our credit facility is spread among a diversified group of investment grade financial institutions.
NOTE 4 – REAL ESTATE INVESMENTS, NET AND INTANGIBLE ASSETS AND LIABILITIES, NET
Real Estate Investments, Net
Real estate investments, net, which consist of land, buildings and improvements leased to others subject to net operating leases and those utilized in the operations of Kerrow Restaurant Operating Business are summarized as follows:
  September 30, December 31,
(In thousands) 2020 2019
Land $764,439
 $690,575
Buildings and improvements 1,171,749
 1,142,275
Equipment 134,976
 134,884
Total gross real estate investments 2,071,164
 1,967,734
Less: Accumulated depreciation (652,849) (635,630)
Total real estate investments, net 1,418,315
 1,332,104
Intangible lease assets, net 79,459
 57,917
Total Real Estate Investments and Intangible Lease Assets, Net $1,497,774
 $1,390,021

During the nine months ended September 30, 2020, the Company invested $121.4 million, including transaction costs, in 52 properties located in 20 states, and allocated the investment as follows: $65.6 million to land, $29.5 million to buildings and improvements, $0.1 million to equipment, and $25.9 million to intangible assets, including finance ROU assets. There was 0 contingent consideration associated with these acquisitions. These properties are 100% occupied under net leases, with a weighted average remaining lease term of 7.5 years as of September 30, 2020. The Company also acquired a plot of land for $2.4 million that it intends to develop. The Company did 0t dispose of any properties during the nine months ended September 30, 2020.
During the nine months ended September 30, 2020, the Company exercised its option to purchase 3 of the properties where the Company was the lessee under ground leases. These leases were previously accounted for as finance leases. These purchases resulted in an in increase in land and a corresponding decrease in finance lease right-of-use assets of $6.0 million.
During the nine months ended September 30, 2019, the Company invested $81.1 million, including transaction costs, in 40 restaurant properties located in 18 states, and allocated the investment as follows: $39.5 million to land, $22.6 million to buildings and improvements, and $19.0 million to intangible assets principally related to the value of the in-place leases acquired. There was no contingent consideration associated with these acquisitions. The Company did 0t dispose of any properties during the nine months ended September 30, 2019.
Intangible Lease Assets and Liabilities, Net
Acquired in-place lease intangibles are amortized over the remaining lease term as depreciation and amortization expense. Above-market and below-market leases are amortized over the initial term of the respective leases as an adjustment to rental revenue. Lease incentives are amortized over the initial term of the respective leases as an adjustment to rental revenue. Intangible lease liabilities are included in Other liabilities on our Consolidated Balance Sheets.

14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

The following tables detail intangible lease assets and liabilities.
  September 30, December 31,
(In thousands) 2020 2019
Acquired in-place lease intangibles $54,430
 $38,844
Above-market leases 13,804
 7,754
Finance leases - right of use asset (1)
 15,729
 16,063
Lease incentives, net 5,774
 0
Total 89,737
 62,661
Less: Accumulated amortization (10,278) (4,744)
Intangible Lease Assets, Net $79,459
 $57,917

(1)    See Note 5 - Leases for additional information on finance leases - right of use assets.
  September 30, December 31,
(In thousands) 2020 2019
Below-market leases $2,978
 $1,923
Less: Accumulated amortization (495) (155)
Intangible Lease Liabilities, Net $2,483
 $1,768

The value of acquired in-place leases amortized and included in depreciation and amortization expense was $1.8 million and $813 thousand for the three months ended September 30, 2020 and 2019, respectively, and $4.4 million and $2.1 million for the nine months ended September 30, 2020 and 2019, respectively. The value of above-market and below-market leases amortized as an adjustment to revenue was $363 thousand and $25 thousand for the three months ended September 30, 2020 and 2019, respectively, and $750 thousand and $49 thousand for the nine months ended September 30, 2020 and 2019, respectively. For the three and nine months ended September 30, 2020, lease incentive amortization was $48 thousand and $49 thousand, respectively.
At September 30, 2020, the total weighted average amortization period remaining for our intangible lease assets and liabilities was 10.0 years, and the individual weighted average amortization period remaining for acquired in-place lease intangibles, above-market leases, below-market leases and lease incentives was 9.7 years, 8.2 years, 9.7 years and 15.1 years, respectively.
Amortization of Lease Intangibles
The following table presents the estimated impact during the next five years and thereafter related to the amortization of in-place lease intangibles, and above-market and below-market lease intangibles for properties held for investment at September 30, 2020.
(In thousands) September 30,
2020 (three months) $2,251
2021 8,637
2022 8,084
2023 6,486
2024 5,605
Thereafter 24,462
Total Future Amortization $55,525

NOTE 5 – LEASES
Operating Leases as Lessee
As a lessee we record ROU assets and lease liabilities for the 2 ground leases at our Kerrow Restaurant Operating Business. These ground leases have extension options, which we believe will be exercised and are included in the calculation of our lease

15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

liabilities and right-of-use assets. During the second quarter of 2020, the Company became the lessee of new corporate office space, which qualified as an operating lease at commencement. In calculating the lease obligations under both the ground leases and office lease, we used discount rates estimated to be equal to what the Company would have to pay to borrow on a collateralized basis over a similar term, for an amount equal to the lease payments, in a similar economic environment.
Operating Lease Liability
As of September 30, 2020, maturities of operating lease liabilities were as follows:
(In thousands) September 30,
2020 (three months) $162
2021 673
2022 693
2023 705
2024 718
Thereafter 5,851
Total Payments 8,802
Less: Interest (2,642)
Operating Lease Liability $6,160

The weighted-average discount rate for operating leases at September 30, 2020 was 4.07%. The weighted-average remaining lease term was 17.1 years.
Rental expense was $222 thousand and $166 thousand for the three months ended September 30, 2020 and 2019, respectively. Rental expense was $542 thousand and $500 thousand for the nine months ended September 30, 2020 and 2019, respectively.
Operating Leases as Lessor
Our leases consist primarily of single-tenant, net leases, in which the tenants are responsible for making payments to third parties for operating expenses such as property taxes, insurance, and other costs associated with the properties leased to them. In leases where costs are paid by the Company and reimbursed by lessees, such payments are considered variable lease payments and recognized in rental revenue.
The following table shows the components of rental revenue for the three and nine months ended September 30, 2020 and 2019.
  Three Months Ended September 30, 
Nine Months Ended
September 30,
(In thousands) 2020 2019 2020 2019
Lease revenue - operating leases $38,271
 $34,993
 $112,899
 $103,252
Variable lease revenue (tenant reimbursements) 600
 216
 1,732
 580
Total Rental Revenue $38,871
 $35,209
 $114,631
 $103,832


16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

Future Minimum Lease Payments to be Received
The following table presents the scheduled minimum future contractual rent to be received under the remaining non-cancelable term of the operating leases. The table presents future minimum lease payments due during the initial lease term only as lease renewal periods are exercisable at the option of the lessee.
(In thousands) September 30,
2020 (three months) $37,249
2021 149,953
2022 151,380
2023 151,680
2024 152,163
Thereafter 1,079,088
Total Future Minimum Lease Payments $1,721,513

Ground Leases as Lessee
As of September 30, 2020, the Company had finance ground lease assets aggregating $15.7 million. These assets are included in intangible lease assets, net on the Consolidated Balance Sheets. The Company did not recognize a lease liability as no payments are due in the future under the leases. The Company’s ground lease assets have remaining lease terms ranging from 63 years to 99 years, with options to extend certain of the lease terms for additional ninety-nine year terms, and the option to purchase the assets. The weighted average remaining non-cancelable lease term for the ground leases was 94 years years at September 30, 2020.
NOTE 6 – SUPPLEMENTAL DETAIL FOR CERTAIN COMPONENTS OF CONSOLIDATED BALANCE SHEETS
Other Assets
The components of other assets were as follows:
  September 30, December 31,
(In thousands) 2020 2019
Operating lease right-of-use asset $5,515
 $3,810
Prepaid acquisition costs and deposits 3,018
 4,219
Prepaid assets 473
 845
Accounts receivable 1,860
 380
Food and beverage inventories 126
 196
Other 1,202
 715
Total Other Assets $12,194
 $10,165


17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

Other Liabilities
The components of other liabilities were as follows:
  September 30, December 31,
(In thousands) 2020 2019
Operating lease liability $6,160
 $4,403
Accrued interest expense 5,566
 1,572
Accrued compensation 1,628
 1,913
Accounts payable 367
 799
Intangible lease liabilities, net 2,483
 1,768
Accrued operating expenses 249
 396
Other 2,765
 1,745
Total Other Liabilities $19,218
 $12,596

NOTE 7 – LONG-TERM DEBT, NET OF DEFERRED FINANCING COSTS
At September 30, 2020, our long-term debt consisted of (1) $400 million of non-amortizing term loans and (2) $350 million of senior, unsecured, fixed rate notes. At December 31, 2019 our long-term debt consisted of (1) $400 million of non-amortizing term loans and (2) $225 million of senior, unsecured, fixed rate notes. At September 30, 2020 and December 31, 2019, the outstanding borrowings under the revolving credit facility were $0 million and $52.0 million, respectively, and there were 0 outstanding letters of credit.
The following table presents the Term Loan balances as of September 30, 2020 and December 31, 2019.
      Outstanding Balance
  Maturity Interest September 30, December 31,
(Dollars in thousands) Date Rate 2020 2019
Term Loans:        
Term loan due 2022 Nov 2022 1.51%(a)$150,000
 $150,000
Term loan due 2023 Nov 2023 1.41%(a)150,000
 150,000
Term loan due 2024 Mar 2024 1.41%(a)100,000
 100,000
Total Term Loans     $400,000
 $400,000
(a) Loan is a variable‑rate loan which resets monthly at one-month LIBOR + the applicable credit spread which was 1.25%-1.35% at September 30, 2020.
The following table presents the senior unsecured fixed rate notes balance as of September 30, 2020 and December 31, 2019.
      Outstanding Balance
  Maturity Interest September 30, December 31,
(Dollars in thousands) Date Rate 2020 2019
Notes Payable:        
Senior unsecured fixed rate note, issued June 2017 Jun 2024 4.68% $50,000
 $50,000
Senior unsecured fixed rate note, issued June 2017 Jun 2027 4.93% 75,000
 75,000
Senior unsecured fixed rate note, issued December 2018 Dec 2026 4.63% 50,000
 50,000
Senior unsecured fixed rate note, issued December 2018 Dec 2028 4.76% 50,000
 50,000
Senior unsecured fixed rate note, issued March 2020 Jun 2029 3.15% 50,000
 0
Senior unsecured fixed rate note, issued March 2020 Apr 2030 3.20% 75,000
 0
Total Notes     $350,000
 $225,000


18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

At September 30, 2020, and December 31, 2019, net unamortized deferred financing costs were approximately $6.7 million and $7.1 million, respectively. During the three months ended September 30, 2020 and 2019, amortization of deferred financing costs was $543 thousand and $512 thousand, respectively. During the nine months ended September 30, 2020 and 2019, amortization of deferred financing costs was $1.6 million and $1.5 million, respectively. The weighted average interest rate on the term loans before consideration of the interest rate hedge described below was 1.45% and 3.01% at September 30, 2020 and December 31, 2019, respectively.
The Company was in compliance with all debt covenants at September 30, 2020.
NOTE 8 – DERIVATIVE FINANCIAL INSTRUMENTS
Risk Management Objective of Using Derivatives
We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposures to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of our debt funding and the use of derivative financial instruments. Specifically, we enter into derivative financial instruments to manage exposures that arise from business activities that result in our receipt or payment of future cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash payments principally related to our borrowings.
Cash Flow Hedges of Interest Rate Risk
Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish these objectives, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The change in the fair value of derivatives designated and that qualify as cash flow hedges is recorded on our consolidated balance sheet in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the nine months ended September 30, 2020 and 2019, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.
As of September 30, 2020 and December 31, 2019, $300 million of our variable-rate debt is hedged by swaps with notional values totaling $300 million.
During the nine months ended September 30, 2020, the Company terminated 2 cash flow hedges in connection with a $125 million private note offering that was entered into on March 31, 2020. The swaps were terminated on March 10, 2020 for approximately an $8.4 million loss which will be amortized over the next 10 years as interest expense.
On June 8, 2020, the Company entered into 2 interest rate swaps to hedge the interest rate variability associated with our credit facility. The first interest rate swap has a fixed notional value of $50 million, with an effective date of November 9, 2020 and a maturity date of November 9, 2025, where the fixed rate paid by the Company was 0.5025% and the variable rate received reset monthly to the one-month LIBOR rate. The second interest rate swap has a variable notional value of $50 million to $150 million entered into on June 8, 2020 with an effective date of November 9, 2023 and a maturity date of November 9, 2025, where the fixed rate paid by the Company was 0.8205% and the variable rate received reset monthly to the one-month LIBOR rate.
Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. We estimate that over the next twelve months an additional $6.8 million will be reclassified to earnings as an increase to interest expense.
Non-designated Hedges
We do not use derivatives for trading or speculative purposes. During the nine months ended September 30, 2020 and 2019, we did not have any derivatives that were not designated as cash flow hedges for accounting purposes.

19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheets
The table below presents the fair value of our derivative financial instruments as well as their classification on the consolidated balance sheet as of September 30, 2020 and December 31, 2019.
  Derivative Assets Derivative Liabilities
  Balance Sheet Location Fair Value at Balance Sheet Location Fair Value at
(Dollars in thousands)  September 30, 2020 December 31, 2019  September 30, 2020 December 31, 2019
Derivatives designated as hedging instruments:      
Interest rate swaps Derivative assets $54
 $1,451
 Derivative liabilities $20,923
 $5,005
Total   $54
 $1,451
   $20,923
 $5,005

Tabular Disclosure of the Effect of Derivative Instruments on the Statements of Comprehensive Income
The table below presents the effect of our interest rate swaps on the statements of comprehensive income for the three and nine months ended September 30, 2020 and 2019.
(Dollars in thousands) Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Total Amount of Interest Expense Presented in the Consolidated Statements of Income
Three months ended September 30, 2020 $(19) Interest expense $(1,380) $(7,410)
Three months ended September 30, 2019 $(3,226) Interest expense $(420) $(6,665)
Nine months ended September 30, 2020 $(27,934) Interest expense $(2,569) $(21,732)
Nine months ended September 30, 2019 $(12,189) Interest expense $(1,610) $(19,969)

Tabular Disclosure Offsetting Derivatives
The table below presents a gross presentation, the effects of offsetting, and a net presentation of our derivatives at September 30, 2020 and December 31, 2019. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheets.
Offsetting of Derivative Assets          
  Gross Amounts of Recognized Assets Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts of Assets Presented in the Consolidated Balance Sheet Gross Amounts Not Offset in the Consolidated Balance Sheet  
(In thousands)    Financial Instruments Cash Collateral Received Net Amount
September 30, 2020 $54
 $0
 $54
 $(54) $0
 $0
December 31, 2019 1,451
 0
 1,451
 (1,451) 0
 0

20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

Offsetting of Derivative Liabilities          
  Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts of Liabilities Presented in the Consolidated Balance Sheet Gross Amounts Not Offset in the Consolidated Balance Sheet  
(In thousands)    Financial Instruments Cash Collateral Posted Net Amount
September 30, 2020 $20,923
 $0
 $20,923
 $(54) $0
 $20,869
December 31, 2019 5,005
 0
 5,005
 (1,451) 0
 3,554
Credit-risk-related Contingent Features
The agreement with our derivative counterparty provides that if we default on any of our indebtedness, including default for which repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations.
At September 30, 2020 and December 31, 2019, the fair value of derivatives related to these agreements was approximately $20.9 million and $3.6 million in net liabilities, respectively. As of September 30, 2020, we have not posted any collateral related to these agreements. If we or our counterparty had breached any of these provisions at September 30, 2020, we could have been required to settle our obligations under the agreements at their termination value of approximately $20.9 million.
NOTE 9 – INCOME TAXES
We believe that we have been organized and have operated in conformity with the requirements for qualification and taxation as a REIT commencing with our taxable year ended December 31, 2016, and we intend to continue to operate in a manner that will enable us to maintain our qualification as a REIT. So long as we qualify as a REIT, we generally will not be subject to federal income tax on our net income that we distribute currently to our stockholders. Accordingly, no provision for federal income taxes has been included in the accompanying consolidated financial statements for the nine months ended September 30, 2020 related to the REIT. 
Income tax expense consists of federal, state, and local income taxes incurred by FCPT’s TRS, and state and local income taxes incurred by FCPT on its lease portfolio. During the three months ended September 30, 2020 and 2019, we recorded income tax expense of $67 thousand and $69 thousand, respectively. During the nine months ended September 30, 2020 and 2019, we recorded income tax expense of $192 thousand and $198 thousand, respectively.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts for income tax purposes, as well as operating loss and tax credit carryforwards. The Company evaluates the realizability of its deferred tax assets and recognizes a valuation allowance if, based on the available evidence, both positive and negative, it is more likely than not that some portion or all of its deferred tax assets will not be realized. When evaluating the realizability of its deferred tax assets, the Company considers, among other matters, estimates of expected future taxable income, nature of current and cumulative losses, existing and projected book/tax differences, tax planning strategies available, and the general and industry specific economic outlook. This realizability analysis is inherently subjective, as it requires the Company to forecast its business and general economic environment in future periods. Based on an assessment of all factors, including historical losses of the Kerrow Restaurants Operating Business, it was determined that full valuation allowances were required on the net deferred tax assets as of September 30, 2020. Changes in estimates of deferred tax asset realizability are included in "Income tax expense" in the Consolidated Statements of Income.
NOTE 10 – EQUITY
Preferred Stock
At September 30, 2020 and December 31, 2019, the Company was authorized to issue 25,000,000 shares, $0.0001 par value per share of preferred stock. There were 0 shares issued and outstanding at September 30, 2020 and December 31, 2019.

21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

Common Stock
At September 30, 2020 and December 31, 2019, the Company was authorized to issue 500,000,000 shares, $0.0001 par value per share of common stock. At September 30, 2020, there were 72,769,345 shares of the Company's common stock issued and outstanding.
On March 16, 2020, we declared a dividend of $0.3050 per share, which was paid in April 2020 to common stockholders of record as of March 31, 2020. On May 29, 2020, we declared a dividend of $0.3050 per share, which was paid in July 2020 to common stockholders of record as of June 30, 2020. On September 17, 2020, we declared a dividend of $0.3050 per share, which was paid in October 2020 to common stockholders of record as of September 30, 2020.
Common Stock Issuance Under the At-The-Market Program
In December 2016, the Company established an “At-the-Market” (“ATM”) equity issuance program under which the Company may, at its discretion, issue and sell its common stock through ATM offerings on the New York Stock Exchange through broker-dealers. On March 22, 2019, the Company amended its ATM program and increased the maximum sales under ATM offerings to $210.0 million. In connection with the amended ATM program, the Company may enter into forward sale agreements with certain financial institutions acting as forward purchasers whereby, at the Company's discretion, the forward purchasers may borrow and sell shares of common stock under the amended ATM program. The use of forward sale agreements allows the Company to lock in a share price on the sale of shares of common stock at the time the respective forward sale agreements are executed but defer settling the forward sale agreements and receiving the proceeds from the sale of shares until a later date.
During the three months ended September 30, 2020, the Company issued 2,435,958 shares under the ATM program at a weighted average share price of $25.65 for net proceeds of $61.3 million. During the six months ended June 30, 2020, the Company executed and physically settled in full a forward sale agreement under the ATM program with a financial institution acting as forward purchaser to sell 144,321 shares of common stock at an average forward offering price per share of $30.23 for net proceeds of $4.4 million. During the nine months ended September 30, 2020, the Company issued 2,580,279 shares under the ATM program at a weighted average share price of $25.93 for net proceeds of $65.6 million.
At September 30, 2020, there was $94.9 million available for issuance under the ATM program.
Noncontrolling Interest
At September 30, 2020, there were 204,392 FCPT Operating Partnership Units (“OP units”) outstanding held by third parties. During the nine months ended September 30, 2020, FCPT OP did not issue any OP units for consideration in real estate transactions. Generally, OP units participate in net income allocations and distributions and entitle their holder the right, subject to the terms set forth in the partnership agreement, to require FCPT OP to redeem all or a portion of the OP units held by such limited partner. At FCPT OP’s option, it may satisfy this redemption with cash or by exchanging non-registered shares of FCPT common stock on a one-for-one basis. Prior to the redemption of OP units, the limited partners participate in net income allocations and distributions in a manner equivalent to the common stockholders. The redemption value of outstanding non-controlling interest OP units was $5.2 million and $7.9 million as of September 30, 2020 and December 31, 2019, respectively.
At September 30, 2020, FCPT was the owner of approximately 99.72% of FCPT’s OP units. The remaining 0.28%, or 204,392 of FCPT’s OP units were held by unaffiliated limited partners. During the nine months ended September 30, 2020, FCPT OP distributed $197 thousand to its limited partners and settled redemptions of 85,000 OP units; 40,000 OP units for cash, at a weighted average price per unit of $20.30 for $813 thousand; and 45,000 OP units for shares of common stock.

22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

Earnings Per Share
The following table presents the computation of basic and diluted net earnings per common share for the three and nine months ended September 30, 2020 and 2019.
(In thousands except for shares and per share data) 
Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2020 2019 2020 2019
Average common shares outstanding – basic 71,009,154
 68,315,915
 70,430,037
 68,274,167
Net effect of dilutive equity awards 221,327
 211,272
 228,463
 220,846
Average common shares outstanding – diluted 71,230,481
 68,527,187
 70,658,500
 68,495,013
Net income available to common shareholders $19,349
 $18,331
 $57,080
 $53,702
Basic net earnings per share $0.27
 $0.27
 $0.81
 $0.79
Diluted net earnings per share $0.27
 $0.27
 $0.81
 $0.78

For the three months ended September 30, 2020 and 2019, the number of outstanding equity awards that were anti-dilutive totaled 216,773 and 146,335, respectively. For the nine months ended September 30, 2020 and 2019, the number of outstanding equity awards that were anti-dilutive totaled 209,637 and 142,558, respectively.
Exchangeable OP units have been omitted from the denominator for the purpose of computing diluted earnings per share since FCPT OP, at its option, may satisfy a redemption with cash or by exchanging non-registered shares of FCPT common stock. The weighted average exchangeable OP units outstanding for the three months ended September 30, 2020 and 2019 was 204,392 and 294,506. The weighted average exchangeable OP units outstanding for the nine months ended September 30, 2020 and 2019 was 221,355 and 310,599, respectively.
NOTE 11 – STOCK-BASED COMPENSATION
On October 20, 2015, the Board of Directors of FCPT adopted, and FCPT’s sole stockholder at such time, Rare Hospitality International, Inc., approved, the Four Corners Property Trust, Inc. 2015 Omnibus Incentive Plan (the “Plan”). The Plan provides for the grant of awards of nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, unrestricted stock, dividend equivalent rights, performance shares and other performance-based awards, other equity-based awards, and cash bonus awards to eligible participants. Subject to adjustment, the maximum number of shares of stock reserved for issuance under the Plan is equal to 2,100,000 shares.
At September 30, 2020, 1,014,968 shares of common stock were available for award under the Plan. The unamortized compensation cost of awards issued under the Plan totaled approximately $5.4 million at September 30, 2020 as shown in the following table.
(In thousands) Restricted Stock Units Restricted Stock Awards Performance Stock Awards Total
Unrecognized compensation cost at January 1, 2020 $1,290
 $1,427
 $406
 $3,123
Equity grants 1,305
 1,548
 1,976
 4,829
Equity grant forfeitures 0
 (74) (1) (75)
Equity compensation expense (684) (1,044) (769) (2,497)
Unrecognized Compensation Cost at September 30, 2020 $1,911
 $1,857
 $1,612
 $5,380

At September 30, 2020, the weighted average amortization period remaining for all of our equity awards was 2.2 years.
Restricted Stock Units
RSUs have been granted at a value equal to the five-day average or day of closing market price of our common stock on the date of grant, and will be settled in stock at the end of their vesting periods, which range between one and five years.

23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

At September 30, 2020 and December 31, 2019, there were 133,039 and 91,473 RSUs outstanding, respectively. During the three months ended September 30, 2020, there were 14,138 shares of restricted stock granted, and 0 RSUs were forfeited or vested. During the nine months ended September 30, 2020, there were 52,083 shares of restricted stock granted, restrictions on 10,517 RSUs lapsed and were distributed, and 0 RSUs were forfeited. Restrictions on these RSUs lapse through 2025.
Restricted Stock Awards
RSAs have been granted at a value equal to the five-day average closing market price of our common stock on the date of grant and will be settled in stock at the end of their vesting periods, which range between one and three years.
At September 30, 2020 and December 31, 2019, there were 102,355 and 101,267 RSAs outstanding, respectively. During the three months ended September 30, 2020, 0 shares of restricted stock were granted, forfeited, or vested. During the nine months ended September 30, 2020, there were 54,124 shares of restricted stock granted and 2,826 shares forfeited, and restrictions on 50,300 RSAs lapsed and were distributed, of which 23,238 RSAs were designated for tax withholdings. Restrictions on these RSAs lapse through 2023. The Company expects all RSAs to vest.
Performance-Based Restricted Stock Awards
At September 30, 2020 and December 31, 2019, the target number of PSUs that were unvested was 202,706 and 204,068, respectively. During the three months ended September 30, 2020, 0 PSUs were were granted, forfeited, or vested. During the nine months ended September 30, 2020, PSUs with a target number of 66,474 shares were granted and PSUs with a target number of 64,522 shares vested. The total shareholder return calculated for these PSUs resulted in a distribution of 200% of target shares, resulting in the distribution of 128,060 shares, of which 64,808 were withheld for tax.
The performance period of the unvested grants run from January 1, 2020 through December 31, 2022, from January 1, 2019 through December 31, 2021, and from January 1, 2018 through December 31, 2020. Pursuant to the PSU award agreement, each participant is eligible to vest in and receive shares of the Company's common stock based on the initial target number of shares granted multiplied by a percentage range between 0% and 200%. The percentage range is based on the attainment of a combination of relative shareholder return and total shareholder return of the Company compared to certain specified peer groups of companies during the performance period. The grant date fair values of PSUs were determined through Monte-Carlo simulations using the following assumptions: our common stock closing price at the grant date, the average closing price of our common stock price for the 20 trading days prior to the grant date and a range of performance-based vesting based on estimated total stockholder return over a three year performance period. For the 2020 PSU grant, the Company used an implied volatility assumption of 17.4% (based on historical volatility), risk free rates of 2.50% (the three-year Treasury rates on the grant date), and a 0% dividend yield (the mathematical equivalent to reinvesting the dividends over the three-year performance period as is consistent with the terms of the PSUs), which resulted in a grant date fair value of $1.98 million.
Based on the grant date fair value, the Company expects to recognize $1.6 million in compensation expense on a straight-line basis over the remaining requisite service period associated with the unvested PSU awards.
NOTE 12 – FAIR VALUE MEASUREMENTS
The carrying amounts of certain of the Company’s financial instruments including cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value due either to length of maturity or interest rates that approximate prevailing market rates. The carrying value of derivative financial instruments equal fair value in accordance with U.S. GAAP. Determining which category an asset or liability falls within the hierarchy requires significant judgment. We evaluate hierarchy disclosures each reporting period.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table presents the assets and liabilities recorded that are reported at fair value on our Consolidated Balance Sheets on a recurring basis.

24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

September 30, 2020        
(In thousands) Level 1 Level 2 Level 3 Total
Assets        
Derivative assets $0
 $54
 $0
 $54
Liabilities        
Derivative liabilities $0
 $20,923
 $0
 $20,923
December 31, 2019        
(In thousands) Level 1 Level 2 Level 3 Total
Assets        
Derivative assets $0
 $1,451
 $0
 $1,451
Liabilities        
Derivative liabilities $0
 $5,005
 $0
 $5,005

Derivative Financial Instruments
Currently, we use interest rate swaps to manage our interest rate risk associated with our notes payable. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.
The fair values of interest rate options are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.
To comply with the provisions of ASC 820, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.
Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by ourselves and our counterparties. We have determined that the significance of the impact of the credit valuation adjustments made to our derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of our derivatives held at September 30, 2020, and December 31, 2019 were classified as Level 2 of the fair value hierarchy.

25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

Fair Value of Certain Financial Liabilities
The following table presents the carrying value and fair value of certain financial liabilities that are recorded on our Consolidated Balance Sheets.
  September 30, 2020
(In thousands) 
Carrying Value(1)
 Fair Value
Term loan due 2022 $150,000
 $150,750
Term loan due 2023 150,000
 150,516
Term loan due 2024 100,000
 100,405
Senior fixed note due June 2024 50,000
 56,608
Senior fixed note due June 2027 75,000
 90,848
Senior fixed note due June 2026 50,000
 59,485
Senior fixed note due June 2028 50,000
 61,405
Senior fixed note due June 2029 50,000
 55,783
Senior fixed note due April 2030 75,000
 83,795
Revolving credit facility 0
 0
  December 31, 2019
(In thousands) 
Carrying Value(1)
 Fair Value
Term loan due 2022 $150,000
 $150,834
Term loan due 2023 150,000
 150,510
Term loan due 2024 100,000
 100,352
Senior fixed note due June 2024 50,000
 52,496
Senior fixed note due June 2027 75,000
 81,176
Senior fixed note due June 2026 50,000
 52,946
Senior fixed note due June 2028 50,000
 53,902
Revolving credit facility 52,000
 52,301

(1)    Carrying values exclude deferred financing costs
The fair value of the long-term debt (Level 2) is determined using the present value of the contractual cash flows, discounted at the current market cost of debt.
NOTE 13 – COMMITMENTS AND CONTINGENCIES
Litigation
We are subject to private lawsuits, administrative proceedings and claims that arise in the ordinary course of our business from time to time. A number of these lawsuits, proceedings and claims may exist at any given time. These matters typically involve claims from guests, employee wage and hour claims and others related to operational issues common to the restaurant industry. We record our best estimate of a loss when the loss is considered probable. When a liability is probable and there is a range of estimated loss with no best estimate in the range, we record the minimum estimated liability related to the lawsuits, proceedings or claims. While the resolution of a lawsuit, proceeding or claim may have an impact on our financial results for the period in which it is resolved, we believe that the maximum liability related to probable lawsuits, proceedings and claims in which we are currently involved, individually and in the aggregate, will not have a material adverse effect on our financial position, results of operations or liquidity.

26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

NOTE 14 – SEGMENTS
During the three and nine months ended September 30, 2020 and 2019, we operated in 2 segments: real estate operations and restaurant operations. Our segments are based on our organizational and management structure, which aligns with how our results are monitored and performance is assessed. Expenses incurred at our corporate office are allocated to real estate operations. The accounting policies of the reportable segments are the same as those described in Note 2 - Summary of Significant Accounting Policies.
The following tables present financial information by segment for the three and nine months ended September 30, 2020 and 2019.
Three Months Ended September 30, 2020
(In thousands) Real Estate Operations Restaurant Operations Intercompany Total
Revenues:        
Rental revenue $38,871
 $0
 $
 $38,871
Intercompany rental revenue 136
 
 (136) 
Restaurant revenue 0
 4,097
 
 4,097
Total revenues 39,007
 4,097
 (136) 42,968
Operating expenses:        
General and administrative 3,741
 0
 0
 3,741
Depreciation and amortization 7,405
 118
 0
 7,523
Property expenses 838
 0
 0
 838
Restaurant expenses 0
 4,123
 (136) 3,987
Total operating expenses 11,984
 4,241
 (136) 16,089
Interest expense (7,410) 0
 0
 (7,410)
Other income 2
 0
 0
 2
Income tax expense (40) (27) 0
 (67)
Net Income (Loss) $19,575
 $(171) $0
 $19,404
Three Months Ended September 30, 2019
(In thousands) Real Estate Operations Restaurant Operations Intercompany Total
Revenues:        
Rental revenue $35,209
 $0
 $
 $35,209
Intercompany rental revenue 102
 
 (102) 
Restaurant revenue 0
 4,974
 
 4,974
Total revenues 35,311
 4,974
 (102) 40,183
Operating expenses:        
General and administrative 3,389
 0
 0
 3,389
Depreciation and amortization 6,523
 130
 0
 6,653
Property expenses 346
 0
 0
 346
Restaurant expenses 0
 4,907
 (102) 4,805
Total operating expenses 10,258
 5,037
 (102) 15,193
Interest expense (6,665) 0
 0
 (6,665)
Other income 153
 0
 0
 153
Income tax expense (38) (31) 0
 (69)
Net Income (Loss) $18,503
 $(94) $0
 $18,409

27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)


Nine Months Ended September 30, 2020
(In thousands) Real Estate Operations Restaurant Operations Intercompany Total
Revenues:        
Rental revenue $114,631
 $0
 $
 $114,631
Intercompany rental revenue 408
 
 (408) 
Restaurant revenue 0
 11,696
 
 11,696
Total revenues 115,039
 11,696
 (408) 126,327
Operating expenses:        
General and administrative 11,303
 0
 0
 11,303
Depreciation and amortization 21,294
 376
 0
 21,670
Property expenses 2,539
 0
 0
 2,539
Restaurant expenses 0
 12,207
 (408) 11,799
Total operating expenses 35,136
 12,583
 (408) 47,311
Interest expense (21,732) 0
 0
 (21,732)
Other income 168
 0
 0
 168
Income tax expense (114) (78) 0
 (192)
Net Income (Loss) $58,225
 $(965) $0
 $57,260
Nine Months Ended September 30, 2019
(In thousands) Real Estate Operations Restaurant Operations Intercompany Total
Revenues:        
Rental revenue $103,832
 $0
 $
 $103,832
Intercompany rental revenue 305
 
 (305) 
Restaurant revenue 0
 15,520
 
 15,520
Total revenues 104,137
 15,520
 (305) 119,352
Operating expenses:        
General and administrative 10,766
 0
 0
 10,766
Depreciation and amortization 19,132
 400
 0
 19,532
Property expenses 1,071
 0
 0
 1,071
Restaurant expenses 0
 15,047
 (305) 14,742
Total operating expenses 30,969
 15,447
 (305) 46,111
Interest expense (19,969) 0
 0
 (19,969)
Other income 872
 0
 0
 872
Income tax expense (106) (92) 0
 (198)
Net Income (Loss) $53,965
 $(19) $0
 $53,946


28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

The following tables present supplemental information by segment at September 30, 2020 and December 31, 2019.
Supplemental Segment Information at September 30, 2020
(In thousands) Real Estate Operations Restaurant Operations Total
Total real estate investments $2,054,187
 $16,977
 $2,071,164
Accumulated depreciation (647,095) (5,754) (652,849)
Total real estate investments, net 1,407,092
 11,223
 1,418,315
Cash and cash equivalents 16,993
 742
 17,735
Total assets 1,557,300
 16,325
 1,573,625
Long-term debt, net of deferred financing costs 743,335
 0
 743,335
Supplemental Segment Information at December 31, 2019
(In thousands) Real Estate Operations Restaurant Operations Total
Total real estate investments $1,952,855
 $14,879
 $1,967,734
Accumulated depreciation (630,250) (5,380) (635,630)
Total real estate investments, net 1,322,605
 9,499
 1,332,104
Cash and cash equivalents 4,032
 1,051
 5,083
Total assets 1,431,003
 15,067
 1,446,070
Long-term debt, net of deferred financing costs 669,940
 0
 669,940

NOTE 15 – SUBSEQUENT EVENTS
The Company reviewed its subsequent events and transactions that have occurred after September 30, 2020, the date of the Consolidated Balance Sheet, through October 29, 2020 and noted the following:
Acquisitions
Through October 29, 2020, the Company invested $11.4 million in the acquisition of 7 net lease properties with an investment yield of approximately 6.5%, and approximately 7.1 years of lease term remaining. The Company funded the acquisitions with cash on hand and additional borrowings on the revolving credit facility. The Company anticipates accounting for these transactions as asset acquisitions in accordance with U.S. GAAP. There were no contingent liabilities associated with these transactions at September 30, 2020.
Strategic Joint Venture
On October 5, 2020, the Company announced a strategic venture with Lubert-Adler Real Estate Funds that could potentially invest as much as $150 million to acquire and re-tenant vacant buildings. The Company’s investment into this venture could reach $20 million, with Lubert-Adler contributing the remainder of the capital. In addition, the Company will have the right, but not the obligation, to purchase properties from the venture for the Company’s long-term ownership portfolio once the properties stabilize. The joint venture will have a multi-year investment period and will be fully compliant with the Company’s REIT status. As of October 29, 2020, the Company has not contributed funds to the joint venture. The Company is still evaluating the financial reporting impact of the joint venture on its Consolidated Financial Statements.
Pandemic-Related Contingencies
The ongoing COVID-19 pandemic continues to reduce travel and adversely affect the hospitality industry in general. The actual and threatened continued spread of coronavirus nationally or in the locations in which we operate, or future widespread outbreak of infectious or contagious disease, can continue to reduce volume of business nationally. During and subsequent to the first quarter, the continually evolving COVID-19 pandemic impacted our tenants, especially those in industries considered “non-essential” under varying state “shelter-in-place” or “stay-at-home” orders and other restrictions on types of businesses that may

29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

continue to operate, and our restaurant business operations. The Company has taken precautions to protect the safety, health and well-being of its employees and tenants.
The COVID-19 pandemic has and continues to disrupt supply chains and affect production and sales across a range of industries, and it could materially adversely impact the Company and its tenants. The macroeconomic effects of the COVID-19 pandemic could also materially adversely affect the Company’s properties, as well as many other aspects of the Company’s business, financial condition, and results of operations. At this point, the extent to which COVID-19 may result in short- or long-term interruptions in the Company’s business operations or impact our financial condition or results of operations is uncertain.
As of October 29, 2020, a material number of our properties remain impacted by the pandemic and the Company received October 2020 rent payments of approximately 99% of our portfolio, as measured by contractual annual base rent, exclusive of rent abatement agreements. The Company currently remains in active discussions and negotiations with its impacted tenants and restaurant owners and anticipates the need to grant rent concessions or other lease-related relief, such as the deferral of lease payments for a period of time to be paid over the remaining term of the lease. The nature and financial impact of such rent relief is currently unknown as negotiations have recently been initiated. We anticipate an impact to our rent collections throughout 2020 as a result of reduced activity at our properties due to government-imposed restrictions and changes in consumer behavior. The Company is not currently aware of any loss contingencies related to this matter that would require recognition at this time.
There were no other material subsequent events or transactions.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
Statements contained in this Quarterly Report on Form 10-Q, including the documents that are incorporated by reference, that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Also, when Four Corners Property Trust, Inc. (the “Company”) uses any of the words “anticipate,” “assume,” “believe,” “estimate,” “expect,” “intend,” or similar expressions, Four Corners Property Trust, Inc. is making forward-looking statements. Although management believes that the expectations reflected in such forward-looking statements are based upon present expectations and reasonable assumptions, actual results could differ materially from those set forth in the forward-looking statements. Certain factors that could cause actual results or events to differ materially from those anticipated or projected are described in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, as such factors may be updated from time to time in our periodic filings with the Securities and Exchange Commission. One of the most significant of such factors is the potential adverse effect of the current pandemic of the novel coronavirus, or COVID-19, on the financial condition, results of operations, cash flows and performance of the Company and its tenants, the real estate market and the global economy and financial markets. 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. Moreover, you should interpret many of the risks identified in this report, as well as the risks set forth below, as being heightened as a result of the ongoing and numerous adverse impacts of COVID-19.
Given these uncertainties, readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this Quarterly Report on Form 10-Q or any document incorporated herein by reference. Four Corners Property Trust, Inc. undertakes no obligation to publicly release any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.
The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included in the Annual Report on Form 10-K of Four Corners Property Trust, Inc. for the year ended December 31, 2019. Any references to “FCPT,” “the Company,” “we,” “us,” or “our” refer to Four Corners Property Trust, Inc. as an independent, publicly traded, self-administered company.
Overview
We are a Maryland corporation and a real estate investment trust (“REIT”) which owns, acquires and leases properties for use in the restaurant and retail industries. Substantially all of our business is conducted through Four Corners Operating Partnership, LP (“FCPT OP”), a Delaware limited partnership of which we are a majority limited partner and our wholly owned subsidiary, Four Corners GP, LLC (“FCPT GP”), is its sole general partner. We believe that we have operated in conformity with the requirements for qualification and taxation as a REIT for the taxable year ended December 31, 2019, and we intend to continue to operate in a manner that will enable us to maintain our qualification as a REIT.
Our revenues are primarily generated by leasing properties to tenants through net lease arrangements under which the tenants are primarily responsible for ongoing costs relating to the properties, including utilities, property taxes, insurance, common area maintenance charges, and maintenance and repair costs. We focus on income producing properties leased to high quality tenants in major markets across the United States. We also generate revenues by operating six LongHorn Steakhouse® restaurants located in the San Antonio, Texas area (the “Kerrow Restaurant Operating Business”) pursuant to franchise agreements with Darden.
In addition to managing our existing properties, our strategy includes investing in additional restaurant and retail properties to grow and diversify our existing restaurant portfolio. We expect this acquisition strategy will decrease our reliance on Darden over time. We intend to purchase properties that are well located, occupied by durable concepts, with creditworthy tenants whose operating cash flows are expected to meaningfully exceed their lease payments to us. We seek to improve the probability of successful tenant renewal at the end of initial lease terms by acquiring properties that have high levels of operator profitability compared to rent payments and have absolute rent levels that generally reflect market rates.

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During the nine months ended September 30, 2020, FCPT acquired 52 properties for a total investment value of $121.4 million, including transaction costs. These properties are 100% occupied under net leases with a weighted average remaining lease term of 7.5 years. The Company also acquired a plot of land for $2.4 million that it is developing.
At September 30, 2020, our lease portfolio had the following characteristics:
751 properties located in 46 states and representing an aggregate leasable area of 5.0 million square feet;
99.6% occupancy (based on leasable square footage);
An average remaining lease term of 10.5 years (weighted by annualized base rent); and
An average annual rent escalation of 1.5% through December 31, 2029 (weighted by annualized base rent).

COVID-19
We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business, including how it will impact our tenants. The outbreak continues to significantly and adversely impact economic activity in many areas of the United States, including where we own properties and where our headquarters are located. Our managed restaurants and certain of our tenants have experienced and continue to experience operational challenges as a result of the COVID-19 pandemic, which has had, and we anticipate will continue to have, an impact on our and their financial condition, results of operations, liquidity and creditworthiness. The situation surrounding the COVID-19 pandemic remains fluid, and we continue to actively manage our response in collaboration with tenants, government officials and business partners and assess potential impacts to our financial position and operating results, as well as potential adverse developments to our business. For further information regarding the impact of COVID-19 on the Company, see Part II, Item 1A titled “Risk Factors.”
We have collected over 92% and over 99% of our portfolio’s contractual base rent for the quarters ending June 30, 2020 and September 30, 2020, respectively. Rent deferrals agreed to for rent owed for second quarter of 2020 were for approximately $1.0 million of contractual base rent as of June 30, 2020 and require the full rent amount to be paid back to the Company in the near-term. In the third quarter of 2020, the Company has agreed to rent abatements as part of lease amendments for concessions of the type described above and for lease payments due in the second quarter. These agreements for abatements represent approximately $1.6 million of rental revenue recognized in the second quarter of 2020. During the third quarter of 2020, the receivables for abatements were recorded as lease incentives and will be amortized as a reduction to revenue over the amended lease terms.
Not all tenant requests have resulted or will ultimately result in modification agreements, nor is the Company forgoing its contractual rights under its lease agreements. Second and third quarter collections, rent relief requests, and rent concessions to date may not be indicative of collections, requests, or concessions in any future period.

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Results of Operations
During the three and nine months ended September 30, 2020 and 2019, we operated in two segments: real estate operations and restaurant operations. The following discussion includes the results of our operations for the three and nine months ended September 30, 2020 and 2019 as summarized in the table below:
  
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(In thousands) 2020 2019 2020 2019
Revenues:        
Rental revenue $38,871
 $35,209
 $114,631
 $103,832
Restaurant revenue 4,097
 4,974
 11,696
 15,520
Total revenues 42,968
 40,183
 126,327
 119,352
Operating expenses:        
General and administrative 3,741
 3,389
 11,303
 10,766
Depreciation and amortization 7,523
 6,653
 21,670
 19,532
Property expenses 838
 346
 2,539
 1,071
Restaurant expenses 3,987
 4,805
 11,799
 14,742
Total operating expenses 16,089
 15,193
 47,311
 46,111
Interest expense (7,410) (6,665) (21,732) (19,969)
Other income 2
 153
 168
 872
Income tax expense (67) (69) (192) (198)
Net income 19,404
 18,409
 57,260
 53,946
Net income attributable to noncontrolling interest (55) (78) (180) (244)
Net Income Attributable to Common Shareholders $19,349
 $18,331
 $57,080
 $53,702
Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019
Real Estate Operations
Rental Revenue
Rental revenue increased $3.7 million, or 10.4%, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019. This increase was due to the acquisition of 110 leased properties, during the year-over-year period from October 1, 2019 through September 30, 2020. During the three months ended September 30, 2020, we recognized variable lease revenue, including costs paid by the lessor and reimbursed by the lessees within rental revenue of $600 thousand as compared to $216 thousand during the three months ended September 30, 2019. These amounts are also recognized in property expenses.
We recognize rental income on a straight-line basis to include the effect of base rent escalators, and free rent periods, if any.
General and Administrative Expenses
General and administrative expense is comprised of costs associated with staff, office rent, legal, accounting, information technology, and other professional services and other administrative services in association with our real estate operations and our REIT structure and reporting requirements. General and administrative expenses increased $352 thousand, or 10.4%, in the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to an increase in compensation-related expenses stemming from a higher head count and benefits costs as well as an increase in recruiting fees and office rent expense.
Depreciation and Amortization Expense
Depreciation and amortization expense represents the depreciation on real estate investments that have estimated lives ranging from two to fifty-five years. Depreciation and amortization increased by approximately $870 thousand, or 13.1%, for the three

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months ended September 30, 2020 compared to the three months ended September 30, 2019, due to the acquisition of 110 properties, during the year-over-year period from October 1, 2019 through September 30, 2020.
Property Expense
We record all tenant expenses, both reimbursed and non-reimbursed, to property expense. We also record initial direct costs (lease negotiation and other previously capitalizable transaction expenses) as property expenses. Other property expenses consist of expenses incurred on vacant properties, abandoned deal costs, and franchise taxes. During the three months ended September 30, 2020, we recorded property expenses of $838 thousand, of which $600 thousand was reimbursed by tenants. During the three months ended September 30, 2019, we recorded property expenses of $346 thousand, of which $216 thousand was reimbursed by tenants. The primary reasons for the $108 thousand increase in non-reimbursed expenses were vacancy costs and higher legal costs associated with negotiating lease amendments with tenants impacted by the COVID-19 pandemic.
Interest Expense
We incur interest expense on our $400 million of term loans, any outstanding borrowings on our revolving credit facility, interest rate swaps, and our $350 million of senior fixed rate notes. Interest expense increased $745 thousand for the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due to the issuance of $125 million of senior fixed notes in April and June. As of September 30, 2020 we had no outstanding borrowings under the revolving credit facility.
Realized Gain on Sale, Net
The Company did not sell any assets during the three months ended September 30, 2020 or 2019.
Income Taxes
During the three months ended September 30, 2020 and 2019, our income tax expense was $67 thousand and $69 thousand, respectively. The income tax provision consists of federal, state, and local income taxes incurred by the Kerrow Restaurant Operating Business, and state and local income taxes incurred by FCPT on its lease portfolio.
Restaurant Operations
Restaurant revenues decreased by $0.9 million, or 17.6%, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019 primarily due to decreased seating capacity of the restaurants as a result of the COVID-19 pandemic and restrictions intended to prevent its spread.
Total restaurant expenses decreased by $0.8 million, or 17.0%, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019, primarily due a decrease in the hours of restaurant employees and cost of good sold as the decreased seating capacity of the restaurants as a result of the COVID-19 pandemic.
Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019
Real Estate Operations
Rental Revenue
Rental revenue increased $10.8 million, or 10.4%, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019. This increase was due to the acquisition of 110 leased properties, during the year-over-year period from October 1, 2019 through September 30, 2020. During the nine months ended September 30, 2020, we recognized variable lease revenue, including costs paid by the lessor and reimbursed by the lessees within rental revenue of $1.7 million as compared to $580 thousand during the nine months ended September 30, 2019. These amounts are also recognized in property expenses.
We recognize rental income on a straight-line basis to include the effect of base rent escalators, and free rent periods, if any.
General and Administrative Expenses
General and administrative expense is comprised of costs associated with staff, office rent, legal, accounting, information technology, and other professional services and other administrative services in association with our real estate operations and our

34


REIT structure and reporting requirements. General and administrative expenses increased $537 thousand, or 5.0%, in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due to an increase in cash compensation-related expenses stemming from a higher head count and benefits costs related to employees added in 2019 and 2020 as well as an increase in recruiting fees and office rent expense.
Depreciation and Amortization Expense
Depreciation and amortization expense represents the depreciation on real estate investments that have estimated lives ranging from two to fifty-five years. Depreciation and amortization increased by approximately $2.1 million, or 10.9%, for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, due to the acquisition of 110 properties, during the year-over-year period from October 1, 2019 through September 30, 2020.
Property Expense
We record all tenant expenses, both reimbursed and non-reimbursed, to property expense. We also record initial direct costs (lease negotiation and other previously capitalizable transaction expenses) as property expenses. Other property expenses consist of expenses incurred on vacant properties, abandoned deal costs, and franchise taxes. During the nine months ended September 30, 2020, we recorded property expenses of $2.5 million, of which $1.7 million was reimbursed by tenants. During the nine months ended September 30, 2019, we recorded property expenses of $1.1 million, of which $0.6 million was reimbursed by tenants. The primary reasons for the $0.3 million increase in non-reimbursed property expenses were higher legal costs associated with negotiating lease amendments with tenants impacted by the COVID-19 pandemic, abandoned deal costs, and expenses on vacant properties.
Interest Expense
We incur interest expense on our $400 million of term loans, any outstanding borrowings on our revolving credit facility, interest rate swaps, and our $350 million of senior fixed rate notes. Interest expense increased $1.8 million for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due to the usage of our revolving credit facility and issuance of $125 million of senior fixed notes in April and June. As of September 30, 2020 we had no outstanding borrowings under the revolving credit facility.
Realized Gain on Sale, Net
The Company did not sell any assets during the nine months ended September 30, 2020 or the nine months ended September 30, 2019.
Income Taxes
During the nine months ended September 30, 2020 and 2019, our income tax expense was $192 thousand and $198 thousand, respectively. The income tax provision consists of federal, state, and local income taxes incurred by the Kerrow Restaurant Operating Business, and state and local income taxes incurred by FCPT on its lease portfolio.
Restaurant Operations
Restaurant revenues decreased by $3.8 million, or 24.6%, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 primarily due to the temporary closure and decreased seating capacity of the restaurants as a result of the COVID-19 pandemic and restrictions intended to prevent its spread.
Total restaurant expenses decreased by $2.9 million, or 20.0%, during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, primarily due a decrease in the hours of restaurant employees and cost of good sold resulting from the temporary closure and decreased seating capacity of the restaurants as a result of the COVID-19 pandemic.
Critical Accounting Policies
The preparation of FCPT’s consolidated financial statements in conformance with U.S. GAAP requires management to make estimates on assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as other disclosures in the financial statements. On an ongoing basis, management evaluates its estimates and assumptions; however, actual results

35


may differ from these estimates and assumptions, which in turn could have a material impact on our financial statements. A summary of FCPT’s critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2019 in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates.” Management believes those critical accounting policies, among others, affect our more significant estimates and assumptions used in the preparation of our consolidated financial statements.
New Accounting Standards
A discussion of new accounting standards and the possible effects of these standards on our consolidated financial statements is included in Note 2 - Summary of Significant Accounting Policies of our consolidated financial statements, included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Liquidity and Financial Condition
At September 30, 2020, we had $17.7 million of cash and cash equivalents and $250.0 million of borrowing capacity under our revolving credit facility, which expires on November 9, 2021, subject to our ability to extend the term for two additional six-month periods to November 9, 2022. The revolving credit facility provides for a letter of credit sub-limit of $25 million. See Note 7 - Long-Term Debt, Net of Deferred Financing Costs included in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information. As of September 30, 2020, we had no borrowings outstanding under our revolving credit facility. The credit facility also includes $400 million of non-amortizing term loans, of which $150 million will mature on November 9, 2022, $150 million will mature on November 9, 2023, and $100 million will mature on March 9, 2024. At September 30, 2020, the weighted average interest rate on the term loans, after consideration of the interest rate hedges, was 2.60%.
In March 2019, we entered into a new ATM program, pursuant to which up to $210 million of additional shares of common stock may be offered and sold (1) by us to, or through, a consortium of banks acting as our sales agents or (2) by a consortium of banks acting as forward sellers on behalf of any forward purchasers contemplated thereunder, in each case by means of ordinary brokers’ transactions on the NYSE or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices, by privately negotiated transactions (including block sales) or by any other methods permitted by applicable law.
During the first quarter of 2020, the Company executed a forward sale agreement under the ATM program with a financial institution acting as forward purchaser under the ATM program to sell 144,321 shares of common stock at an average forward offering price per share of $30.23. During the six months ended June 30, 2020, the Company physically settled this forward sale agreement and issued 144,321 shares of common stock for net proceeds of $4.3 million. During the three months ended September 30, 2020, the Company issued 2,435,958 shares under the ATM program at a weighted average share price of $25.65 for net proceeds of $61.3 million. Under the March 2019 ATM program, through September 30, 2020, we have issued 4,243,395 shares and raised $115.1 million before issuance costs. At September 30, 2020, there was $94.9 million available for issuance under our ATM program.
We have entered into interest rate swaps to hedge the interest rate variability associated with our credit facility. On November 9, 2015, we entered into an interest rate swap that has a fixed notional value of $200 million that matures on November 9, 2020, where the fixed rate paid by FCPT OP is 1.557% and the variable rate received resets monthly to the one-month LIBOR rate. On July 12, 2017, we entered into a swap with a fixed notional value of $100 million, an effective date of November 9, 2018, and a maturity date of November 9, 2021, where the fixed rate paid by FCPT OP is 1.960% and the variable rate received resets monthly to the one-month LIBOR rate. On July 12, 2017, we entered into a swap with a fixed notional value of $100 million, an effective date of November 9, 2020, a maturity date of November 9, 2023, where the fixed rate paid by FCPT OP is 2.302% and the variable rate received resets monthly to the one-month LIBOR rate. On August 29, 2017, we entered into a 2-year swap with a fixed notional value of $100 million for its first twelve months and $200 million for its second twelve months with an effective date of November 9, 2020, a maturity date of November 9, 2022 and where the fixed rate paid by FCPT is 2.002% and the variable rate received resets monthly to the one-month LIBOR rate. On June 11, 2019, we entered into a swap with a fixed notional value of $150 million, an effective date of November 9, 2022, and a maturity date of November 9, 2024, where the fixed rate paid by FCPT OP is 1.913% and the variable rate received resets monthly to the one-month LIBOR rate. On June 8, 2020 we entered into an interest rate swap with a fixed notional value of $50 million with an effective date of November 9, 2020 and a maturity date of November 9, 2025, where the fixed rate paid by the Company was 0.5025% and the variable rate received reset monthly to the

36


one-month LIBOR rate. On June 8, 2020 we entered into an interest rate swap with a fixed notional value of $50 million to $150 million with an effective date of November 9, 2023 and a maturity date of November 9, 2025, where the fixed rate paid by the Company was 0.8205% and the variable rate received reset monthly to the one-month LIBOR rate. On September 29, 2020, we entered into a swap with a fixed notional value of $25 million, an effective date of May 4, 2021, and a maturity date of May 1, 2031, where the fixed rate paid by FCPT OP is 0.7516% and the variable rate received resets monthly to the three-month LIBOR rate.
These eight hedging agreements were entered into to mitigate the interest rate risk inherent in FCPT OP’s variable rate debt and not for trading purposes. These swaps are accounted for as cash flow hedges with all interest income and expense recorded as a component of net income and other valuation changes recorded as a component of other comprehensive income.
During the first quarter of 2020, the Company terminated two cash flow hedges in connection with a $125 million private note offering that was entered into on March 31, 2020. The swaps were terminated on March 10, 2020 for approximately a $8.4 million loss which will be amortized over the next 10 years as interest expense.
On June 7, 2017 and December 20, 2018, FCPT OP issued $125 million and $100 million, respectively, of senior unsecured fixed rate notes (together, the “Notes”) in private placements pursuant to note purchase agreements with the various purchasers. The Notes issued on June 7, 2017 consist of $50 million of notes with a term ending in June 2024 and priced at a fixed interest rate of 4.68%, and $75 million of notes with a term ending in June 2027 and priced at a fixed interest rate of 4.93%. The Notes issued on December 20, 2018 consist of $50 million of notes with a term ending in December 2026 and priced at a fixed interest rate of 4.63%, and $50 million of notes with a term ending in December 2028 and priced at a fixed interest rate of 4.76%.
On March 31, 2020, FCPT and FCPT OP entered into private placements pursuant to a note purchase agreement with various purchasers pursuant to which FCPT OP issued $125.0 million of senior unsecured notes comprised of (i) $75.0 million of notes with a ten-year term that funded on April 8, 2020 and mature on April 8, 2030, priced at a fixed interest rate of 3.20%, and (ii) $50.0 million of notes with a nine-year term that funded on June 9, 2020 and mature on June 9, 2029, priced at a fixed interest rate of 3.15%.
On a short-term basis, our principal demands for funds will be for operating expenses, distributions to stockholders and interest and principal on current and any future debt financings. We expect to fund our operating expenses and other short-term liquidity requirements, capital expenditures, payment of principal and interest on our outstanding indebtedness, property improvements, re-leasing costs and cash distributions to common stockholders, primarily through cash provided by operating activities, and, for acquisitions, investments, and other capital expenditures, from borrowings under our $250 million revolving credit facility.
On a long-term basis, our principal demands for funds include payment of dividends, financing of property acquisitions, and scheduled debt maturities. We plan to meet our long-term capital needs by issuing debt or equity securities or by obtaining asset-level financing, subject to market conditions. In addition, we may issue common stock to permanently finance properties that were financed on an intermediate basis by our revolving credit facility or other indebtedness. In the future, we may also acquire properties by issuing partnership interests of FCPT OP in exchange for property owned by third parties. Our common partnership interests would be redeemable for cash or shares of our common stock, at FCPT’s election.
We continually evaluate alternative financing and believe that we can obtain financing on reasonable terms. However, we cannot be assured that we will have access to the capital markets at times and at terms that are acceptable to us. We expect that our primary uses of capital will be for property and other asset acquisitions and the funding of tenant improvements and other capital expenditures, and debt refinancing.
Because the properties in our portfolio are generally leased to tenants under net leases, where the tenant is responsible for property operating costs and expenses, our exposure to rising property operating costs due to inflation is mitigated. Interest rates and other factors, such as occupancy, rental rate and the financial condition of our tenants, influence our performance more so than does inflation. Changes in interest rates do not necessarily correlate with inflation rates or changes in inflation rates. As described above, we currently offer leases that provide for payments of base rent with scheduled annual fixed increases.
Impact of COVID-19 on Liquidity and Financial Condition
As a result of the short-term and potential longer term impact of COVID-19 and the actions taken to minimize its spread, we may temporarily reduce the annual rate of our annual cash dividends. We currently intend to continue paying sufficient dividends to maintain our status as a REIT.

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Property rental income is our primary source of cash flow and is dependent on a number of factors, including our occupancy level and rental rates, as well as our tenants’ ability to pay rent. Our properties have historically provided us with a relatively consistent stream of cash flow that enables us to pay operating expenses, debt service and recurring capital expenditures. As discussed in more detail below, the effects of COVID-19 and the actions taken to minimize its spread have had an adverse impact on our tenants’ ability to operate and could impact their ability to pay rent to us and therefore have a significant longer term adverse impact on our cash flow and financial condition. Other sources of liquidity to fund cash requirements include proceeds from financings, equity offerings and asset sales.
The Company continues to monitor the COVID-19 pandemic and its impact on our overall liquidity position and outlook. The ultimate impact COVID-19 may have on our operational and financial performance over the next 12 months is currently uncertain and will depend on certain developments, including, among others, the impact of COVID-19 on our tenants, on restaurants that we manage and the magnitude and duration of the pandemic, including its impact on social distancing rules which may impact a tenant’s ability to generate sales at sufficient levels to cover operating costs. Our ability to retain our outstanding borrowings and utilize remaining amounts available under our revolving credit facility will depend on our continued compliance with the applicable financial covenants and other terms of our credit agreements, which may be impacted by tenant store closures and failure of tenants to pay rent.
Pandemic-Related Contingencies
The ongoing COVID-19 pandemic and restrictions intended to prevent and mitigate its spread could have additional adverse effects on our business, including but not limited to:
the ability and willingness of our tenants to renew their leases upon expiration, our ability to re-lease the properties on the same or better terms in the event of nonrenewal or in the event we exercise our right to replace an existing tenant, and obligations we may incur in connection with the replacement of an existing tenant, particularly in light of the adverse impact to the financial health of many restaurant owners that has occurred and continues to occur as a result of the COVID-19 pandemic and the significant uncertainty as to when and the conditions under which potential tenants will be able to operate in future;
macroeconomic conditions, such as a disruption of or lack of access to the capital markets and the adverse impact of the recent significant decline in our share price from prices prior to the spread of the COVID-19 pandemic;
the broader impact of the severe economic contraction due to the COVID-19 pandemic, the resulting increase in unemployment that has occurred and its effect on consumer behavior, and negative consequences that will occur if these trends are not timely reversed; and
potential reduction in our operating effectiveness as employees work remotely or if key personnel become unavailable due to illness or other personal circumstances related to COVID-19.
The COVID-19 pandemic and restrictions intended to prevent and mitigate its spread have already had a significant adverse impact on economic and market conditions around the world, including the United States and markets where our properties are located, in the first three quarters of 2020 and could further trigger a period of sustained global and U.S. economic downturn or recession. While the rapid developments regarding the COVID-19 pandemic preclude any prediction as to its ultimate adverse impact, the current economic, political and social environment presents material risks and uncertainties with respect to our and our tenants’ business, financial condition, results of operations, cash flows, liquidity and ability to access the capital markets and satisfy debt service obligations.
Contractual Obligations
There were no material changes outside the ordinary course of business to the information regarding specified contractual obligations contained in our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC.
Off-Balance Sheet Arrangements
At September 30, 2020, we had no off-balance sheet arrangements.

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Supplemental Financial Measures
The following tables presents a reconciliation of U.S. GAAP net income to National Association of Real Estate Investment Trusts (“NAREIT”) funds from operations (“FFO”) and adjusted funds from operations (“AFFO”) for the three and nine months ended September 30, 2020 and 2019.
  
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(In thousands, except share and per share data) 2020 2019 2020 2019
Net income $19,404
 $18,409
 $57,260
 $53,946
Depreciation and amortization on real estate investments 7,503
 6,636
 21,615
 19,481
FFO (as defined by NAREIT) $26,907
 $25,045
 $78,875
 $73,427
Straight-line rent (2,248) (2,415) (6,519) (7,008)
Recognized rental revenue expected to be abated (1)
 (196) 
 (1,568) 
Stock-based compensation 868
 802
 2,496
 2,792
Non-cash amortization of deferred financing costs 543
 512
 1,589
 1,539
Other non-cash interest (income) expense 1
 1
 (1) (4)
Non-real estate investment depreciation 20
 17
 55
 51
Other non-cash revenue adjustments 412
 25
 799
 49
Adjusted Funds from Operations (AFFO) $26,307
 $23,987
 $75,726
 $70,846
         
Fully diluted shares outstanding (2)
 71,434,873
 68,816,579
 70,879,855
 68,805,612
         
FFO per diluted share $0.38
 $0.36
 $1.11
 $1.07
         
AFFO per diluted share $0.37
 $0.35
 $1.07
 $1.03
         
(1)    Amount represents base rent that the Company has agreed to abate as a result of lease amendments. Upon finalization of lease amendments with tenants, the Company abated $1.6 million of rental revenue recognized in the second quarter of 2020, of which $1.4 million was included as an adjustment to AFFO in the second quarter of 2020. In the third quarter, receivables of $1.6 million were recognized as lease incentives and will be amortized as a reduction to rental revenue over the amended lease terms.
(2)    Assumes the issuance of common shares for OP units held by non-controlling partners.

Non-GAAP Definitions
The certain non-GAAP financial measures included above management believes are helpful in understanding our business, as further described below. Our definition and calculation of non-GAAP financial measures may differ from those of other REITs and therefore may not be comparable. The non-GAAP measures should not be considered an alternative to net income as an indicator of our performance and should be considered only a supplement to net income, and to cash flows from operating, investing or financing activities as a measure of profitability and/or liquidity, computed in accordance with U.S. GAAP.
FFO is a supplemental measure of our performance which should be considered along with, but not as an alternative to, net income and cash provided by operating activities as a measure of operating performance and liquidity. We calculate FFO in accordance with the standards established by the NAREIT. FFO represents net income (loss) computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of property and undepreciated land and impairment write-downs of depreciable real estate, plus real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures. We also omit the tax impact of non-FFO producing activities from FFO determined in accordance with the NAREIT definition.
Our management uses FFO as a supplemental performance measure because, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that, when compared year over

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year, captures trends in occupancy rates, rental rates and operating costs. We offer this measure because we recognize that FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our financial condition and results from operations, the utility of FFO as a measure of our performance is limited. FFO is a non-GAAP measure and should not be considered a measure of liquidity including our ability to pay dividends or make distributions. In addition, our calculations of FFO are not necessarily comparable to FFO as calculated by other REITs that do not use the same definition or implementation guidelines or interpret the standards differently from us. Investors in our securities should not rely on these measures as a substitute for any U.S. GAAP measure, including net income.
Adjusted Funds from Operations is a non-U.S. GAAP measure that is used as a supplemental operating measure specifically for comparing year-over-year ability to fund dividend distribution from operating activities. AFFO is used by us as a basis to address our ability to fund our dividend payments. We calculate AFFO by adding to or subtracting from FFO:
1.Transaction costs incurred in connection with business combinations
2.Straight-line rent revenue adjustment
3.Stock-based compensation expense
4.Non-cash amortization of deferred financing costs
5.Other non-cash interest expense (income)
6.Non-real estate investment depreciation
7.Merger, restructuring and other related costs
8.Impairment charges
9.Other non-cash revenue adjustments, including amortization of above and below market leases and lease incentives
10.Amortization of capitalized leasing costs
11.Debt extinguishment gains and losses
12.Recurring capital expenditures and tenant improvements
AFFO is not intended to represent cash flow from operations for the period, and is only intended to provide an additional measure of performance by adjusting the effect of certain items noted above included in FFO. AFFO is a widely reported measure by other REITs; however, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to other REITs.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Information concerning market risk is incorporated herein by reference to Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as supplemented by the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A titled “Risk Factors.” Other than the developments described thereunder, including changes in the fair values of our assets, there have been no other material changes in our quantitative or qualitative exposure to market risk since December 31, 2019.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures were effective.

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Changes in Internal Control over Financial Reporting
During the third quarter of 2020, there have been no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
In the ordinary course of our business, we are party to various claims and legal actions that management believes are routine in nature and incidental to the operation of our business. Management believes that the outcome of these proceedings will not have a material adverse effect upon our operations, financial condition or liquidity.
Item 1A. Risk Factors.
There have been no material changes to the risk factors as disclosed in Part I, Item 1A. “Risk Factors” beginning on page 8 of our Annual Report on Form 10-K for the year ended December 31, 2019, other than as set forth below, which supplements the above referenced risk factors disclosed in our Annual Report on Form 10-K.

Actual or perceived threats associated with epidemics, pandemics or public health crises, including the ongoing COVID-19 pandemic, could have a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, cash flow, liquidity and ability to access the capital markets and satisfy debt service obligations and make distributions to our stockholders.
Epidemics, pandemics or other public health crises, including the ongoing COVID-19 pandemic, that impact economic and market conditions, particularly in markets where our properties are located, and preventative measures taken to alleviate any public health crises, including “shelter-in-place” or “stay-at-home” orders, density limitations or social distancing measures issued by local, state or federal authorities, may have a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, liquidity and ability to access capital markets and satisfy our debt service obligations, and make distributions to our stockholders, and may affect our ability as a net-lease real estate investment trust to acquire properties or lease properties to our tenants, who may be unable, as a result of any economic downturn occasioned by public health crises, to make rental payments when due. Although some local, state and other authorities were in varying stages of lifting or modifying some of these measures, some have already been forced to, and others may in the future, reinstitute these measures or impose new, more restrictive measures, if the risks, or the perception of the risks, related to the COVID-19 pandemic worsen at any time.
The ongoing COVID-19 pandemic and restrictions intended to prevent its spread has already had a significant adverse impact on economic and market conditions around the world in the first three quarters of 2020, including the United States and markets where our properties are located. Our restaurant tenants, as well as our tenants that operate other retail businesses, depend on in-person interactions with their customers to generate unit-level profitability, and an COVID-19 has decreased and may continue to decrease customers’ willingness to frequent, and mandated “shelter-in-place” or “stay-at-home” orders, density limitations and social distancing measures have prevented and may continue to prevent customers from frequenting, our tenants’ businesses, which has resulted in decreased profitability for our tenants and may continue to result in our tenants’ inability to maintain profitability and make timely rental payments to us under their leases. In connection with the business stoppages at many of our properties, during the second quarter, we have agreed to lease concessions with certain tenants in response to the COVID-19 pandemic and restrictions intended to prevent its spread. Whether we enter into any future lease amendments or grant any additional rent concessions or other lease-related relief will be made by our management team and board, as appropriate, based on each tenant’s unique financial and operating situation.
The ongoing COVID-19 pandemic and restrictions intended to prevent its spread could further trigger a period of sustained global and U.S. economic downturn or recession. Moreover, the ongoing COVID-19 pandemic and restrictions intended to prevent its spread could have significant adverse impacts on our business, financial condition, results of operations, cash flows, liquidity and ability to access the capital markets and satisfy our debt service obligations and make distributions to our stockholders in a variety of ways that are difficult to predict. Such adverse impacts could depend on, among other factors:
the financial condition and viability of tenants and our tenants’ ability or willingness to pay rent in full on a timely basis;

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state, local, federal and industry-initiated efforts that may adversely affect landlords, including us, and their ability to collect rent and/or enforce remedies for the failure to pay rent;
our need to restructure leases with our tenants and our ability to do so on favorable terms or at all;
our ability to renew leases or re-lease available space in our proprieties on favorable terms or at all in the event of nonrenewal or in the event we exercise our right to replace an existing tenant, and obligations we may incur in connection with the replacement of an existing tenant, including as a result of a general decrease in demand for our restaurant or retail space, deterioration in the economic and market conditions in markets where our properties are located or due to restrictions intended to prevent the spread of COVID-19 that frustrate our leasing activities, particularly in light of the adverse impact to the financial health of many restaurant owners that has occurred and continues to occur as a result of the COVID-19 pandemic and the significant uncertainty as to when and the conditions under which potential tenants will be able to operate in the future;
a severe and prolonged disruption and instability in the global financial markets, including the debt and equity capital markets, all of which have already experienced and may continue to experience significant volatility, or deteriorations in credit and financing conditions, as well as the recent significant decline in our share price from prices prior to the spread of the COVID-19 pandemic, may affect our or our tenants’ ability to access capital necessary to fund our respective business operations or retire, replace or renew maturing liabilities on a timely basis, on attractive terms or at all and may adversely affect the valuation of financial assets and liabilities, any of which could affect our and/or our tenants’ ability to meet liquidity and capital expenditure requirements;
a refusal or failure of one or more lenders under our revolving credit facility to fund their respective financing commitment to us may affect our ability to access capital necessary to fund our business operations and to meet our liquidity and capital expenditure requirements;
the broader impact of the severe economic contraction due to the COVID-19 pandemic and restrictions intended to prevent its spread, the resulting increase in unemployment that has occurred and its effect on consumer behavior, and negative consequences that will occur if these trends are not timely reversed;
complete or partial shutdowns of one or more of our tenants’ facilities or distribution centers, temporary or long-term disruptions in our tenants’ supply chains from local, national and international suppliers or delays in the delivery of products, services or other materials necessary for our tenants’ operations, which could force our tenants to reduce, delay or eliminate offerings of their products and services, reduce or eliminate their revenues and liquidity and/or result in their bankruptcy or insolvency;
our and our tenants’ ability to manage our respective businesses to the extent our and their management or personnel (including on-site employees) are impacted in significant numbers by the COVID-19 pandemic and are not willing, available or allowed to conduct work; and
our and our tenants’ ability to ensure business continuity in the event our continuity of operations plan is not effective or improperly implemented or deployed during the COVID-19 pandemic.
The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of the COVID-19 pandemic or restrictions intended to prevent its spread. Nevertheless, the ongoing COVID-19 pandemic and restrictions intended to prevent its spread and the current financial, economic and capital markets environment and future developments in these and other areas present material risks and uncertainties with respect to our business, financial condition, results of operations, cash flows, liquidity and ability to access the capital markets and satisfy our debt service obligations and make distributions to our stockholders. Moreover, to the extent any of these risks and uncertainties adversely impact us in the ways described above or otherwise, they may also have the effect of heightening many of the other risks described under the section entitled “Item 1A. Risk Factors” in the Company’s most recent annual report on Form 10-K for the year ended December 31, 2019.



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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
The exhibits issued in the accompanying Index to Exhibits are filed as part of this Form 10-Q and incorporated herein by reference.

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INDEX TO EXHIBITS
Exhibit Number Description
3.1 
3.2 
31 (a)* 
31 (b)* 
32 (a)* 
32 (b)* 
101* The following materials from Four Corners Property Trust, Inc.’s Quarterly Report on Form 10-Q for the three months ended September 30, 2020 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statement of Equity, (v) the Consolidated Statements of Cash Flows, and (vi) related notes to these consolidated financial statements.
* Filed herewith

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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
    
    
  FOUR CORNERS PROPERTY TRUST, INC.
    
    
Dated:October 29, 2020By:/s/ William H. Lenehan
   William H. Lenehan
   President and Chief Executive Officer
   (Principal Executive Officer)
    
    
Dated:October 29, 2020By:/s/ Gerald R. Morgan
   Gerald R. Morgan
   Chief Financial Officer
   (Principal Financial Officer)
    
    
Dated:October 29, 2020By:/s/ Niccole M. Stewart
   Niccole M. Stewart
   Chief Accounting Officer
   (Principal Accounting Officer)
    
    


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