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FCPT Four Corners Property Trust

Participants
Gerald Morgan CFO
William Lenehan President and CEO
Nate Crossett Berenberg
Sheila McGrath Evercore ISI
Anthony Paolone JPMorgan
Rob Stevenson Janney Montgomery Scott
John Massocca Ladenburg Thalmann
Peter Hermann Robert W. Baird
Call transcript
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Operator

Good day, and welcome to the FCPT Fourth Quarter 2020 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Gerry Morgan. ahead. go Please

Gerald Morgan

Thank you.

call, on are by beliefs this will forward-looking us. of make we and which course based statements the During assumptions made

factors, ability of the Our known pandemic that the be will our COVID-XX scope, including control beyond unknown or remaining duration actual to predict. uncertainty and affected severity, are related to results and by

assumptions to be prove are some and will not Our a performance, guarantee of future incorrect.

found filings, at of potential All risk, refer which For can on more SEC be February XX, presented current detailed description information XXXX. a is as fcpt.com. today, to the please call our this of

In site. addition, the to financial that, call the With in available Bill. company's and FFO this measures presented also reconciliation I'll such turn as call, found to non-GAAP can over supplemental Web be our AFFO, report, on on

William Lenehan

Thank with Thank you, for are equity growth FCPT the continued to discuss to which team. terms of fourth high the raised, joining and volumes, in very collections, of us everyone we Gerry. quarter strong acquisition results, morning. our pleased capital you Good meaningful continued

been kind of Four owns. While between period has restaurant distinguish important overall, specifically periods it restaurant that one this is to operating the most and different types, of for pandemic properties the the challenging industry Corners

often not are a models. are part of are buildings traded are Our their resilient business typically business These concepts, suburban companies in enterprises. have but instead proven of are located districts not who central in publicly and restaurant large adjusting branded one-off cities. operators They large,

results reporting mode, tenants QSR dining are our above often levels. casual in pre-COVID rebound but Our remain tenants

interest as significant support could the consumer. well with in the the discussions, stimulus We that the industry in federal result as end restaurant in are Washington, watching

profitability Kerrow overhead improved of higher As seen operators, dining to-go margins technology, with focus and menus, EBITDA casual our on businesses, efficiency. have significant a dining room in simplified lower staffing, because of for investment Group, Garden, levels we other and have

end, and we an with quarter scheduled at operators rents, had collections that XX.X accomplishment year. tenants our our of worked engaged for XXXX who had Our tenet collected impressive team our this is for hard

strong in to date. XXXX We this collections range to continue see for

X.X% are three to deferral connection but terminate We time we the rent their instead building. rents less tenants, modify either our and on than in opportunities tenants are or portfolio in not lease spending then locations our of expansion potential joint representing requests working release with are venture. with them Otherwise, from with seeing

restrictions. these are. Oak shown Antonio, in have construct run committed how and ground, seventh restaurant this year who area restaurants, and in quarter, team, year-over-year $X.XX which a Garden we is reported that located property July. increase. second new open the acquired $X.XX, represents the also to wonderful October, which real-time will are San what which the by impacted in COVID provides subsidiary Kerrow be continues Kerrow Antonio, Kerrow window operates a The to adapt. to our Our Longhorn and doing tenants six Steakhouses, into understanding of of work EBITDA return quarter, the the profitability to in third and positive We and next AFFO in quarter broke hard thanks our an Longhorn early in her Live positive to Carol San in with My $XXX,XXX, resulted Dilts of and profitability share quarter, in fourth team's fourth in in Kerrow to skilled to per in EBITDA increase $XXX,XXX. We Olive they

$XX.XX $XX sheet $XXX in raised per price an in of de-levered end, XXXX, the as of well average via We the million toward -- the quarter balance million the with much and the are ATM equity in for set at growth up we acquisitions of share. occurred

combined acquired cash we initial $XXX yield of for weighted properties quarter, purchase XX of a X.X%. the average an in price million, acquisitions, to Turning and

million, $XXX made as the or XXXX properties sourced setup therefore, of most totaling with at in were lower for properties of properties total, the as of were outparcel acquisitions we acquired and XX% quarter. pause Looking rents. these second in ground leases into Approximately even strategy, investments with XXX the many a the

of operated XXXX of the evidenced, the and are leases, leases leases quality of acquisitions, constructed the by owns XX% of the guaranteed entity, brand’s the or are XX% FCPT the where the As tenant and building. ground corporate corporate land

the Lubert-Adler me of October. vacant announced let Now, update you in we venture that on

in We venture. vacant the active are very

is tenants, We brands have is growth would of formerly interest formerly there conversations thesis has that X,XXX With said, so of letters and tenant intent. properties weak number in and remains have underwritten a of held with difficult. that been issued that be over brands mode. properties, confirmed, dozens The well-located pricing obviously strong

a of turning improve lot pricing but time. we are over rocks, will believe we over So,

a acquisitions. we quarterly transactions these results the day than As do reminder, other FCPT as announce in close with rather they will we our

And far. a so partner to We been learning to a Lubert-Adler are tenant. good in great lot our finds They specific a about each locations tenant’s the lot table. has eyes what bring

properties. for Just environment competitive, comment acquisition the quick especially very a leased QSR is buildings on for

lease making continue sector, I to believe the rate team posted our we expect We leveraged net up And intent the for to We pushing to markets will In hope go and low and on acquired building to in Lubert-Adler. to pricing. to and focus disciplined rent continue remain is interest on which financing venture the quality acquisitions XX.X% pipeline are are environments excited the be that in the buyers summary, collections in a is making properties XX QX and and and quarter. High portfolio progress Gerry? the forward. are with are strong. highest aggressive. We

Gerald Morgan

excluding cash the rent of non-cash income Thanks, $X.X million and We line rental other in of straight fourth million $XX.X quarter adjustments. generated Bill. after

accounting, of collection One result rent As for the extensions. totaled other is includes modifications Bill in but revenue we include abetted collected of collections these million is mentioned, $X.X second this of Including remind reported and we not AFFO. XX.X% XXXX as that long-term in-rental in amounts to to caveat the did in which rental everyone it yearend. quarter we revenue lease abetted by return revenue our reported totaled GAAP rent, for favorable required

rent, XX.X%, so, abetted for Excluding very still our the high. collection XXXX results were

With no the to And On is these for rent in $XXX.X in million. as XX-year average there were balance annual in the changes escalator no XX, credit cash place our or December sheet reserves rent material is impairments X.XX%. cash also quarter. run XXXX And rate we the weighted based our a results, quarter. annual collectability a had current basis, leases of

by the quarter. Xth November on As all the X.X% rent reminder, original on leases this increased Garden a of

this coverage for see in times using were EBITDA. period leases XXXX we we their sales calculated evidences our also portfolio. will This though us, result This portfolio for collection the XX% to our year to for sales have their rent at quarter have by X.X Garden’s our Garden portfolio that You and is have over the November estimate for XX, ending same on rent time average room even quarter. for estimate down estimated and on Garden’s reported brand the low margins in rent and

time. current tenant return estimates time its expectation of reporting and to since normalize not We for COVID-XX much we this over prior operations will non-Garden historical includes periods portfolio year our levels of rent representative portion that the the may tenant to the of still be re-financial coverage and have excluded It’s will operations. coverage see

$X.XX our share QX AFFO of all the the quarter in in of Over results. $X.XX of $XX AFFO the per balance in on will for of of fourth were properties these of with share acquisitions the to million We quarter. $XXX.X million December Our contribute per and increase availability and cash quarter of revolver reserves. year-over-year $XXX ended the quarter $XX million represented December. and end full toward in results Much million XX% closed that

X.X net given I the leverage coverage debt X.X capital leverage from X.X quarter improved raising in of to fixed capitalization times with metrics to times. the quarter a standpoint would we below Our everyone X.X the in to us fourth run XXXX, X leverage maintaining EBITDA sets closer in the debt net EBITDA. of times estimate equity times. are committed to targets charge rate at well a are up to going we and to and remind year-end This

or an the I'll Q&A. which turn prior closing represented the comments it over X% $X.XXXX that, with Bill increased over back before an And we increase on quarter. annualized dividend a for basis, Finally, quarter for of paid $X.XX to

William Lenehan

Thanks, conclusion, XXXX quarter total. very the In fourth is off with hard. good start, Gerry. are very the we for are happy extremely results working year-end a and we to and

any answer turn for or to to quarter so available please the are back we we questions will With out. Q&A. on operator the that, over always, reach the it As portfolio,

Operator

Crossett with begin the question question-and-answer comes first session. now go [Operator will Instructions] ahead. Please Berenberg. Nate We The from

Nate Crossett

Hey, good guys. morning,

William Lenehan

Good morning.

Nate Crossett

just maybe Brookfield? could left this little bit a right you wondering much how us are remind could pipeline is kind how that And agreements And be color Was year? give these can looks and Seritage now? initiated the just of of if outparcel more more on you there between

William Lenehan

a There comfort significant so deals quite a a non-restaurant pipeline one-off us We actually have and individual give cetera. transaction. -- single lots don’t in so not of a And also well, robust other as said, Sure. we but Brookfield, that lot ton of portfolios, at as But properties Washington numbers, resting busy point, Prime, of Seritage, are specific making this progress. and making transactions, we've been granular with with on with it's significant with pipeline I we're gives et very a with other progress. some of that mix

Nate Crossett

question that have Okay. how left But like… on the I past, guys you guess my much is agreements announced the in is

Gerald Morgan

million of $XX end about as of the the it's yes, Nate, year.

Nate Crossett

Okay.

Gerald Morgan

yet we've Of announced, that deals closed. but not

Nate Crossett

you. Okay, that's Thank cool, helpful.

quickly. progressing disclosed, So, could expect than JV, the or… would when are you of that on that quite curious sounded things quicker amount you that things initially expect was get like was deployed, I kind versus thought initially how your expectations? it Are just initial we the like progressing

William Lenehan

we're progress. think I making of a ton Yes,

made Lubert-Adler be would of a are A if a only you As lot to sellers we properties brings really the is I a really it were pricing table, really lot to and progress. good Lots appropriate to on at, of user. matter of pricing. holding look said, that

So with have we've I And lot to that very we're of we excited good a conversations been end am finding properties. think having it's I But productive. think been over up going the time. change will tenants the very again, how going. And with

of effort itself, So, and whole that worthwhile. -- made was in the

Nate Crossett

Okay, it you. I'll there. leave Thank

William Lenehan

Nate. Thanks,

Operator

ISI. go ahead. The with comes from next McGrath question Please Sheila Evercore

Sheila McGrath

a Yes, XXX ground good could if those was little appears It you of mall outparceled? morning. us on the were Are out XX properties wondering detail leases. ground that more all I transactions. give Bill, lease

William Lenehan

Yes, and question. Sheila, great

ground share very low attributes Many of have aren’t leases said ground are very amount very leases. it's we lease. Yes, so a XX% outparcels I mall for of and of the deployed, work think rents, and dollars ground of lot about often were ground that other a the a the small tenants. rents leases. very center to sticky shopping And lot but low

leases long-term. over the levels. overall, ground even you a roll-up of handful just over years. to lot that But high. with when some is huge I year very of strategy. pay, continue think collections market And our rents strategy higher come And like a focus that had so up one have so seen tend had last we've And We've lease the to happy having maturities we've reasons have on bought the which benefit. are And that's to they that

Sheila McGrath

do or whatever on extra parcel, you of it outlining your limit the do the lot part? you to work competition more a the because effort have often And is, because the terminology requires like

William Lenehan

realized fact, do. in work public deals of is taken much up handful that And on. to how They've these dropped our of signed now to a and deals. out Indeed, competitors have they after had we've them we've complete other

this, of work, knowledge credit super Officer time. a the lot again, front. of of organized being Brat, There's Jim Chief do work and our up over lot So lots for value having Transaction to to

Sheila McGrath

on acquisitions? And the last are that you’ll all rates one, for transactions similar average those cap report to the

William Lenehan

Yes.

Sheila McGrath

thank Okay, you.

William Lenehan

Sheila. Thanks,

Operator

Paolone Anthony go Please ahead. next from with comes The question JPMorgan.

Anthony Paolone

be some they doing just Thanks. just guess following about mean be The deals, at like these? How center small owners, credit you I continued I strong. seems with to Sheila's question, their these shopping these strong. to as operators transactions to I of do looking other and seem motivation guess on think your pretty are pretty what's yield

William Lenehan

about think I valuation which attracted high relative used parcels the very And by malls have malls, versus they're to proceeds. the values.

Now they don't.

to accretive is the the So valuation. parcel overall

proceeds debt cash redevelopment Seritage's for So fund and to to creating cash again, pursuing. they're it's redevelopment case, in retire have activities that to having very to pay accretive

Anthony Paolone

and teed-up you've pipeline, the outside looking that put do were you able that at range to deals, yields you'd you're the of keep same as been running And the in think in Okay. are them? previously, place be

William Lenehan

if down it also debt as just of slightly, surprise great but short, has cost very, yields the me question, over a time point very would wouldn’t Seems significantly I well. come out declined

to relative flat. the we relatively So yields, stay would expect

Anthony Paolone

bit? comes and a quickly your real Okay, how that's going the that into about play, talked talk front on conversations where are Can then like to what tenant you estate things? solution a about that expansion, the play just, that just and role in you've

William Lenehan

super rent a of I think a different X% still them rents in I of rents cases, we space super, super were brand. increased where accommodate in kept to there's One X%, single just dining X% simply a rents handful long think post-COVID the to casual sales, a time, And might safe. go their and see there. lot sales, it X% digits now, routes of reconfigure is proceeds, were XX% and then to other we’ll gave low, rent And be to capital. percentages but accommodate XX% was remodeled that within that brands period try restaurants to over

in that can business low our model bargain. lease good wings rents to because as of help those manifest Brinker with we and how the box. out, actual the And just finance it's example, used I concept rolled think the For and very typically boxes we to so are the changes have them, credit part tenants, the extension has changes may

Anthony Paolone

$XX the million you Okay, as put was that just go? your joint is in question, detail then do funded last you all commitment, venture, or already, that and

William Lenehan

Just carry go. on as we

Anthony Paolone

Got it. Thank you.

William Lenehan

thanks. Yes,

Operator

comes Stevenson Please question next ahead. Rob from go The with Janney.

Rob Stevenson

Good morning, guys.

William Lenehan

Rob. Good morning,

Rob Stevenson

are any there? commonality excluding what's The commonality concept, Is XX.X% tenants of operator what collect the by there or is abated there those? rent, the types it

William Lenehan

chunk Let’s in being Darden Brinker. a start then good XX% with and being

was basically XX%. not had the that and a two approaching, But region, closed a approaching credit issues entire so that are multi-state get a region. pay you everyone's commonality. So exceptions those excuse that few me, One there's one-off, really an down brand so

really we don't issue, So without much that able imagine. had we'll low good a be I to rents release building with

the think country. entire I the region of closed down

up a that and of it's was like one our in properties buildings... So of caught stuff handful that, but

Rob Stevenson

assets that you at Okay, all occupied there, releasing keep And the at right. essentially occupied, couple Help those the this - are in Are fully that going? some How moment. us Perfect. sales? give - You or the you have think of you more to basically from point likely guys is not then assets of still assets they be color the that wouldn't are mind. them that if them. retained at this us

William Lenehan

already a for we game. building Sure. we that We Well, one empty sold. had sold it actually

it then and it. through So for sort us of it the of was to game releasing more sell effort the to book advantageous go

advanced discussions We have our one take release. building. will We're to the building definitely in tenants of large existing with that we one

progress or two a literally it's but and situational, in building we're case. it's think any I making good

Rob Stevenson

the And before you one out how Gerry, raised last for that minimum close guys dividend, were you increase. then repay to Okay. when me,

Gerald Morgan

very minimum, even comfortably We're increase. the close. over Not without the

Rob Stevenson

Okay. Thanks, guys. it. Appreciate

William Lenehan

welcome. Yes,

Operator

question John Ladenburg next Thalmann. Please ahead. comes with go from The Massocca

John Massocca

Good morning.

William Lenehan

Good morning.

John Massocca

turning of building over mean line? maybe landlords is earlier for front, out-lots new you're finish next out-lots. transaction-based, the guess even on on mean that a other I year, probably gets conversations what's kind of not transactions, kind I deep of I expectation over that some the potential maybe lot around the how leads of what new

William Lenehan

Seritage an is doing thought and our leasing, our mean counterparty to best with found what strategies, they question, as infinite I as current active is were we every be counterparties not additional another we've I our think we and we example leased properties partial we But time their with are properties. or to Great found it's obviously. done go up

companies And quite tend those have still go this in ways too early where we M&A, had way days think as in I I deals. restructuring partial narrow. defined types this. create things was small So transactions, to there's a of opportunity some to in the try engage And

on to So continue we'll it. focus

to to to out these strategy. in them. proven competency able developed a can I buy And buildings the get really core where situation we've we think we've be a be

million So company. I for it's have meaningful or done do the we've that think under it's so, something contract around either $XXX to

John Massocca

would think can M&A? Okay. you side some be the in maybe rich, that leaseback been play a opportunities. something And there's terms the platform, then FCPT investment type of you conversation on too of pricing other M&A some maybe of even on operators activity might out on that side that do larger that in kind Is of think around come transactions sale of or create QSR

William Lenehan

one big transactions store convenience the Yes, by XXXX M&A. be the driven will for obviously

look they I down - some private so that financing. competitors shine. it we everything make at that's closed to work plenty competitors will really comes use the And or you've pricing. There's realistic And out that's who for people XX% values ABS deals, we to have okay. but where really sure see on. financing play we who us, when And are all structured think the us not for we And

John Massocca

Okay. Well, to bigger and both portfolios… pricing it kind of at like individual level sounds assets granular up of for the even the some is pressure

William Lenehan

think that’s I correct.

John Massocca

very that's guess me. for Thank much. I it you

William Lenehan

side generally. investment on group And more the

John Massocca

Okay.

Operator

comes with Peter Instructions] next Please ahead. Baird. from question [Operator The Hermann go

Peter Hermann

to ports to you they’re multiple advice structuring, those Hey there Shake file look If and reject contribute and to would guys, that water. there out on some as were properties 'n like the JV? looks higher are stores, taking Steak be to they vacant

William Lenehan

Yes.

Peter Hermann

forward in have the new Okay. guys funding XXXX I percentage the to continue as to is, going one acquisitions do then, you well? expect next equity And of higher

William Lenehan

we We It’s price be try sensitive a raise question. when to equity. great

some we price I depends really that in our price, stock stock which we December and thought in our sense. And can’t predict, on had made some so prices interest it but

given with we balance to so, were conservative we sheet. pipeline And always very again, active our and dependent, price trying our modulate be again,

Peter Hermann

it That’s me. for Thanks it. Got guys.

William Lenehan

Yes, thanks.

Operator

This to Lenehan would turn concludes closing conference our Q&A like remarks. to back Bill for I session. the over

William Lenehan

XXXX Thanks difficult was year. a everyone.

to board really team Our you. reach any our shareholders. Thank to free and our out. Thank feel anyone responded. to you If please has questions,

Operator

is for The you Thank today’s attending conference presentation. concluded. now

disconnect. may You now