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FCPT Announces Second Quarter 2019 Financial and Operating Results

FCPT Announces Second Quarter 2019 Financial and Operating Results

Four Corners Property Trust, Inc. (“FCPT” or the “Company”, NYSE: FCPT) today announced financial results for the three months and six months ended June 30, 2019.

Management Comments

“During the second quarter, we continued to make accretive acquisitions of quality restaurant properties that benefit from low rental rates and a high percentage of corporate operators,” said Bill Lenehan. “Last week, we also announced a $38 million follow-on acquisition with Washington Prime Group (WPG) for 12 restaurant properties and 8 properties operating in other retail sectors. We are enthusiastic to announce our first entry into the non-restaurant, retail net-lease space and look forward to continuing to build on the relationship with WPG. These non-restaurant outparcels share similar qualities as our current restaurant assets and will be great additions as we continue on the path to diversify our portfolio.”

Financial Results

Rental Revenue and Net Income Attributable to Common Shareholders

  • Rental revenue for the second quarter increased 16.3% over the prior year to $34.4 million. Rental revenue consisted of $32.2 million in cash rents and $2.2 million of straight-line and other non-cash rent adjustments.
  • Net income attributable to common shareholders was $17.9 million for the second quarter, or $0.26 per diluted share. These results compared to net income attributable to common shareholders of $27.4 million in the prior year, or $0.44 per diluted share, including a $10.9 million gain on the sale of a property.
  • Net income attributable to common shareholders was $35.4 million for the six months ended June 30, 2019, or $0.52 per diluted share. These results compared to net income attributable to common shareholders of $43.7 million, or $0.71 per diluted share, including a $10.9 million gain on the sale of a property, for the same six-month period in the prior year.

Funds from Operations (FFO)

  • NAREIT-defined FFO per diluted share for the second quarter was $0.36, representing a $0.01 per share increase compared to the second quarter in 2018.
  • NAREIT-defined FFO per diluted share for the six months ended June 30, 2019 was $0.70, representing flat per share results compared to the same six-month period in the prior year.

Adjusted Funds from Operations (AFFO)

  • AFFO per diluted share for the second quarter was $0.34, representing flat per share results compared to the second quarter in 2018.
  • AFFO per diluted share for the six months ended June 30, 2019 was $0.68, representing flat per share results compared to the same six-month period in the prior year.

General and Administrative (G&A) Expense

  • G&A expense for the second quarter was $3.4 million, which included $0.8 million of stock-based compensation. These results compared to G&A expense in the second quarter of 2018 of $3.1 million, including $0.9 million of stock-based compensation.
  • Cash G&A expense (after excluding stock-based compensation) for the six months ended June 30, 2019 was $5.4 million, representing 8.4% of cash rental income for the quarter.

Dividends

  • FCPT declared a dividend of $0.2875 per common share for the second quarter of 2019.

Portfolio Activities

Acquisitions

  • During the second quarter, FCPT acquired 21 restaurant properties for a combined purchase price of $43.0 million, at an initial weighted average cash yield of 6.7%, including percentage rent consideration, with a weighted average lease term of 11.8 years remaining.
  • On July 24, 2019 FCPT also announced the signing of a definitive agreement to purchase 20 additional outparcel properties from Washington Prime Group (NYSE: WPG) for approximately $38 million. This pricing reflects a mid-six percent capitalization rate on in-place net operating income. This transaction includes 12 restaurant properties as well as 8 properties operating in other retail sectors, marking FCPT’s first investments outside of restaurant net lease. Each property has a separate individual lease and the leases have a current weighted average remaining term of approximately 8 years.

Liquidity and Capital Markets

Capital Raising

  • During the second quarter, FCPT raised $1.0 million in gross proceeds at a weighted average share price of $29.45 via its At-The-Market (ATM) stock program. In addition, during the second quarter, 1,603,478 shares of Common Stock were sold by a forward purchaser through a manager under the ATM program pursuant to a forward sale agreement for gross proceeds of approximately $47.0 million based on the initial forward price. The Company currently expects to fully physically settle the forward sale agreement with the forward purchaser on one or more dates prior to January 1, 2020. As of June 30, 2019, the Company had not settled any portion of the forward sale agreement.

Cash

  • At June 30, 2019, FCPT had $19.6 million of available cash and cash equivalents net of $19.6 million of dividends that were paid on July 15.

Credit Facility and Unsecured Note

  • At June 30, 2019, FCPT had $625 million of outstanding debt, consisting of $400 million of term loans and $225 million of unsecured fixed rate notes. At quarter end, FCPT was undrawn on its $250 million revolving credit facility.

Real Estate Portfolio

  • As of June 30, 2019, the Company’s rental portfolio consisted of 642 restaurant properties located in 45 states. The properties are 99.9% occupied (measured by square feet) under long-term, net leases with a weighted average remaining lease term of approximately 11.8 years and an estimated portfolio weighted average EBITDAR to Lease Rent coverage of 4.8x.

Conference Call Information

Company management will host a conference call and audio webcast on Wednesday, July 31, 2019 at 11:00 am Eastern Time to discuss the results.

Interested parties can listen to the call via the following:

Internet: Go to http://dpregister.com/10133454 at least 15 minutes prior to start time of the call, in order to register and to download any necessary audio software. Please note for those that register, the dial-in number will be provided upon registration.

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

Replay: Available through October 31, 2019 by dialing 1-877-344-7529 (domestic) / 1-412-317-0088 (international), Replay Access Code 10133454.

About FCPT

FCPT is a real estate investment trust primarily engaged in the acquisition and leasing of restaurant properties. The Company seeks to grow its portfolio by acquiring additional real estate to lease for use in the restaurant and retail industries.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include all statements that are not historical statements of fact and those regarding the Company’s intent, belief or expectations, including, but not limited to, statements regarding: operating and financial performance; and expectations regarding the making of distributions and the payment of dividends. Words such as “anticipate(s),” “expect(s),” “intend(s),” “plan(s),” “believe(s),” “may,” “will,” “would,” “could,” “should,” “seek(s)” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. Forward-looking statements speak only as of the date on which such statements are made and, except in the normal course of the Company’s public disclosure obligations, the Company expressly disclaims any obligation to publicly release any updates or revisions to any forward-looking statements to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any statement is based. Forward-looking statements are based on management’s current expectations and beliefs and the Company can give no assurance that its expectations or the events described will occur as described. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements. For a further discussion of these and other factors that could cause the company’s future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in the company’s most recent annual report on Form 10-K, and other risks described in documents subsequently filed by the company from time to time with the Securities and Exchange Commission.

Notice Regarding Non-GAAP Financial Measures:

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

Supplemental Materials and Website:

Supplemental materials on the Second Quarter 2019 operating results and other information on the Company are available on the investors relations section of FCPT’s website at www.investors.fcpt.com.

Four Corners Property Trust

Consolidated Statements of Income

(Unaudited)

(In thousands, except share and per share data)

 
 
Three Months Ended June 30, Six Months Ended June 30,

2019

2018

2019

2018

 
Revenues:
Rental revenue

$

34,415

 

$

29,596

 

$

68,623

 

$

59,186

 

Restaurant revenue

 

5,153

 

 

5,079

 

 

10,546

 

 

10,293

 

Total revenues

 

39,568

 

 

34,675

 

 

79,169

 

 

69,479

 

Operating expenses:
General and administrative

 

3,431

 

 

3,109

 

 

7,377

 

 

6,692

 

Depreciation and amortization

 

6,518

 

 

5,225

 

 

12,879

 

 

10,569

 

Property expenses

 

417

 

 

95

 

 

725

 

 

181

 

Restaurant expenses

 

4,954

 

 

4,786

 

 

9,937

 

 

9,656

 

Total operating expenses

 

15,320

 

 

13,215

 

 

30,918

 

 

27,098

 

 
Interest expense

 

(6,557

)

 

(4,877

)

 

(13,304

)

 

(9,733

)

Other income, net

 

306

 

 

231

 

 

719

 

 

588

 

Realized gain on sale, net

 

-

 

 

10,879

 

 

-

 

 

10,879

 

Income tax expense

 

(61

)

 

(66

)

 

(129

)

 

(125

)

Net income

 

17,936

 

 

27,627

 

 

35,537

 

 

43,990

 

 
Net income attributable to noncontrolling interest

 

(68

)

 

(182

)

 

(166

)

 

(291

)

Net Income Attributable to Common Shareholders

$

17,868

 

$

27,445

 

$

35,371

 

$

43,699

 

 
Basic net income per share

$

0.26

 

$

0.44

 

$

0.52

 

$

0.71

 

Diluted net income per share

$

0.26

 

$

0.44

 

$

0.52

 

$

0.71

 

Regular dividends declared per share

$

0.2875

 

$

0.2750

 

$

0.5750

 

$

0.5500

 

 
Weighted-average shares outstanding:
Basic

 

68,302,395

 

 

61,751,530

 

 

68,252,947

 

 

61,511,183

 

Diluted

 

68,501,181

 

 

61,911,699

 

 

68,475,778

 

 

61,661,560

 

Four Corners Property Trust

Consolidated Balance Sheets

(In thousands, except share data)

 
June 30, 2019
(Unaudited) December 31, 2018
ASSETS
Real estate investments:
Land

$

603,047

 

$

569,057

 

Buildings, equipment and improvements

 

1,256,453

 

 

1,236,224

 

Total real estate investments

 

1,859,500

 

 

1,805,281

 

Less: Accumulated depreciation

 

(624,055

)

 

(614,584

)

Total real estate investments, net

 

1,235,445

 

 

1,190,697

 

Intangible lease assets, net

 

26,253

 

 

18,998

 

Total real estate investments and intangible lease assets, net

 

1,261,698

 

 

1,209,695

 

Cash and cash equivalents

 

39,289

 

 

92,041

 

Straight-line rent adjustment

 

34,736

 

 

30,141

 

Derivative assets

 

552

 

 

5,982

 

Other assets

 

8,696

 

 

5,239

 

Total Assets

$

1,344,971

 

$

1,343,098

 

 
LIABILITIES AND EQUITY
 
Liabilities:
Long-term debt ($625,000 principal, net of deferred financing costs)

$

616,916

 

$

615,892

 

Dividends payable

 

19,641

 

 

19,580

 

Rent received in advance

 

8,752

 

 

1,609

 

Derivative liabilities

 

4,718

 

 

-

 

Other liabilities

 

12,273

 

 

7,053

 

Total liabilities

 

662,300

 

 

644,134

 

 
Equity:
Preferred stock, $0.0001 par value per share, 25,000,000 shares authorized, zero shares issued and outstanding

 

-

 

 

-

 

Common stock, $0.0001 par value per share, 500,000,000 shares authorized, 68,418,243 and 68,204,405 shares issued and outstanding, respectively

 

7

 

 

7

 

Additional paid-in capital

 

638,988

 

 

639,116

 

Accumulated other comprehensive income

 

(4,149

)

 

5,956

 

Noncontrolling interest

 

5,703

 

 

7,867

 

Retained earnings

 

42,122

 

 

46,018

 

Total equity

 

682,671

 

 

698,964

 

Total Liabilities and Equity

$

1,344,971

 

$

1,343,098

 

Four Corners Property Trust

FFO and AFFO

(Unaudited)

(In thousands, except share and per share data)

 
Three Months Ended June 30, Six Months Ended June 30,

2019

2018

2019

2018

Funds from operations (FFO):
Net income

$

17,936

 

$

27,627

 

$

35,537

 

$

43,990

 

Depreciation and amortization

 

6,501

 

 

5,209

 

 

12,845

 

 

10,540

 

Realized gain on sales of real estate

 

-

 

 

(10,879

)

 

-

 

 

(10,879

)

Realized gain on exchange of real estate (1)

 

-

 

 

-

 

 

-

 

 

(228

)

FFO (as defined by NAREIT)

$

24,437

 

$

21,957

 

$

48,382

 

$

43,423

 

Straight-line rent

 

(2,234

)

 

(2,280

)

 

(4,593

)

 

(4,563

)

Stock-based compensation

 

776

 

 

924

 

 

1,989

 

 

2,107

 

Non-cash amortization of deferred financing costs

 

514

 

 

455

 

 

1,027

 

 

910

 

Other non-cash interest income

 

(1

)

 

(1

)

 

(5

)

 

(6

)

Non-real estate investment depreciation

 

17

 

 

16

 

 

34

 

 

29

 

Amortization of above and below market leases, net

 

12

 

 

15

 

 

24

 

 

31

 

Adjusted Funds from Operations (AFFO)

$

23,521

 

$

21,086

 

$

46,858

 

$

41,931

 

 
Fully diluted shares outstanding (2)

 

68,795,687

 

 

62,321,019

 

 

68,797,156

 

 

62,070,880

 

 
FFO per diluted share

$

0.36

 

$

0.35

 

$

0.70

 

$

0.70

 

 
AFFO per diluted share

$

0.34

 

$

0.34

 

$

0.68

 

$

0.68

 

 

(1)

Non-cash gain recognized for GAAP purposes on the transfer of nonfinancial assets related to an excess land parcel exchange.

(2)

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

 

FCPT
Bill Lenehan, 415-965-8031
CEO

Gerry Morgan, 415-965-8032
CFO

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