Four Corners Property Trust: A High-Yield REIT with Strong Q2 Performance and Strategic Growth Momentum

When it comes to real estate investment trusts (REITs), stability, yield, and growth are the holy trinity of success. Four Corners Property Trust (FCPT) has long been a standout in this space, and its Q2 2025 earnings report reaffirms why this REIT deserves a closer look from income-focused investors and those seeking capital appreciation. With a 10.7% year-over-year increase in rental revenue, a 6.7% cash yield on recent acquisitions, and a 5.4x net debt-to-EBITDAre leverage ratio that leaves room for maneuver, FCPT is delivering on its promise of disciplined, high-conviction growth.

A Q2 That Checks All the Boxes

FCPT's Q2 results were a masterclass in consistency. The company reported rental revenue of $64.8 million, driven by strong occupancy (99.4%) and a 7.2-year weighted average lease term, which provides a predictable cash flow stream. Even better, its Adjusted Funds from Operations (AFFO) per diluted share rose to $0.44, up $0.01 from the prior year. This metric is the gold standard for REIT performance because it strips out non-cash adjustments and one-time items, giving investors a clearer view of operational health.

The company's ability to grow AFFO despite a flat NAREIT-defined FFO per share (due to minor accounting adjustments) shows that FCPT is not just maintaining its foundation—it's building on it. For long-term investors, this is a green light: the REIT is optimizing its existing assets while investing in new ones without overleveraging.

Strategic Acquisitions Fuel Future Growth

What truly sets FCPT apart is its aggressive acquisition strategy. In Q2, the REIT snapped up 24 properties for $84.4 million, with 68% allocated to auto service locations—a sector with durable demand—and 28% to casual dining, which is rebounding from post-pandemic lulls. These deals carry an initial cash yield of 6.7%, which is well above the sector average and reflects FCPT's focus on high-conviction, high-margin opportunities.

The REIT's portfolio now spans 1,245 properties across 48 states, with a 99.4% occupancy rate. This is no accident; FCPT's underwriting discipline is evident in its ability to secure long-term, triple-net leases that transfer operational risks to tenants. For income seekers, this means a reliable dividend stream. FCPT's current yield of 5.3% (based on its $0.3550 quarterly payout and a $28.27 share price) is already attractive, but the recent acquisitions suggest the company is positioning for even higher returns down the road.

Liquidity and Balance Sheet Strength: The Unsung Heroes

A REIT's growth is only as good as its balance sheet. FCPT's $562 million in liquidity—including $206 million in anticipated forward sale proceeds and $350 million in revolving credit capacity—gives it the firepower to fund its ambitions without resorting to expensive debt. Its leverage ratio of 5.4x is conservative for a REIT, especially when adjusted to 4.5x by including equity under forward sales agreements. This flexibility is critical in a market where interest rates remain elevated and financing costs could rise.

The Case for Long-Term Investors

For investors who prioritize income, FCPT's 5.3% yield is compelling, but the real allure lies in its capital appreciation potential. The REIT's focus on acquiring high-yielding assets in resilient sectors—auto service, quick service restaurants, and casual dining—positions it to outperform in a soft-landing economy. Auto service locations, in particular, are recession-resistant, as consumers prioritize vehicle maintenance over discretionary spending.

Moreover, FCPT's use of forward sale agreements to fund growth is a smart move. These agreements lock in equity proceeds at today's prices, reducing the risk of share price volatility undercutting its expansion plans. With $172.7 million in gross proceeds from its ATM program year-to-date, the REIT is showing it can scale without diluting shareholders.

Risks to Consider

No investment is without risk. The REIT's focus on restaurant and retail properties exposes it to sector-specific downturns, such as a collapse in consumer spending. Additionally, while its current leverage is conservative, the $1.215 billion in outstanding debt could become a concern if interest rates rise further. However, FCPT's strong liquidity and conservative leverage ratios provide a buffer, and its long-term leases insulate it from short-term economic volatility.

Final Verdict: Buy for Income and Growth

Four Corners Property Trust is a rare breed: a REIT that delivers both high yield and disciplined growth. Its Q2 results, strategic acquisitions, and balance sheet strength make it a compelling addition to a diversified portfolio. For long-term investors, the key takeaway is clear: FCPT is not just surviving in the current environment—it's thriving. With a forward-looking strategy that prioritizes quality over quantity, this REIT is well-positioned to reward shareholders with both dividends and capital gains.

Now is the time to consider FCPT for those who want to build a fortress of income and growth in a world where both are increasingly hard to find.