Four Corners Property Trust's Q4 2024: Unpacking Contradictions in Acquisition Strategies and Lease Expectations

These are the key contradictions discussed in Four Corners Property Trust, Inc.'s latest 2024Q4 earnings call, specifically including: Acquisition Strategy and Capital Raise, Lease Rollover Expectations, Acquisition Strategy and Underwriting Criteria, and Cost of Capital and Yield Requirements:



Strong Financial Performance:
- Four Corners Property Trust (FCPT) reported Q4 FFO of $0.44 per share, up 2.3% from Q4 2023, and full-year 2024 AFFO per share of $1.73, up 3.6% from 2023.
- The growth was driven by strong cash rental income, which increased by 6.6% in Q4 and 8.8% for the full year, supported by high collection rates and occupancy.

Capital Sourcing and Balance Sheet Strength:
- FCPT raised $318 million of equity during the year and $102 million in Q4, extending its credit facility with increased revolver capacity and maintaining a conservative pro forma net leverage of 5.1 times.
- This strong capital sourcing allows the company to fund acquisitions while maintaining a healthy fixed charge coverage ratio of 4.5 times.

Investment Activity and Strategic Focus:
- FCPT acquired $265 million of assets at a blended 7.1% cap rate in 2024, with a significant proportion of acquisitions occurring in the second half of the year.
- The company focused on sectors with strong, nationally branded tenants, such as casual dining and medical retail, to minimize risk and enhance return on investment.

Diversification and Portfolio Management:
- FCPT achieved significant diversification with its top three tenants – Olive Garden, LongHorn, and Chili's – representing 34%, 10%, and 7% of ABR, respectively, while Darden's brands became 48% of the portfolio.
- The company managed lease maturities effectively, reducing 2025 lease maturities from 2.2% to 1.1% of ABR, and renewing or retenanting 95% of 2024 lease expirations.