FCPT's Strategic Acquisition of Outback Steakhouse Property Bolsters Portfolio Resilience

Four Corners Property Trust (FCPT), a REIT specializing in net-leased restaurant and retail properties, has expanded its portfolio with the acquisition of an Outback Steakhouse property in Oklahoma for $1.6 million. This transaction, part of FCPT’s disciplined growth strategy, highlights the company’s focus on high-quality, income-generating assets while diversifying its tenant base.

The property, leased to Outback Steakhouse under a corporate-guaranteed, triple-net lease, offers FCPT a stable cash flow stream with approximately four years remaining on the lease term. Triple-net leases, which require tenants to cover property taxes, insurance, and maintenance costs, are a core component of FCPT’s model, minimizing operational risk and ensuring predictable earnings.

Strategic Rationale: Diversification and Leverage

FCPT’s portfolio now includes 1,115 properties across 47 states, anchored by leases averaging 7.6 years. The Outback acquisition aligns with its strategy of targeting long-term, net-leased assets with strong tenant credit. Outback’s corporate guarantee adds credibility, as the brand is part of Bloomin’ Brands, a publicly traded restaurant chain with a market cap of over $2 billion.

The transaction also underscores FCPT’s ability to capitalize on opportunities in secondary markets, where prime restaurant locations often trade at attractive cap rates. While the exact cap rate for this deal isn’t disclosed, similar FCPT acquisitions in 2025, such as six Whataburger properties, were priced at 6.8% cap rates, suggesting this Outback property offers comparable risk-adjusted returns.

Financial Performance and Capital Structure

FCPT’s financial health supports its acquisition pace. As of March 2024, the company reported $2.46 billion in total assets, with $1.137 billion in debt, yielding a leverage ratio of 4.9x net debt to adjusted EBITDAre (when including equity from forward sales). This conservative structure allows FCPT to pursue accretive deals while maintaining a 99.6% occupancy rate by square footage.

The Outback acquisition’s $1.6 million price tag is modest relative to FCPT’s $2.45 billion market cap, but it adds to a $23.7 million total of non-Burger King acquisitions in 2025, including six Whataburger properties and an Arkansas automotive service center. These deals collectively diversify FCPT’s tenant base, reducing reliance on any single industry.

Risks and Challenges

Despite its strengths, FCPT faces headwinds. Elevated interest rates have increased borrowing costs, pressuring the company to refinance its debt at higher rates. Its $350 million revolving credit facility and $225 million term loan, renegotiated in early 2025, aim to mitigate this risk but leave FCPT exposed to macroeconomic volatility.

Additionally, the Outback lease’s four-year remaining term introduces near-term rollover risk. While FCPT’s long-term lease portfolio mitigates this, shorter-term leases require careful tenant management to avoid vacancies.

Conclusion: A Solid Investment in Defensive Real Estate

FCPT’s acquisition of the Outback Steakhouse property reinforces its position as a defensive, cash-flow-driven REIT, well-suited to withstand economic cycles. With a 99.6% occupancy rate, a diversified tenant roster (149 brands), and a $1.42 annualized dividend supported by consistent AFFO growth, the company offers investors stability and growth potential.

Key data points further validate this thesis:
- Dividend Consistency: FCPT’s dividend has been raised in 18 of the past 19 quarters, reflecting management’s commitment to shareholder returns.
- Tenant Quality: 88% of FCPT’s portfolio is leased to investment-grade or corporate-backed tenants, reducing default risk.
- Valuation: At a price-to-FFO ratio of 11.2x (as of March 2024), FCPT trades at a discount to its five-year average of 12.5x, offering upside potential.

While interest rates and lease rollovers pose risks, FCPT’s disciplined acquisitions, strong balance sheet, and defensive sector focus position it as a recession-resistant play for income-oriented investors. The Outback deal is a small but strategic step toward further portfolio diversification, reinforcing FCPT’s status as a reliable REIT in a challenging environment.

Investors should monitor FCPT’s Q1 2025 earnings release on April 30, where management will likely discuss how recent acquisitions, including this Outback property, are contributing to AFFO and occupancy metrics. For now, the fundamentals remain intact: a resilient business model, solid financials, and a dividend that outperforms the S&P 500’s average yield.