FCPT's Strategic Acquisitions and Strong Rent Collection Rates Drive Growth in Q4 2024

Four Corners Property Trust Inc. (FCPT) reported its financial results for the fourth quarter and full year ended December 31, 2024, highlighting its strategic acquisitions and strong rent collection rates. The company's disciplined approach to capital raising and investing, coupled with its focus on maintaining liquidity and extending debt maturities, positions it well for future growth and shareholder value, particularly in a volatile market environment.



FCPT's strategic acquisitions in 2024 significantly contributed to its overall growth and performance. The company acquired $264.6 million worth of properties, with a weighted average lease term of 11.9 years, at an initial weighted average cash yield of 7.1%. This acquisition strategy allowed FCPT to expand its portfolio with high-quality, net-leased restaurant and retail properties, leased to diverse national brands at accretive pricing. The key takeaways from these transactions include:

1. Accretive pricing: FCPT successfully acquired properties at a blended cap rate of 7.1%, which was lower than the 7.5% cap rate of its existing portfolio. This indicates that the acquisitions were made at accretive pricing, contributing to the company's overall growth and profitability.
2. Diversification: The acquisitions included properties leased to diverse national brands, which helped FCPT diversify its tenant base and reduce the risk associated with relying on a single tenant or industry.
3. Long-term leases: The weighted average remaining lease term of 11.9 years provided FCPT with a stable and predictable revenue stream, as well as the opportunity to benefit from long-term appreciation in the value of the properties.
4. Momentum: FCPT ended the year with great momentum, closing on over $132 million of acquisitions in the fourth quarter alone. This demonstrates the company's ability to identify and capitalize on attractive investment opportunities in the market.



Strong Rent Collection Rates

FCPT's strong rent collection rates are primarily driven by its disciplined approach to capital raising and investing, as well as its strategic acquisitions of properties leased to diverse national brands at accretive pricing. The company's ability to maintain high occupancy rates and robust rent collection is a testament to its operational strength and the quality of its tenant base. To maintain this performance in the face of market volatility, FCPT should continue to focus on the following factors:

1. Diversified tenant base: FCPT's portfolio consists of a wide variety of tenants, including national brands and well-capitalized operators. This diversification helps mitigate the risk of relying on a single tenant or industry, reducing the impact of market fluctuations on rent collection.
2. Long-term leases: The company's properties are under long-term, net leases, with a weighted average remaining lease term of approximately 7.3 years. These long-term commitments provide a stable revenue stream and help insulate FCPT from short-term market volatility.
3. Strict underwriting criteria: FCPT maintains strict underwriting criteria for property acquisitions, focusing on quality real estate and tenants with strong financials. This approach helps ensure that the company's portfolio remains resilient during economic downturns.
4. Maintaining liquidity: FCPT has successfully raised significant debt and equity capital in recent months, boosting its liquidity and extending debt maturities. This financial flexibility allows the company to navigate market uncertainties and continue to grow its AFFO.
5. Investment in high-performing tenants: FCPT's portfolio includes high-performing tenants with proven track records, such as Brinker International (Chili's, Maggiano's Little Italy), Olive Garden, and Garden Fresh Restaurant Corp. These tenants have demonstrated consistent sales growth and strong financial performance, making them less likely to default on rent payments.
6. Avoidance of troubled tenants and sectors: FCPT has successfully avoided exposure to troubled tenants and sectors, such as Joann's, Zips Car Wash, and Car City. By focusing on high-quality tenants and properties, the company can minimize the risk of rent collection issues.

Maintaining Liquidity and Extending Debt Maturities

FCPT's focus on maintaining liquidity and extending debt maturities is a strategic move that positions the company for future growth and shareholder value, especially in a volatile market environment. This approach allows FCPT to have a strong financial foundation, enabling it to capitalize on opportunities and mitigate risks. Here's how this strategy benefits the company:

1. Access to capital for acquisitions: FCPT's liquidity position allows it to raise significant debt and equity capital, which it can use to fund acquisitions. In 2024, the company acquired $264.6 million worth of properties, demonstrating its ability to invest in growth opportunities. By maintaining liquidity, FCPT can continue to make strategic acquisitions, even in challenging market conditions.
2. Reduced reliance on short-term financing: Extending debt maturities helps FCPT reduce its reliance on short-term financing, which can be more expensive and less stable. This strategy allows the company to lock in lower interest rates and improve its overall cost of capital. For example, FCPT's cost of capital improved by 1.5% in 2024, enabling it to transact at appropriate pricing and improve its blended cap rate.
3. Flexibility to navigate market volatility: Maintaining liquidity and extending debt maturities provides FCPT with the flexibility to navigate market volatility. In a volatile environment, having access to capital and a low leverage profile allows the company to make strategic decisions, such as investing in high-quality properties or waiting for more attractive opportunities.
4. Supporting AFFO growth: FCPT's capital raising efforts and low leverage profile support its ability to achieve continued AFFO growth. By maintaining a strong financial position, the company can generate consistent cash flows, which it can reinvest in its portfolio or distribute as dividends to shareholders.

In conclusion, FCPT's strategic acquisitions and strong rent collection rates, coupled with its focus on maintaining liquidity and extending debt maturities, position the company for future growth and shareholder value, particularly in a volatile market environment. By continuing to focus on these factors, FCPT can maintain its strong performance and navigate market uncertainties effectively.