FCPT’s Strategic Auto Services Acquisition Bolsters Portfolio Resilience

Four Corners Property Trust (FCPT), a REIT specializing in net-leased properties for essential services, announced its latest move in expanding its industrial footprint with the acquisition of three Express Oil Change & Tire Engineers locations for $9.5 million. The deal, structured at a 6.6% cap rate, underscores FCPT’s disciplined growth strategy—focusing on long-term leases, creditworthy tenants, and high-traffic locations. This acquisition adds automotive service to its portfolio of quick-service restaurants and retail properties, a diversification play that aligns with rising demand for essential services.

The properties, all leased to the corporate entity of Express Oil Change, offer 19 years of remaining lease term and triple-net terms, shielding FCPT from operational costs. Georgia’s strong demographic trends and the tenant’s stability position this as a low-risk, high-yield addition.

A REIT in Expansion Mode

FCPT has been aggressive in 2025, with the Express Oil Change acquisition following $56 million in prior Q1 purchases. This reflects its focus on acquiring defensive assets in sectors like automotive and quick-service restaurants, which have proven resilient during economic shifts. The REIT’s Q1 results highlight its financial strength:

• Occupancy: 99.4% across its 1,221-property portfolio, with 7.3 years of weighted-average lease term.
• Liquidity: $617 million, including $245 million from forward sale agreements and a $350 million undrawn revolver.
• Leverage: Net debt/adjusted EBITDAre of 5.6x, the lowest in seven years.

Why This Deal Matters

The Express Oil Change properties are not just incremental additions—they reinforce FCPT’s thesis of owning assets critical to daily life. Auto service centers, like fast-food restaurants, thrive in both booms and recessions. The 6.6% cap rate, while modest, reflects market realities post-pandemic, balancing yield with the security of long-term leases.

Management’s emphasis on “accretive acquisitions” is key here. With $1.2 billion in total debt and conservative refinancing plans, FCPT has the flexibility to grow without overleveraging. The Q1 AFFO per share rose to $0.44, up 2% year-over-year, while the dividend remains stable at $0.3550—a 3% increase from 2024—bolstering investor confidence.

Risks on the Horizon

No strategy is without risks. FCPT’s AFFO payout ratio rose to 111%, suggesting dividend coverage is tightening. However, the REIT’s liquidity buffer and low leverage provide a safety net. The slight dip in occupancy at Firm Capital’s Canadian operations (a separate entity) serves as a reminder that geographic diversification carries its own risks, but FCPT’s U.S.-focused portfolio remains robust.

Conclusion: A Steady Hand in Volatile Markets

FCPT’s acquisition of the Express Oil Change properties is a textbook example of opportunistic growth. By targeting a defensive sector with a creditworthy tenant, FCPT strengthens its income streams while maintaining a conservative balance sheet. With 99.5% rent collection in Q1 and a liquidity war chest of $617 million, the REIT is well-positioned to capitalize on further opportunities in 2025.

The data tells the story: FCPT has grown rental revenue by 8.4% year-over-year, executed its largest-ever Q1 acquisition volume, and reduced its leverage to a seven-year low. For income investors seeking stability, FCPT’s 5.08% dividend yield—backed by a portfolio of essential-service properties—offers compelling value in an uncertain market. This is a REIT building for the long haul, one oil change at a time.