Attached files
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EX-99.1 - EX-99.1 - Four Corners Property Trust, Inc. | d428643dex991.htm |
8-K - FORM 8-K - Four Corners Property Trust, Inc. | d428643d8k.htm |
Exhibit 99.2
Supplemental Financial & Operating Information
Six Months Ended June 30, 2017
Four Corners Property Trust, Inc. (FCPT or the Company, NYSE: FCPT) is primarily engaged in the acquisition and leasing of restaurant properties. FCPT seeks to grow its portfolio by acquiring additional real estate to lease, on a triple net basis, for use in the restaurant and related food services industry. As of June 30, 2017, FCPTs leased portfolio consists of 506 restaurant properties located in 44 states. The properties are 100% occupied under predominantly long-term, triple net leases with a weighted average remaining lease term of approximately 13.4 years and an estimated portfolio weighted average EBITDAR to lease rent coverage of 4.7x.
Table of Contents
Non-GAAP Definitions |
3 | |||
Consolidating Balance Sheets |
5 | |||
Consolidated Statements of Income |
6 | |||
FFO and AFFO Statement |
7 | |||
Leased Portfolio Summary |
8 | |||
Diversification by State |
9 | |||
Lease Expirations |
10 | |||
Debt Summary |
11 |
2
Non-GAAP Definitions and Cautionary Note Regarding Forward-Looking Statements:
This document includes certain non-GAAP financial measures that management believes are helpful in understanding our business, as further described below. Our definition and calculation of non-GAAP financial measures may differ from those of other REITs and therefore may not be comparable. The non-GAAP measures should not be considered an alternative to net income as an indicator of our performance and should be considered only a supplement to net income, and to cash flows from operating, investing or financing activities as a measure of profitability and/or liquidity, computed in accordance with GAAP.
Funds From Operations (FFO) is a supplemental measure of our performance which should be considered along with, but not as an alternative to, net income and cash provided by operating activities as a measure of operating performance and liquidity. We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (NAREIT). FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of property and undepreciated land and impairment write-downs of depreciable real estate, plus real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures. We also omit the tax impact of non-FFO producing activities from FFO determined in accordance with the NAREIT definition.
Our management uses FFO as a supplemental performance measure because, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We offer this measure because we recognize that FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our financial condition and results from operations, the utility of FFO as a measure of our performance is limited. FFO is a non-GAAP measure and should not be considered a measure of liquidity including our ability to pay dividends or make distributions. In addition, our calculations of FFO are not necessarily comparable to FFO as calculated by other REITs that do not use the same definition or implementation guidelines or interpret the standards differently from us. Investors in our securities should not rely on these measures as a substitute for any GAAP measure, including net income.
Adjusted Funds From Operations AFFO is a non-GAAP measure that is used as a supplemental operating measure specifically for comparing year over year ability to fund dividend distribution from operating activities. AFFO is used by us as a basis to address our ability to fund our dividend payments. We calculate adjusted funds from operations by adding to or subtracting from FFO:
1. | Transaction costs incurred in connection with the acquisition of real estate investments |
2. | Non-cash stock-based compensation expense |
3. | Amortization of deferred financing costs |
4. | Other non-cash interest expense |
5. | Non-real estate depreciation |
6. | Merger, restructuring and other related costs |
7. | Impairment charges |
8. | Amortization of capitalized leasing costs |
9. | Straight-line rent revenue adjustment |
10. | Amortization of above and below market leases |
11. | Debt extinguishment gains and losses |
12. | Recurring capital expenditures and tenant improvements |
3
AFFO is not intended to represent cash flow from operations for the period, and is only intended to provide an additional measure of performance by adjusting the effect of certain items noted above included in FFO. AFFO is a widely-reported measure by other REITs; however, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to other REITs.
EBITDAR represents earnings before interest, taxes, depreciation, amortization and rent. Calculated as EBITDA plus rental expense.
EBITDAR to Lease Rent coverage is calculated by dividing our reporting tenants trailing 12-month EBITDAR by annual contractual rent.
Cautionary Note Regarding Forward-Looking Statements:
This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include all statements that are not historical statements of fact and those regarding the Companys intent, belief or expectations, including, but not limited to, statements regarding: operating and financial performance; and expectations regarding the making of distributions and the payment of dividends. Words such as anticipate(s), expect(s), intend(s), plan(s), believe(s), may, will, would, could, should, seek(s) and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. Forward-looking statements speak only as of the date on which such statements are made and, except in the normal course of the Companys public disclosure obligations, the Company expressly disclaims any obligation to publicly release any updates or revisions to any forward-looking statements to reflect any change in the Companys expectations or any change in events, conditions or circumstances on which any statement is based. Forward-looking statements are based on managements current expectations and beliefs and the Company can give no assurance that its expectations or the events described will occur as described. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements.
Factors that could have a material adverse effect on the Companys operations and future prospects or that could cause actual results to differ materially from the Companys expectations are included in the sections entitled Business, Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations of the Companys Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2017.
4
Consolidating Balance Sheet
As of June 30, 2017
(Unaudited)
(In thousands)
Real Estate Operations |
Restaurant Operations |
Elimination | Consolidated FCPT |
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ASSETS | ||||||||||||||||
Real estate investments: |
||||||||||||||||
Land |
$ | 437,974 | $ | 3,061 | $ | | $ | 441,035 | ||||||||
Buildings, equipment and improvements |
1,084,714 | 13,592 | | 1,098,306 | ||||||||||||
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Total real estate investments |
1,522,688 | 16,653 | | 1,539,341 | ||||||||||||
Less: accumulated depreciation |
(583,694 | ) | (6,219 | ) | | (589,913 | ) | |||||||||
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Total real estate investments, net |
938,994 | 10,434 | | 949,428 | ||||||||||||
Real estate held for sale |
1,691 | | | 1,691 | ||||||||||||
Cash and cash equivalents |
79,826 | 1,502 | | 81,328 | ||||||||||||
Deferred rent |
16,389 | | | 16,389 | ||||||||||||
Other assets |
4,963 | 494 | | 5,457 | ||||||||||||
Investment in subsidiary |
10,953 | | (10,953 | ) | | |||||||||||
Intercompany receivable |
38 | | (38 | ) | | |||||||||||
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Total Assets |
$ | 1,052,854 | $ | 12,430 | $ | (10,991 | ) | $ | 1,054,293 | |||||||
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LIABILITIES AND EQUITY | ||||||||||||||||
Liabilities: |
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Revolving facility ($350,000 available capacity) |
$ | | $ | | $ | | $ | | ||||||||
Term loan ($400,000, net of deferred financing costs) |
394,691 | | | 394,691 | ||||||||||||
Unsecured notes ($125,000, net of deferred financing costs) |
123,327 | | | 123,327 | ||||||||||||
Deferred rental revenue |
8,228 | | | 8,228 | ||||||||||||
Deferred tax liability |
157 | | | 157 | ||||||||||||
Dividends payable |
14,820 | | | 14,820 | ||||||||||||
Other liabilities |
3,027 | 1,905 | | 4,932 | ||||||||||||
Intercompany payable |
| 38 | (38 | ) | | |||||||||||
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Total liabilities |
544,250 | 1,943 | (38 | ) | 546,155 | |||||||||||
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Equity: |
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Preferred stock |
| | | | ||||||||||||
Common stock |
6 | | | 6 | ||||||||||||
Additional paid-in capital |
468,933 | 10,953 | (10,953 | ) | 468,933 | |||||||||||
Accumulated other comprehensive income |
1,059 | | | 1,059 | ||||||||||||
Noncontrolling interest |
7,717 | | | 7,717 | ||||||||||||
Retained earnings |
30,889 | (466 | ) | | 30,423 | |||||||||||
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Total equity |
508,604 | 10,487 | (10,953 | ) | 508,138 | |||||||||||
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Total Liabilities and Equity |
$ | 1,052,854 | $ | 12,430 | $ | (10,991 | ) | $ | 1,054,293 | |||||||
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5
Consolidated and Combined Statements of Income
Three and Six Months Ended June 30, 2017 and 2016
(Unaudited)
(In thousands, except shares and per share data)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues: |
||||||||||||||||
Rental revenue |
$ | 28,327 | $ | 26,192 | $ | 56,091 | $ | 52,385 | ||||||||
Restaurant revenue |
4,826 | 4,701 | 9,766 | 9,560 | ||||||||||||
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Total revenues |
33,153 | 30,893 | 65,857 | 61,945 | ||||||||||||
Operating expenses: |
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General and administrative |
3,459 | 2,508 | 6,316 | 5,826 | ||||||||||||
Depreciation and amortization |
5,426 | 5,101 | 10,829 | 10,288 | ||||||||||||
Restaurant expenses |
4,583 | 4,593 | 9,251 | 9,291 | ||||||||||||
Interest expense |
4,508 | 3,858 | 8,604 | 8,039 | ||||||||||||
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Total operating expenses |
17,976 | 16,060 | 35,000 | 33,444 | ||||||||||||
Other income |
34 | 18 | 39 | 78 | ||||||||||||
Realized gain on sale, net |
3,291 | | 3,291 | | ||||||||||||
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Income before income tax |
18,502 | 14,851 | 34,187 | 28,579 | ||||||||||||
Income tax (expense) benefit |
(61 | ) | (50 | ) | (106 | ) | 80,506 | |||||||||
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Net Income |
$ | 18,441 | $ | 14,801 | $ | 34,081 | $ | 109,085 | ||||||||
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Net income attributable to noncontrolling interest |
(128 | ) | | (245 | ) | | ||||||||||
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Net Income Available to Common Shareholders |
$ | 18,313 | $ | 14,801 | $ | 33,836 | $ | 109,085 | ||||||||
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Basic net income per share |
$ | 0.30 | $ | 0.25 | $ | 0.56 | $ | 2.02 | ||||||||
Diluted net income per share |
$ | 0.30 | $ | 0.25 | $ | 0.56 | $ | 1.84 | ||||||||
Weighted-average shares outstanding: |
||||||||||||||||
Basic |
60,319,521 | 59,830,284 | 60,125,477 | 54,102,565 | ||||||||||||
Diluted |
60,430,606 | 59,844,059 | 60,215,050 | 59,271,807 | ||||||||||||
Regular dividends declared per share |
$ | 0.2425 | $ | 0.2425 | $ | 0.4850 | $ | 0.4850 |
6
FFO and AFFO Statement
Three and Six Months Ended June 30, 2017 and 2016
(Unaudited)
(In thousands, except shares and per share data)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Funds from operations (FFO): |
||||||||||||||||
Net income |
$ | 18,441 | $ | 14,801 | $ | 34,081 | $ | 109,085 | ||||||||
Depreciation and amortization |
5,426 | 5,101 | 10,829 | 10,288 | ||||||||||||
Deferred tax benefit from REIT election |
| | | (80,409 | ) | |||||||||||
Realized gain on sales of real estate |
(3,291 | ) | | (3,291 | ) | | ||||||||||
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FFO (as defined by NAREIT) |
$ | 20,576 | $ | 19,902 | $ | 41,619 | $ | 38,964 | ||||||||
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Non-cash stock-based compensation |
704 | 429 | 1,198 | 742 | ||||||||||||
Non-cash amortization of deferred financing costs |
415 | 398 | 813 | 796 | ||||||||||||
Other non-cash interest expense |
11 | 55 | 63 | 435 | ||||||||||||
Straight-line rent |
(2,422 | ) | (2,595 | ) | (4,795 | ) | (5,191 | ) | ||||||||
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Adjusted funds from operations (AFFO) |
$ | 19,284 | $ | 18,189 | $ | 38,898 | $ | 35,746 | ||||||||
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Fully diluted shares outstanding (1) |
60,870,695 | 59,844,059 | 60,649,120 | 59,271,807 | ||||||||||||
FFO per diluted share |
$ | 0.34 | $ | 0.33 | $ | 0.69 | $ | 0.66 | ||||||||
AFFO per diluted share |
$ | 0.32 | $ | 0.30 | $ | 0.64 | $ | 0.60 |
(1) | Assumes the issuance of common shares for OP units held by non-controlling partners. |
7
Leased Portfolio Summary
As of June 30, 2017
Second |
Properties |
Number of |
Total |
Cash Base |
Percentage of |
Avg. Rent |
EBITDAR |
Lease Term |
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Existing properties |
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Olive Garden |
299 | 2,556 | $ | 70,892 | 67.4 | % | $ | 28 | 5.0x | 13.3 | ||||||||||||||||||||
LongHorn Steakhouse |
104 | 579 | 19,038 | 18.1 | % | 33 | 4.4x | 12.2 | ||||||||||||||||||||||
Other Brands - Darden |
13 | 126 | 4,676 | 4.4 | % | 37 | 4.2x | 11.7 | ||||||||||||||||||||||
Other Brands - non-Darden |
68 | 214 | 7,286 | 6.9 | % | 34 | 2.7x | 16.0 | ||||||||||||||||||||||
Properties acquired in Q2 2017(4) |
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2 Transactions |
23 | 111 | 3,565 | 3.4 | % | 32 | 2.7x | 19.8 | ||||||||||||||||||||||
Properties sold |
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Olive Garden |
(1 | ) | (9 | ) | (265 | ) | -0.3 | % | 29 | 3.5x | 15.3 | |||||||||||||||||||
Lease terminations |
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No terminations in Q2 2017 |
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Total/Weighted Avg. |
506 | 3,577 | $ | 105,192 | 100.0 | % | $ | 29 | 4.7x | 13.4 | ||||||||||||||||||||
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(1) | Current scheduled minimum contractual rent as of 6/30/2017. |
(2) | EBITDAR Coverage is calculated by dividing our tenants estimated trailing 12-month EBITDAR by annual contractual cash rent paid to FCPT. EBITDAR is defined as earnings before interest, income taxes, depreciation, amortization and rent. EBITDAR is derived from the most recent data from tenants who disclose this information, representing approximately 98% of our run-rate rental income. For Darden, EBITDAR represents estimated EBITDA plus rental expense. EBITDA is derived by multiplying the most recent individual property sales information reported by Darden twice annually to FCPT times the brand average EBITDA margin reported by Darden in its most recent public filing. FCPT does not independently verify financial information provided by its tenants. |
(3) | Lease term weighted by cash base rent. |
(4) | FCPT acquired 23 properties in Q2 2017 consisting of the following brands: Bob Evans (16) Burger King (7). |
8
Leased Portfolio Diversification by State
As of June 30, 2017
State |
# of Properties |
% of Annual |
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FL |
44 | 11.1 | % | |||||
TX |
47 | 10.9 | % | |||||
GA |
44 | 7.8 | % | |||||
OH |
40 | 6.2 | % | |||||
MI |
26 | 3.8 | % | |||||
TN |
20 | 3.3 | % | |||||
NC |
17 | 3.1 | % | |||||
CA |
10 | 3.0 | % | |||||
WI |
16 | 3.0 | % | |||||
PA |
14 | 2.9 | % | |||||
IN |
27 | 2.8 | % | |||||
IL |
17 | 2.6 | % | |||||
VA |
15 | 2.5 | % | |||||
MS |
12 | 2.3 | % | |||||
AL |
12 | 2.3 | % | |||||
NY |
11 | 2.2 | % | |||||
MD |
12 | 2.1 | % | |||||
SC |
9 | 1.9 | % | |||||
KY |
10 | 1.9 | % | |||||
IA |
10 | 1.8 | % | |||||
AZ |
8 | 1.8 | % | |||||
NV |
6 | 1.7 | % | |||||
MN |
8 | 1.7 | % | |||||
CO |
7 | 1.5 | % | |||||
OK |
7 | 1.5 | % | |||||
AR |
7 | 1.3 | % | |||||
KS |
5 | 1.2 | % | |||||
LA |
6 | 1.2 | % | |||||
WV |
6 | 1.2 | % | |||||
MO |
6 | 1.0 | % | |||||
14 States |
27 | 8.4 | % | |||||
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Grand Total |
506 | 100.0 | % | |||||
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9
Lease Expirations
As of June 30, 2017
Leases |
Number of Properties |
Cash Base Rent ($ in thousands)(1) |
Total Square Footage (in thousands) |
Percent of Total Expiring Annual Rent |
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2017 |
| | | 0.0 | % | |||||||||||
2018 |
| | | 0.0 | % | |||||||||||
2019 |
| | | 0.0 | % | |||||||||||
2020 |
2 | 130 | 6 | 0.1 | % | |||||||||||
2021 |
1 | 87 | 2 | 0.1 | % | |||||||||||
2022 |
1 | 59 | 3 | 0.1 | % | |||||||||||
2023 |
2 | 207 | 5 | 0.2 | % | |||||||||||
2025 |
1 | 117 | 4 | 0.1 | % | |||||||||||
2026 |
2 | 234 | 7 | 0.2 | % | |||||||||||
2027 |
71 | 15,957 | 520 | 15.2 | % | |||||||||||
2028 |
74 | 17,027 | 539 | 16.2 | % | |||||||||||
2029 |
69 | 15,080 | 523 | 14.3 | % | |||||||||||
2030 |
67 | 14,716 | 518 | 14.0 | % | |||||||||||
2031 |
60 | 13,375 | 480 | 12.7 | % | |||||||||||
2032 |
46 | 10,309 | 363 | 9.8 | % | |||||||||||
2033 |
42 | 9,808 | 365 | 9.3 | % | |||||||||||
2034 |
4 | 510 | 13 | 0.5 | % | |||||||||||
2035 |
1 | 173 | 3 | 0.2 | % | |||||||||||
2036 |
40 | 3,841 | 115 | 3.7 | % | |||||||||||
2037 |
23 | 3,565 | 111 | 3.4 | % | |||||||||||
Vacant |
| | | 0.0 | % | |||||||||||
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Total |
506 | 105,192 | 3,577 | 100 | % | |||||||||||
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(1) | Current scheduled minimum contractual rent as of 6/30/2017. |
10
Debt Summary
(In thousands)
As of June 30, 2017
Debt Type |
Maturity Date |
Principal Balance as of June 30, 2017 |
% of Debt | Cash Interest |
Weighted Average Maturity (Yrs.) |
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Credit Facility |
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Revolving Facility(1) |
November 9, 2019 | | | 2.3 | ||||||||||||
Term Loan(2) |
November 9, 2020 | $ | 400,000 | 76.2 | % | 3.06% | 3.3 | |||||||||
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Principal Amount | 400,000 | |||||||||||||||
Deferred Financing Costs |
(5,309 | ) | ||||||||||||||
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Carrying Value | 394,691 | |||||||||||||||
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Unsecured Notes |
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4.68% 7-Year Note |
June 7, 2024 | 50,000 | 9.5 | % | 4.68% | 6.9 | ||||||||||
4.93% 10-Year Note |
June 7, 2027 | 75,000 | 14.3 | % | 4.93% | 9.9 | ||||||||||
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Principal Amount | 125,000 | |||||||||||||||
Deferred Financing Costs |
(1,673 | ) | ||||||||||||||
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Carrying Value | 123,327 | |||||||||||||||
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Mortgages Payable(3) |
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None |
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Total/Weighted Average |
$ | 525,000 | 100.0 | % | 3.48% | 4.6 | ||||||||||
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Fixed Rate |
525,000.00 | 100 | % | |||||||||||||
Variable Rate |
| 0 | % |
(1) | FCPT has a $350 million unsecured revolving credit facility with an initial term expiration on November 9, 2019 with two six-month extension options. |
(2) | Borrowings under the tem loan accrue interest at a rate of 6-month LIBOR plus 1.70%. FCPT has entered into interest rate swaps which fix the per annum interest rate at 3.06%. |
(3) | As of June 30, 2017, all FCPT properties are unencumbered. |
(4) | Excludes deferred financing costs on the credit facility and unsecured notes. |
11