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Four Corners Boosts Portfolio with Asset Buyout from Seritage

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Four Corners Property Trust FCPT recently shelled out $3.1 million for the acquisition of a BJ’s Restaurant and Brewhouse property from Seritage Growth Properties SRG. This move comes as part of its portfolio-expansion efforts through the Seritage transaction which was announced in October 2019 and expanded last month.

The Maryland property is corporate-owned and is occupied under a net lease with roughly seven years of residual term.Being positioned in a highly trafficked retail corridor, this facility is likely to keep witnessing solid demand. Moreover, the buyout seems a strategic one, with the transaction being priced at a cap rate in range with its previous transactions.

Notably, in August, Four Corners amended its deal, which was originally announced last October, to acquire nine additional single-tenant outparcel properties from Seritage for $27.3 million. The transaction will take place in tranches, with the majority closing this year and the rest in 2021.

The nine outparcels comprise four restaurant brands, three bank branches and two retail brands. Among the restaurant brands are Arby’s, BJ’s Restaurant and Brewhouse, Popeyes, and Portillo’s. The non-restaurant tenants comprise three bank branches operated by the Bank of America BAC, Chase and Truist Bank of Truist Financial Corporation TFC, as well as Recreational Equipment, Inc., and an auto-services center operated by American Automobile Association (“AAA”).

With the properties in this transaction having contractual rent growth, net-lease structures and strong tenancy with credit-worthy operators, as well as a weighted average remaining term of roughly nine years, the move seems a strategic fit for the company.

Primarily engaged in the ownership of high-quality net-leased restaurant properties, Four Corners maintains an investment-grade financial position and seeks attractive acquisition opportunities. With the August expansion move, aggregate portfolios between Four Corners Property Trust and Seritage totaled 32 properties for $96 million, and considering the latest acquisition, 15 properties worth $48 million have been closed so far.

While the pandemic has hit the restaurant industry hard, the reopening of the economy is boosting hopes and things are now looking much better compared with late March, thanks to the recovery in sales. Moreover, the company is targeting growth of its portfolio through acquisitions of additional real estate to lease, on a net basis, for use in the restaurant and retail industries. Particularly, in the latest expansion move, four of the brands (AAA, Bank of America, Chase and Truist Bank) are new to the company’s portfolio.

In addition, the company’s rent collection from tenants has been strong. As of Jul 29, the company collected the July, June, May and April rent payments, totaling 99%, 91%, 90% and 95%, respectively, of its portfolio’s contractual base rent for those months.

Shares of this Zacks Rank #2 (Buy) company have appreciated 8.4% over the past three months, while its industry has declined 0.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Bank of America Corporation (BAC) : Free Stock Analysis Report
Seritage Growth Properties (SRG) : Free Stock Analysis Report
Four Corners Property Trust, Inc. (FCPT) : Free Stock Analysis Report
Truist Financial Corporation (TFC) : Free Stock Analysis Report
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