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Four Corners on Buyout Spree, Acquires 2 Seritage Properties

Zacks Equity Research

Four Corners Property Trust FCPT recently shelled out $7 million for the acquisition of two properties from Seritage Growth Properties. This move comes as part of its portfolio-expansion efforts through the Seritage transaction which was announced last October and expanded last month.

Being located in highly trafficked and populated corridors in California and Utah, the properties are likely to keep witnessing solid demand. Currently, these properties are leased to the brands’ corporate entities and include an auto services center operated by American Automobile Association (“AAA”) and an Arby’s restaurant. The leases have a weighted average lease term of roughly nine years. Moreover, the purchases seem strategic, with the transaction being priced at a cap rate in range with its previous transactions.

This August, Four Corners announced its outparcel portfolio growth with Seritage Growth Properties, signing an amendment to the deal originally announced last October, for acquiring nine additional single tenant outparcel properties from Seritage for $27.3 million. The nine outparcels included four restaurant brands, three bank branches and two retail brands. The transaction will take place in tranches, with the majority closing this year and the rest in 2021.

Primarily engaged in the ownership of high-quality net-leased restaurant properties, Four Corners maintains an investment-grade financial position and seeks solid acquisition opportunities. With the latest acquisition, aggregate portfolios between Four Corners Property Trust and Seritage totaled 32 properties for $96 million, of which 17 properties worth $55 million have closed so far.

While the pandemic has hit the restaurant industry hard, the reopening of 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 acquisition of additional real estate to lease, on a net basis, for use in the restaurant and retail industries.

In addition, the company’s rent collection from tenants has been strong. As of Jul 29, it managed to collect 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 2.2% over the past three months, while its industry has declined 4.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Stocks to Consider

The Zacks Consensus Estimate for Duke Realty Corporation’s DRE 2020 funds from operations (FFO) per share has been revised 2.8% upward to $1.49 over the past month. The stock currently carries a Zacks Rank #2.

Industrial Logistics Properties Trust’s ILPT FFO per share estimate for the ongoing year moved 1.6% north to $1.87 over the past month. The company currently carries a Zacks Rank of 2.

Omega Healthcare Investors’ OHI FFO per share estimate for the current year has moved marginally upward to $3.16 over the past week. It currently carries a Zacks Rank of 2.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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Duke Realty Corporation (DRE) : Free Stock Analysis Report
 
Omega Healthcare Investors, Inc. (OHI) : Free Stock Analysis Report
 
Four Corners Property Trust, Inc. (FCPT) : Free Stock Analysis Report
 
Industrial Logistics Properties Trust (ILPT) : Free Stock Analysis Report
 
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