Four Corners (FCPT) on Acquisition Spree, Buys Virginia Asset
Shares of Four Corners Property Trust FCPT were marginally up on May 15 regular trading session on the NYSE after it recently shelled out $3.3 million to acquire a Chili’s property located in a strong retail corridor in Virginia. The move aligns with the FCPT’s portfolio-expansion efforts, with real estate leased to strong credit operators.
The property is corporate-operated under a triple net lease with around three years of term remaining. Priced at a cap rate of 6.7%, excluding transaction costs, the buyout seems a strategic fit for FCPT. The portfolio is likely to generate steady revenues over the long term.
It also announced the buyout of a National Veterinary Associates (“NVA”) property in Alaska for $637,000. The property is corporate-operated under a new triple net lease to NVA with 15 years of term and three, five-year options and annual rent increases of 2%. Based on FCPT’s total basis in the property, the transaction was priced at a 7.3% entry cap rate, excluding transaction costs.
Of late, this real estate investment trust (REIT), mainly engaged in the ownership and acquisition of high-quality, net-leased restaurant and retail properties, has been on an acquisition spree.
This May, the company acquired a Brookshire Brothers grocery store property located in a strong retail corridor in Texas for $3 million. The property is occupied under a long-term, triple net lease with around four years of term remaining and priced at a cap rate of 6.8%, excluding transaction costs.
Moreover, in April, FCPT announced the acquisition of a NAPA Auto Parts property located in a strong retail corridor in Nebraska for $1.3 million. The property, occupied under a net lease, has roughly two years of term remaining and was priced at a cap rate of 7%, excluding transaction costs.
In the same month, FCPT completed the buyout of an Arby property, located in a highly trafficked corridor in Kentucky, for $1.2 million. Furthermore, the company purchased a VillageMD property in a highly trafficked corridor in Illinois for $2.6 million. It also concluded the buyout of a HCA Emergency Room for $4.6 million and a newly constructed WellNow Urgent Care property for $2.4 million, located in strong retail corridors of Texas and Indiana, respectively.
Also, as part of its capital-recycling efforts, FCPT announced the disposition of a Burger King property in Alabama for $2.4 million in February 2023 and the selloff of a Red Lobster property in North Dakota for $4.7 million in January 2023. The company plans to redeploy the proceeds into new investment prospects in sync with its thresholds.
The buyouts seem a strategic fit for Four Corners and are likely to generate steady revenues over the long term. However, increasing interest rates and macroeconomic uncertainty are raising concerns.
FCPT currently carries a Zacks Rank #4 (Sell).
Its shares have lost 3.1% in the past six months compared with the real estate market’s fall of 4.5%.
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Stocks to Consider
Some better-ranked stocks from the REIT sector are Iron Mountain IRM, Host Hotels & Resorts HST and Stag Industrial STAG, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Iron Mountain’s 2023 FFO per share is pegged at $3.96.
The Zacks Consensus Estimate for Host Hotels’ current-year FFO per share is pegged at $1.89.
The Zacks Consensus Estimate for Stag Industrial’s ongoing year’s FFO per share is pegged at $2.25.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
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