Four Corners (FCPT) on Acquisition Spree, Buys $11.7M Assets
Four Corners Property Trust FCPT is on an acquisition spree. Recently, the company shelled out $3.7 million for the acquisition of a Texas Roadhouse property in Wisconsin, $1.4 million for a Bojangles’ property in North Carolina and $6.6 million for three Mo’Bettahs properties in Kansas, Missouri and Oklahoma. The acquisitions align with FCPT’s portfolio-expansion efforts, with real estate leased to strong credit operators.
The transaction for the Texas Roadhouse property, located in a strong retail corridor in Wisconsin under a triple net lease, was priced at a cap rate in range with prior FCPT deals. The Bojangles’ property, positioned in a strong retail corridor in North Carolina, is occupied under a triple net lease with around 10 years of residual term. This transaction was priced at a 6.7% cap rate on rent as of the closing date, excluding transaction costs.
Moreover, the three newly constructed Mo’Bettahs properties located in strong retail corridors in Kansas, Missouri and Oklahoma are occupied under a long-term, triple net lease with about 15 years of term remaining. This transaction was priced at a cap rate in range with prior FCPT transactions. Mo’Bettahs is a Hawaiian-style quick-service restaurant backed by Savory Brands and was established in 2008.
These acquisitions exemplify Four Corners' strategic growth plan, underlining its commitment to the ownership, acquisition and leasing of prime restaurants and retail properties to creditworthy operators. The long-term triple net lease assures the generation of steady revenues over the long term.
Bolstering its portfolio, in recent times, FCPT also shelled out $24.3 million for the purchase of five Oak Street Health properties. Located in strong retail corridors in Illinois and Indiana, the properties are corporate-operated under net leases.
Moreover, Four Corners has acquired three W.W. Williams properties for $10.3 million through a sale-leaseback deal. The properties situated in Michigan and Ohio are in strong industrial corridors and are corporate-operated under long-term, triple net leases with around 15 years of residual term.
In recent times, Four Corners has also made an agreement to acquire up to 14 Darden restaurant properties, including 13 Cheddar’s Scratch Kitchen properties and one Olive Garden property. The deal carries a purchase price of up to $85 million on an initial cash rent amounting to $5.35 million. It is slated for closure in the third quarter of 2023.
However, a high-interest-rate environment poses concerns for this Zacks Rank #3 (Hold) company in the near term. Shares of FCPT have declined 3.8% year to date, narrower than the industry's fall of 5.6%.
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Stocks to Consider
Some better-ranked stocks from the REIT sector are EastGroup Properties EGP and Innovative Industrial Properties IIPR, each presently 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 EastGroup Properties’ current-year funds from operations (FFO) per share has moved 1.6% north over the past two months to $7.56.
The Zacks Consensus Estimate for Innovative Industrial Properties’ 2023 FFO per share has moved 3.6% upward in the past two months to $8.66.
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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