Four Corners (FCPT) Boosts Portfolio With Strategic Buyouts
Four Corners Property Trust FCPT recently acquired a dual-tenant Aspen Dental and WellNow Urgent Care property located in a retail corridor in New York for $3.3 million. The move is in line with the company’s portfolio-expansion efforts, with real estate leased to strong credit operators.
The property is occupied under a long-term net lease basis and was priced at a cap rate in range with previous FCPT transactions. The property is likely to generate steady revenues over the long term, making Four Corners’ latest buyout a strategic fit. The company’s stocks gained marginally, followed by the news of its recent acquisition.
The purchase diversifies and strengthens Four Corners’ portfolio, benefiting both the business and its stockholders.
Additionally, the company recently announced the purchase of a Covenant Health Emergency Room for $8.7 million. The property is located in a strong retail corridor in Texas and is corporate-operated under a net lease along with an approximate remaining term of seven years. The transaction was priced at a 7.0% cap rate on rent as of the closing date, excluding transaction costs.
Last month, Four Corners announced the purchase of four newly built properties for $17.9 million. The acquired portfolio comprises eight renowned brands and nine lease agreements. It includes Starbucks, Aspen Dental, Bronson Health, Great Clips, Mattress Firm, Oak Street Health, Taco Bell and WellNow Urgent Care. These four newly built properties, situated in strong retail corridors in Michigan and Indiana, are occupied under long-term net leases.
Another noteworthy purchase includes the acquisition of 13 Darden restaurant properties, consisting of 12 Cheddar's Scratch Kitchen properties and one Olive Garden property. The purchase price for these properties amounted to $79.5 million on initial full-year cash rent of around $5 million. This acquisition boosted Four Corners’ total investment to $269.1 million from the beginning of the year through Jul 6 for 71 properties. These strategic acquisitions broaden its footprint in various sectors and ensure portfolio diversification.
Hence, Four Corners is well-positioned to generate consistent rental income and deliver value to shareholders. Moreover, these acquisitions align with the REIT’s strategy of acquiring high-quality, net-leased properties and expanding its presence in attractive markets.
However, a high-interest-rate environment poses potential challenges, despite the impressive growth witnessed by the company. High interest rates could raise the cost of borrowing for future acquisitions, potentially slowing down its expansion efforts. However, its strategy of investing in properties with strong credit operators and long-term leases is likely to provide some buffer against these headwinds.
Shares of this Zacks Rank #3 (Hold) company have declined 9.9% in the past six months compared with the industry's fall of 11.3%.
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Stocks to Consider
Some better-ranked stocks from the REIT sector are Ventas VTR and EastGroup Properties EGP, 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 Ventas’ 2023 funds from operations (FFO) per share has risen marginally over the past month to $3.
The Zacks Consensus Estimate for EastGroup Properties’ current-year FFO per share has moved marginally north over the past month to $7.58.
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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