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8-K - FORM 8-K - Four Corners Property Trust, Inc.d140918d8k.htm
EX-99.1 - PRESS RELEASE - Four Corners Property Trust, Inc.d140918dex991.htm

Exhibit 99.2

 

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Supplemental Financial & Operating Information

Year Ended

December 31, 2015

 

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Four Corners, headquartered in Mill Valley, CA, is an independent company primarily engaged in the acquisition and leasing of restaurant properties. Four Corners will seek to grow its portfolio by acquiring additional real estate to lease, on a triple net basis, for use in the restaurant and related food services industry. As of December 31, 2015, Four Corners’ portfolio consists of 424 restaurant properties located in 44 states. The properties are 100% occupied with 418 properties leased to Darden Restaurants under long-term, triple net leases with a weighted average remaining lease term of approximately 14.5 years and an estimated portfolio weighted average EBITDAR to Lease Rent coverage of 4.2x. The remaining six properties are owned and ground leased properties operated by a taxable REIT subsidiary of Four Corners under a franchise agreement with LongHorn Steakhouse.

 

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Table of Contents

 

Non-GAAP Definitions

     3   

Consolidated Balance Sheets

     5   

Consolidated Statements of Operations

     6   

FFO and AFFO Statement

     7   

Diversification by Brand

     8   

Diversification by Geography

     9   

Lease Expirations

     10   

 

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Non-GAAP Definitions and Cautionary Note Regarding Forward-Looking Statements:

This document includes certain non-GAAP financial measures that management believes are helpful in understanding our business, as further described below. Our definition and calculation of non-GAAP financial measures may differ from those of other REITs and therefore may not be comparable. The non-GAAP measures should not be considered an alternative to net income as an indicator of our performance and should be considered only a supplement to net income, and to cash flows from operating, investing or financing activities as a measure of profitability and/or liquidity, computed in accordance with GAAP.

Funds From Operations (“FFO”) is a supplemental measure of our performance which should be considered along with, but not as an alternative to, net income and cash provided by operating activities as a measure of operating performance and liquidity. We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”). FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of property and undepreciated land and impairment write-downs of depreciable real estate, plus real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures. We also omit the tax impact of non-FFO producing activities from FFO determined in accordance with the NAREIT definition.

Our management uses FFO as a supplemental performance measure because, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We offer this measure because we recognize that FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our financial condition and results from operations, the utility of FFO as a measure of our performance is limited. FFO is a non-GAAP measure and should not be considered a measure of liquidity including our ability to pay dividends or make distributions. In addition, our calculations of FFO are not necessarily comparable to FFO as calculated by other REITs that do not use the same definition or implementation guidelines or interpret the standards differently from us. Investors in our securities should not rely on these measures as a substitute for any GAAP measure, including net income.

Adjusted Funds From Operations “AFFO” is a non-GAAP measure that is used as a supplemental operating measure specifically for comparing year over year ability to fund dividend distribution from operating activities. AFFO is used by us as a basis to address our ability to fund our dividend payments. We calculate adjusted funds from operations by adding to or subtracting from FFO:

 

  1. Plus: Amortization of deferred financing costs

 

  2. Plus: Non-cash (stock based) compensation expense

 

  3. Plus: Non-real estate depreciation

 

  4. Plus: Impairment charges

 

  5. Plus: Below market debt amortization

 

  6. Plus: Non-cash expense on hedging instruments deemed ineffective

 

  7. Plus: Transaction costs incurred in connection with the acquisition of real estate investments

 

  8. Plus: Merger, restructuring and other related costs

 

  9. Plus: Amortization of capitalized leasing costs

 

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  10. Less: Straight line rent adjustment

 

  11. Less: Amortization of (above) and below market leases

 

  12. Less: Recurring capital expenditures and tenant improvements

 

  13. Less: Debt extinguishment gains (losses)

AFFO is not intended to represent cash flow from operations for the period, and is only intended to provide an additional measure of performance by adjusting the effect of certain items noted above included in FFO. AFFO is a widely reported measure by other REITs; however, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to other REITs.

EBITDAR represents earnings before interest, taxes, depreciation, amortization and rent. Calculated as EBITDA plus rental expense.

EBITDAR to Lease Rent coverage is calculated by dividing our reporting tenants’ trailing 12-month EBITDAR by annual contractual rent.

Cautionary Note Regarding Forward-Looking Statements:

This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include all statements that are not historical statements of fact and those regarding the Company’s intent, belief or expectations, including, but not limited to, statements regarding: operating and financial performance; and expectations regarding the making of distributions and the payment of dividends. Words such as “anticipate(s),” “expect(s),” “intend(s),” “plan(s),” “believe(s),” “may,” “will,” “would,” “could,” “should,” “seek(s)” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. Forward-looking statements speak only as of the date on which such statements are made and, except in the normal course of the Company’s public disclosure obligations, the Company expressly disclaims any obligation to publicly release any updates or revisions to any forward-looking statements to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any statement is based. Forward-looking statements are based on management’s current expectations and beliefs and the Company can give no assurance that its expectations or the events described will occur as described. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements. Factors that could have a material adverse effect on the Company’s operations and future prospects or that could cause actual results to differ materially from the Company’s expectations are included in the sections entitled “Business and Properties,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Information Statement filed as an exhibit to the Company’s Registration Statement on Form 10 filed with the Securities and Exchange Commission in final form on October 21, 2015.

 

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Consolidating Balance Sheets

December 31, 2015

(Unaudited)

(In thousands, except shares and per share data)

 

     Real Estate
Operations
    Restaurant
Operations
    Elimination     Consolidated
FCPT
 

ASSETS

        

Real estate investments:

        

Land

   $ 401,751      $ 3,061      $ —        $ 404,812   

Buildings, equipment and improvements

     978,912        13,506          992,418   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total real estate investments

     1,380,663        16,567        —          1,397,230   

Less: Accumulated depreciation

     (563,268     (5,271       (568,539
  

 

 

   

 

 

   

 

 

   

 

 

 

Total real estate investments, net

     817,395        11,296        —          828,691   

Cash and cash equivalents

     95,873        2,200        —          98,073   

Derivative assets

     165        —          —          165   

Deferred rent

     1,500        —          —          1,500   

Other assets

     610        398        —          1,008   

Intercompany receivable

     835        —          (835     —     

Investment in subsidiary

     10,953        —          (10,953     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Assets

   $ 927,331      $ 13,894      $ (11,788   $ 929,437   
  

 

 

   

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

        

Liabilities:

        

Notes payable ($400,000, net of $7,698 of deferred financing costs)

   $ 392,302      $ —        $ —        $ 392,302   

Derivative liabilities

     477        —          —          477   

Deferred rental revenue

     7,940        —          —          7,940   

Deferred tax liability

     80,881        —            80,881   

Other liabilities

     4,101        2,094        —          6,195   

Intercompany payable

     —          835        (835     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     485,701        2,929        (835     487,795   
  

 

 

   

 

 

   

 

 

   

 

 

 

Stockholders’ equity:

        

Preferred stock

     —          —          —          —     

Common stock

     4        —          —          4   

Additional paid-in capital

     436,697        10,953        (10,953     436,697   

Accumulated other comprehensive loss

     (316     —          —          (316

Retained earnings

     5,245        12        —          5,257   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     441,630        10,965        (10,953     441,642   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 927,331      $ 13,894      $ (11,788   $ 929,437   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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Consolidated and Combined Statements of Operations

Year Ended December 31, 2015

(Unaudited)

(In thousands, except shares and per share data)

 

     2015  

Revenues:

  

Rental income

   $ 15,134   

Restaurant revenues

     18,322   
  

 

 

 

Total revenues

     33,456   

Expenses:

  

General and administrative

     1,856   

Depreciation and amortization

     3,758   

Restaurant expenses

     16,996   

Interest expense

     2,203   
  

 

 

 

Total expenses

     24,813   
  

 

 

 

Income before provision for income taxes

     8,643   

Provision for income taxes

     (2,944
  

 

 

 

Net Income

   $ 5,699   
  

 

 

 

Basic net income per share

   $ 0.92   

Diluted net income per share

   $ 0.91   

Weighted-average shares outstanding1:

  

Basic

     6,206,375   

Diluted

     6,263,921   

Footnotes:

 

(1) Weighted average shares outstanding were calculated using the share count throughout 2015. Prior to November 9, 2015, there were no shares outstanding.

 

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FFO and AFFO Statement

Year Ended December 31, 2015

(Unaudited)

(In thousands, except shares and per share data)

 

     2015  

Net income attributable to stockholders in accordance with GAAP

   $ 5,699   

Depreciation and amortization

     3,758   
  

 

 

 

NAREIT funds from operations (FFO)

   $ 9,457   
  

 

 

 

Non-cash compensation expense

     13   

Amortization of deferred financing costs

     265   

Straight-line rent adjustment

     (1,500

Gains on hedging instruments due to hedge ineffectiveness

     (3
  

 

 

 

Adjusted funds from operations (AFFO)

   $ 8,232   
  

 

 

 

Fully diluted shares outstanding1

     6,263,921   

FFO per diluted share

     1.51   

AFFO per diluted share

     1.31   

Footnotes:

 

(1) Weighted average shares outstanding were calculated using the share count throughout 2015. Prior to November 9, 2015, there were no shares outstanding.

 

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Lease Portfolio Diversification by Brand

 

2015 Activity

  

Brand

   Number of
Four Corners
Properties
     Total
Square
Feet
(000s)
     Annual
Cash Base
Rent
     Percentage of
Total
Annualized
Base Rent

$(000s)
    Avg. Rent
Per Square
Foot ($)
     2015
EBITDAR
Coverage1
     Avg. Lease
Term
Before
Renewals
(Yrs)
     Number of
Renewal
Periods
 

Existing properties

  

                   
  

Olive Garden

     300         2,565       $ 70,144         74.3   $ 27         4.4x         14.8         Typically 5   
  

Longhorn SteakHouse

     104         579         18,757         19.9   $ 32         3.8x         13.8         Typically 5   
  

Bahama Breeze

     11         116         4,471         4.8   $ 39         3.8x         12.9         Typically 5   
  

Seasons 52

     2         18         699         0.7   $ 39         3.4x         14.3         Typically 5   
  

Wildfish Seafood

     1         9         318         0.3   $ 35         3.9x         12.8         Typically 5   
     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Properties acquired by location

                         
  

No acquisitions in 2015

     —           —           —           0.0   $ 0         0.0x         —           N/A   
     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Properties sold by location

                         
  

No sales in 2015

     —           —           —           0.0   $ 0         0.0x         —           N/A   
     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Lease terminations by location

                         
  

No terminations in 2015

     —           —           —           0.0   $ 0         0.0x         —           N/A   
     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 
  

Total/Weighted Avg.

     418         3,287       $ 94,389         100.0   $ 29         4.2x         14.5      
     

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Footnotes:

 

(1) 2015 EBITDAR Coverage reflects the ratio of EBITDAR to cash rent paid to Four Corners Property Trust. EBITDAR is defined as earnings before interest, income taxes, depreciation, amortization, and rent.

 

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Leased Portfolio Diversification by State

 

State

   # of
Properties
     % of Annual Base
Rent
 

FL

     46         13.6

TX

     42         11.2

GA

     40         8.4

OH

     32         6.7

MI

     16         3.5

TN

     14         3.0

IN

     13         2.6

PA

     13         3.2

NC

     12         2.7

VA

     12         2.5

IL

     11         2.2

CA

     10         3.3

MD

     10         2.3

AL

     9         1.9

IA

     9         1.8

KY

     9         2.0

NY

     9         2.3

AZ

     8         1.9

MN

     8         1.8

SC

     8         2.0

WI

     8         1.8

AR

     7         1.4

CO

     6         1.5

LA

     6         1.3

MO

     6         1.1

MS

     6         1.3

NV

     6         1.9

OK

     6         1.4

KS

     5         1.4

WV

     5         1.3

14 states

     26         6.7
  

 

 

    

 

 

 

Total

     418         100.0
  

 

 

    

 

 

 

 

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Lease Expirations

 

Leases

Expiring In:

   Number of
Properties
     Expiring Annual
Rent

($ in thousands)
     Total Square
Footage

(in thousands)
     Percent of Total
Expiring Annual
Rent
 

2016

     —           —           —             

2017

     —           —           —             

2018

     —           —           —             

2019

     —           —           —             

2020

     —           —           —             

2021

     —           —           —             

2022

     —           —           —             

2023

     —           —           —             

2024

     —           —           —             

2025

     —           —           —             

2026

     —           —           —             

2027

     70       $ 15,626         516         17

2028

     70         16,159         518         17

2029

     68         15,440         534         16

2030

     67         14,498         518         15

2031

     59         13,064         477         14

2032

     41         9,639         351         10

2033

     43         9,963         374         11

Vacant

     —           —           —             
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Properties

     418       $ 94,389         3,287         100
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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