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EX-99.1 - PRESS RELEASE - Four Corners Property Trust, Inc.d282935dex991.htm
8-K - FORM 8-K - Four Corners Property Trust, Inc.d282935d8k.htm

Exhibit 99.2

 

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Supplemental Financial & Operating Information

Quarter Ended - September 30, 2016

 

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Four Corners Property Trust, Inc. (“FCPT” or the “Company”, NYSE: FCPT), headquartered in Mill Valley, CA, is primarily engaged in the acquisition and leasing of restaurant properties. FCPT seeks 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 September 30, 2016, FCPT’s leased portfolio consists of 434 restaurant properties located in 44 states. The properties are 100% occupied under long-term, triple net leases with a weighted average remaining lease term of approximately 13.8 years and an estimated portfolio weighted average EBITDAR to Lease Rent coverage of 4.2x.

 

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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   

Leased Portfolio Summary

     8   

Diversification by State

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

 

  2. Non-cash stock-based compensation expense

 

  3. Amortization of deferred financing costs

 

  4. Other non-cash interest expense

 

  5. Non-real estate depreciation

 

  6. Merger, restructuring and other related costs

 

  7. Impairment charges

 

  8. Amortization of capitalized leasing costs

 

  9. Straight-line rent revenue adjustment

 

  10. Amortization of above and below market leases

 

  11. Debt extinguishment gains and losses

 

  12. Recurring capital expenditures and tenant improvements

 

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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,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 22, 2016.

 

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Consolidating Balance Sheet

September, 30 2016

(Unaudited)

(In thousands, except shares and per share data)

 

     Real Estate
Operations
    Restaurant
Operations
    Elimination     Consolidated
FCPT
 
ASSETS         

Real estate investments:

        

Land

   $ 402,184      $ 3,061      $ —        $ 405,245   

Buildings, equipment and improvements

     988,858        13,535        —          1,002,393   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total real estate investments

     1,391,042        16,596        —          1,407,638   

Less: accumulated depreciation

     (577,116     (5,754     —          (582,870
  

 

 

   

 

 

   

 

 

   

 

 

 

Total real estate investments, net

     813,926        10,842        —          824,768   

Real estate held for sale

     12,318        —          —          12,318   

Cash and cash equivalents

     15,804        3,066        —          18,870   

Deferred rent

     9,299        —          —          9,299   

Other assets

     765        365        —          1,130   

Investment in subsidiary

     10,953        —          (10,953     —     

Intercompany receivable

     1,872        —          (1,872     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Assets

   $ 864,937      $ 14,273      $ (12,825   $ 866,385   
  

 

 

   

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

  

     

Liabilities:

        

Notes payable, net of deferred financing costs

   $ 393,496      $ —        $ —        $ 393,496   

Derivative liabilities

     6,594        —          —          6,594   

Deferred rental revenue

     7,885        —          —          7,885   

Deferred tax liability

     196        —          —          196   

Dividends payable

     14,510        —          —          14,510   

Other liabilities

     2,532        1,808        —          4,340   

Intercompany payable

     —          1,872        (1,872     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     425,213        3,680        (1,872     427,021   
  

 

 

   

 

 

   

 

 

   

 

 

 

Stockholders’ equity:

        

Preferred stock

     —          —          —          —     

Common stock

     6        —          —          6   

Additional paid-in capital

     437,838        10,953        (10,953     437,838   

Retained earnings

     8,338        (360     —          7,978   

Accumulated other comprehensive loss

     (6,458     —          —          (6,458
  

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     439,724        10,593        (10,953     439,364   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 864,937      $ 14,273      $ (12,825   $ 866,385   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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Consolidated and Combined Statements of Operations

Three Months and Nine Months Ended September 30, 2016 and 2015

(Unaudited)

(In thousands, except shares and per share data)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2016     2015     2016      2015  

Revenues:

         

Rental income

   $ 26,373      $ —        $ 78,836       $ —     

Restaurant revenues

     4,443        4,413        14,003         13,927   
  

 

 

   

 

 

   

 

 

    

 

 

 

Total revenues

     30,816        4,413        92,839         13,927   

Operating expenses:

         

General and administrative

     2,608        —          8,434         —     

Depreciation and amortization

     5,059        208        15,347         605   

Restaurant expenses

     4,308        4,088        13,600         12,936   

Interest expense

     3,549        —          11,588         —     
  

 

 

   

 

 

   

 

 

    

 

 

 

Total operating expenses

     15,524        4,296        48,969         13,541   
  

 

 

   

 

 

   

 

 

    

 

 

 

Income before provision for income taxes

     15,292        117        43,870         386   

(Provision for) benefit from income taxes

     (52     (6     80,455         5   
  

 

 

   

 

 

   

 

 

    

 

 

 

Net Income

   $ 15,240      $ 111      $ 124,325       $ 391   
  

 

 

   

 

 

   

 

 

    

 

 

 

Basic net income per share

   $ 0.25        N/A (1)    $ 2.22         N/A (1) 

Diluted net income per share

   $ 0.25        N/A (1)    $ 2.09         N/A (1) 

Regular dividends declared per common share

   $ 0.2425        N/A (1)    $ 0.7275         N/A (1) 

Weighted-average shares outstanding:

         

Basic

     59,832,824        N/A (1)      56,026,594         N/A (1) 

Diluted

     59,863,109        N/A (1)      59,469,008         N/A (1) 

 

(1) Due to the material change in the Company’s operations as a result of our formation transaction in November 2015, management does not consider presentation of income per share for the pre-formation period to be meaningful.

 

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FFO and AFFO Statement

Three Months and Nine Months Ended September 30, 2016

(Unaudited)

(In thousands, except shares and per share data)

 

     Three Months Ended
September 30, 2016
    Nine Months Ended
September 30, 2016
 

Funds from operations (FFO):

    

Net income attributable to stockholders in accordance with GAAP

   $ 15,240      $ 124,325   

Depreciation and amortization

     5,059        15,347   

Deferred tax benefit from REIT election

     —          (80,410
  

 

 

   

 

 

 

FFO (as defined by NAREIT)

   $ 20,299      $ 59,262   
  

 

 

   

 

 

 

Non-cash stock-based compensation

     412        1,158   

Non-cash amortization of deferred financing costs

     398        1,194   

Other non-cash interest (income) expense

     (296     139   

Straight-line rent

     (2,609     (7,799
  

 

 

   

 

 

 

Adjusted funds from operations (AFFO)

   $ 18,204      $ 53,954   
  

 

 

   

 

 

 

Fully diluted shares outstanding

     59,863,109        59,469,008   

FFO per diluted share

   $ 0.34      $ 1.00   

AFFO per diluted share

   $ 0.30      $ 0.91   

 

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Leased Portfolio Summary

 

Third Quarter
2016

  

Properties

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

Foot ($)
     EBITDAR
Coverage(1)
     Lease Term
Before
Renewals
(Yrs)(2)
 
Existing properties                        
  

Olive Garden

     300         2,565         $70,144         73.1%         $27         4.5x         14.1   
  

LongHorn Steakhouse

     104         579         18,757         19.5%         32         3.3x         12.9   
  

Other Brands

     14         143         5,488         5.7%         38         3.4x         12.4   
Properties acquired in Q3 2016(3)                        
  

5 Transactions

     16         54         1,558         1.6%         29         2.7x         16.1   
Properties sold by location                        
  

No sales in Q3 2016

     —           —           —           —           —           —           —     
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Lease terminations by location                        
  

No terminations in Q3 2016

     —           —           —           —           —           —           —     
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
  

Total/Weighted Avg.

     434         3,341         $95,947         100.0%         $29         4.2x         13.8   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) EBITDAR Coverage is calculated by dividing our tenants estimated trailing 12-month EBITDAR by annual contractual cash rent paid to FCPT. EBITDAR is defined as earnings before interest, income taxes, depreciation, amortization, and rent. EBITDAR is derived from the most recent data from tenants who disclose this information, representing approximately 100% of our run-rate rental income. FCPT does not independently verify financial information provided by its tenants.
(2) Lease term weighted by cash base rent.
(3) FCPT acquired 16 properties in Q3 2016 consisting of the following brands: Pizza Hut (6), KFC (4), Buffalo Wild Wings (3), Arby’s (2), and Wendy’s (1).

 

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Leased Portfolio Diversification by State

 

State

   # of
Properties
     % of Annual Base
Rent
 

FL

     46         13.4

TX

     43         11.1

GA

     40         8.2

OH

     32         6.6

MI

     20         3.7

TN

     14         2.9

IN

     16         2.8

PA

     13         3.1

NC

     14         2.9

VA

     12         2.4

IL

     16         2.7

CA

     10         3.3

MD

     10         2.3

AL

     9         1.8

IA

     10         2.0

KY

     9         2.0

NY

     9         2.3

AZ

     8         1.9

MN

     8         1.8

SC

     8         1.9

WI

     8         1.8

AR

     7         1.4

CO

     6         1.5

LA

     6         1.3

MO

     6         1.1

MS

     6         1.2

NV

     6         1.9

OK

     6         1.4

KS

     5         1.3

WV

     5         1.3

14 states

     26         6.7
  

 

 

    

 

 

 

Total

     434         100.0
  

 

 

    

 

 

 

 

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Lease Expirations

 

Leases
Expiring In

   Number of
Properties
     Expiring Base
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

     1       $ 137         4         0.1

2027

     70         15,626         516         16.3

2028

     73         16,674         535         17.4

2029

     68         15,440         534         16.1

2030

     67         14,498         518         15.1

2031

     59         13,064         477         13.6

2032

     41         9,639         351         10.0

2033

     43         9,963         374         10.4

2034

     2         228         6         0.2

2035

     —           —           —           —     

2036

     10         678         27         0.8

Vacant

     —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     434       $ 95,947         3,341         100.0
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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