Attached files
file | filename |
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8-K - 8-K (EARNINGS 3Q) - Four Corners Property Trust, Inc. | a8-k3q2017earnings.htm |
EX-99.1 - EXHIBIT 99.1 - Four Corners Property Trust, Inc. | fcpt2017q3earningspr1121.htm |
| FCPT | SEPTEMBER 20171
SUPPLEMENTAL F INANCIAL & OPERATING INFORMATION | SEPTEMBER 2017 w ww.fcpt .com
FOUR CORNERS PROPERTY TRUST
N YS E: FC PT
| FCPT | SEPTEMBER 20172
C A U T I O N A R Y N O T E R E G A R D I N G
F O R W A R D - L O O K I N G S T A T E M E N T S :
This press release contains forward-looking statements within the meaning of the federal securities laws. Forwardlooking 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 February 27, 2017.
| FCPT | SEPTEMBER 20173
TABLE OF CONTENTS
Financial Summary Page
Consolidating Balance Sheet 4
Consolidated Income Statement 5
FFO & AFFO Reconciliation 6
Net Asset Value Components 7
Capitalization & Key Credit Metrics 8
Debt Summary 9
Debt Covenants 10
Real Estate Portfolio Summary
Property Locations by Brand 11
Brand & Tenant Diversification 12
Geographic Diversification 13
Lease Maturity Schedule 14
Exhibits
Glossary and Non-GAAP Definitions 15
Reconciliation of Net Income to EBITDA 16
| FCPT | SEPTEMBER 20174
CONSOLIDATING BALANCE SHEET
As of 12/31/2016
($000s, except shares and per share data)
Unaudited
Real Estate
Operations
Restaurant
Operations Elimination
Consolidated
FCPT
Consolidated
FCPT
ASSETS
Real estate investments:
Land 438,401$ 3,061$ -$ 441,462$ 421,941$
Buildings, equipment and improvements 1,086,819 13,611 - 1,100,430 1,055,624
Total real estate investments 1,525,220 16,672 - 1,541,892 1,477,565
Less: accumulated depreciation (587,285) (6,324) - (593,609) (583,307)
Total real estate investments, net 937,935 10,348 - 948,283 894,258
Real estate held for sale 1,712 - - 1,712 -
Cash and cash equivalents 81,202 1,663 - 82,865 26,643
Deferred rent 18,877 - - 18,877 11,594
Other assets 9,548 489 - 10,037 4,656
Investment in subsidiary 10,962 - (10,962) - -
Intercompany receivable 177 - (177) - -
Total Assets 1,060,413$ 12,500$ (11,139)$ 1,061,774$ 937,151$
LIABILITIES AND EQUITY
Liabilities:
Term loan ($400,000, net of deferred financing costs) 395,089$ -$ -$ 395,089$ 393,895$
Revolving facility ($350,000 available capacity) - - - - 45,000
Unsecured notes ($125,000, net of deferred financing costs) 123,264 - - 123,264 -
Accrued interest payable 2,885 - - 2,885 1,134
Deferred rental revenue 7,964 - - 7,964 7,974
Deferred tax liability 164 - - 164 196
Dividends payable 14,820 - - 14,820 14,519
Other liabilities 1,948 1,957 - 3,905 4,316
Intercompany payable - 177 (177) - -
Total liabilities 546,134$ 2,134$ (177)$ 548,091$ 467,034$
Equity:
Preferred stock -$ -$ -$ -$ -$
Common stock 6 - - 6 6
Additional paid-in capital 469,571 10,962 (10,962) 469,571 438,864
ccumulated other comprehensive income 1,545 - - 1,545 207
Noncontrolling interest 7,750 - - 7,750 5,097
Retained earnings 35,407 (596) - 34,811 25,943
Total equity 514,279$ 10,366$ (10,962)$ 513,683$ 470,117$
Total Liabilities and Equity 1,060,413$ 12,500$ (11,139)$ 1,061,774 937,151$
As of 9/30/2017
| FCPT | SEPTEMBER 20175
CONSOLIDATED INCOME STATEMENT
($000s, except shares and per share data)
Unaudited 2017 2016 2017 2016
Revenues:
Rental revenue 28,835$ 26,363$ 84,926$ 78,748$
Restaurant revenue 4,676 4,443 14,445 14,003
Total revenues 33,511$ 30,806$ 99,371$ 92,751$
Operating expenses:
General and administrative 2,899$ 2,608$ 9,215$ 8,434$
Depreciation and amortization 5,425 5,059 16,254 15,347
Restaurant expenses 4,571 4,308 13,823 13,600
Interest expense 5,463 3,549 14,066 11,588
Total operating expenses 18,358$ 15,524$ 53,358$ 48,969$
Other income 172$ 10$ 211$ 88$
Realized gain on sale, net 4,042 - 7,333 -
Income before income tax 19,367$ 15,292$ 53,557$ 43,870$
Income tax (expense) benefit
(1)
(33) (52) (139) 80,455
Net Income 19,334$ 15,240$ 53,418$ 124,325$
Net income attributable to noncontrolling interest (129) - (374) -
Net Income Available to Common Shareholders 19,205$ 15,240$ 53,044$ 124,325$
Basic net income per share 0.31$ 0.25$ 0.88$ 2.22$
Diluted net income per share 0.31$ 0.25$ 0.88$ 2.09$
Weighted-average shares outstanding:
Basic 61,112,051 59,832,824 60,457,949 56,026,594
Diluted 61,256,145 59,863,109 60,567,152 59,469,008
Regular dividends declared per share 0.2425$ 0.2425$ 0.7275$ 0.7275$
Three Months Ended September 30, Nine Months Ended September 30,
___________________________
(1) The 2016 results include a $80.4 million income tax benefit which was principally the result of the reversal of deferred tax liabilities recognized in connection with the Company's election to be taxed as a REIT.
| FCPT | SEPTEMBER 20176
FFO & AFFO RECONCILIATION
($000s, except shares and per share data)
Unaudited 2017 2016 2017 2016
Net income 19,334$ 15,240$ 53,418$ 124,325$
Real estate depreciation and amortization 5,414 5,051 16,231 15,330
Deferred tax benefit from REIT election - - - (80,410)
Realized gain on sales of real estate (4,042) - (7,333) -
FFO (as defined by NAREIT) 20,706$ 20,291$ 62,316$ 59,245$
Non-cash stock-based compensation 722 412 1,920 1,158
Non-cash amortization of deferred financing costs 452 398 1,265 1,194
Non-real estate depreciation 42 (296) 105 139
Other non-cash interest expense 11 8 23 17
Straight-line rent (2,488) (2,609) (7,283) (7,799)
Adjusted Funds From Operations (AFFO) 19,445$ 18,204$ 58,346$ 53,954$
Fully diluted shares outstanding
(1) 61,665,465 59,863,109 60,992,881 59,469,008
FFO per diluted share 0.34$ 0.34$ 1.02$ 1.00$
AFFO per diluted share 0.32$ 0.30$ 0.96$ 0.91$
Three Months Ended September 30, Nine Months Ended September 30,
___________________________
(1) Assumes the issuance of common shares for OP units held by non-controlling partners.
| FCPT | SEPTEMBER 20177
NET ASSET VALUE COMPONENTS
___________________________
(1) EBITDAR Coverage is calculated by dividing our tenants' estimated trailing 12-month EBITDAR by annual contractual cash rent paid to FCPT.
(2) Lease term weighted by cash base rent.
(3) Current scheduled minimum contractual rent as of 9/30/2017.
(4) FCPT acquired 3 properties in Q3 2017 (2 Taco Bells, and 1 dual tenant building leased to Mod Pizza and Del Taco Restaurants); FCPT sold 1 Olive Garden.
Real Estate Portfolio as of 9/30/2017
Purchase
Price
($000s)
Number of
Properties
Total Square
Feet (000s)
Avg. Rent Per
Square Foot
($)
EBITDAR
Coverage
(1)
Lease Term
Remaining
(Yrs)
(2)
Annual Cash Base
Rent ($000s)
(3)
% Total Cash
Base Rent
(3)
Olive Garden - 297 2,538 $28 5.0x 13.0 $70,352 66.8%
LongHorn Steakhouse - 104 579 33 4.4x 11.9 19,038 18.1%
Other Brands - Darden - 13 126 37 4.2x 11.4 4,676 4.4%
Other Brands - Non-Darden - 94 336 34 2.7x 16.9 11,273 10.7%
Total Owned Portfolio 508 3,579 $29 4.7x 13.2 $105,339 100.0%
Q3'17 Activity
(4)
Acquired 6,088 3 11 37 2.9x 15.2 422 0.4%
Sold (5,897) (1) (9) 31 4.2x 16.1 (298) N/A
Tangible Assets Book Value ($000s)
Cash and cash equivalents 82,865$
Other tangible assets 5,247
Total Tangible Assets 88,112$
Debt Face Value ($000s)
Term loan 400,000$
June 2024 note 50,000
June 2027 note 75,000
Revolving credit facility -
Total Debt 525,000$
Tangible Liabilities Book Value ($000s)
Dividends payable 14,820$
Deferred revenue, accrued interest, and other accrued expenses 14,037
Total Tangible Liabilities 28,857$
Shares Outstanding
Common stock (diluted shares outstanding) 61,256,145
Operating partnership units outstanding (OP units) 409,320
Total Diluted Shares and OP Units Outstanding 61,665,465
| FCPT | SEPTEMBER 20178
CAPITALIZATION & KEY CREDIT METRICS
___________________________
(1) Principal debt amount less cash adjusted for declared dividends.
(2) Current Quarter Annualized, See Glossary for EBITDA definition and reconciliation to net income
($000s, except per share data)
Current Capitalization
% of Market
Capitalization Credit Metrics Net Debt
(1)
EBITDA
(2)
Ratio
Equity: Net debt to EBITDA (straight-line rent) 456,955 104,164$ 4.4x
Share price (9/30/2017) 24.94$ Net debt to EBITDA (cash rent) 456,955 97,100$ 4.7x
Shares and OP units outstanding (diluted) 61,665,465
Equity Value 1,537,937$ 74.6% Dividend Data (fully diluted) YTD 2017 YTD 2016 YOY Growth
Debt: Common dividend per share 0.7275$ 0.7275$ 0.0%
Term loan 400,000 19.4% AFFO per share 0.96$ 0.91$ +5.5%
Revolving credit facility 0 0.0% AFFO payout ratio 75.8% 79.9% -5.2%
Unsecured notes 125,000 6.1%
Total Debt 525,000$ 25.4%
Total Market Capitalization 2,062,937$
Less: cash (82,865)
Plus: declared dividends 14,820
Implied Enterprise Value 1,994,892$
| FCPT | SEPTEMBER 20179
DEBT SUMMARY
___________________________
(1) FCPT entered into a $650 million unsecured credit agreement on October 2, 2017 consisting of a 5-year term loan of $400 million and a 4-year revolving credit facility of $250 million to replace the company's
existing $750 million bank credit facility maturing on 11/9/2022. The revolving credit facility has an initial term expiration on 11/9/2021 plus two six-month extension options. The terms of this facility are
reflected in this summary.
(2) Borrowings under the term loan accrue interest at a rate of LIBOR plus 1.35%. FCPT has entered into interest rate swaps which fix the per annum interest rate at 2.7% through November 2018. FCPT has
established additional swaps that fix 75% of the term loan's rate exposure from November 2018 through the November 2022 maturity date. The all-in cash interest rate on the 75% of the term loan that is fixed is
approximately 3.0%, 3.1%, 3.4%, and 3.5% for 2019, 2020, 2021, and 2022, respectively.
(3) As of 9/30/2017, FCPT had no mortgage debt and 100% of FCPT properties were unencumbered.
(4) Excludes amortization of deferred financing costs on the credit facility and unsecured notes.
Debt Type Maturity Date
Balance as of
October 2, 2017
($000s)
(1)
% of Debt
Cash Interest
Rate as of
October 2,
2017
(4)
Weighted
Average
Maturity (Yrs.)
Credit Facility
Revolving facility
(1)
11/9/2021 -$ - 4.0
Term loan
(2)
11/9/2022 400,000 76.2% 2.7% 5.0
Principal Amount 400,000$
Unsecured Notes
June 2024 note 6/7/2024 50,000$ 9.5% 4.7% 6.6
June 2027 note 6/7/2027 75,000 14.3% 4.9% 9.6
Principal Amount 125,000$
Mortgages Payable
(3)
None - - - -
Total/Weighted Average 525,000$ 100.0% 3.2% 5.8
Deferred Financing Costs
Credit facility (4,911)$
Unsecured notes (1,736)
Debt Carrying Value (GAAP) 518,353$
Fixed rate 525,000$ 100.0%
Variable rate -$ 0.0%
Credit Rating (Fitch): BBB-
| FCPT | SEPTEMBER 201710
DEBT COVENANTS
As of September 30, 2017
Covenants Q3 2017 Results
Limitation on incurrence of total debt ≤ 60% of consolidated capitalization value 30.2%
Limitation on incurrence of secured debt ≤ 40% of consolidated capitalization value 0.0%
Fixed charge coverage ratio ≥ 1.75x 5.20x
Limitation on unencumbered leverage ≤ 60% 31.8%
Unencumbered interest ratio ≥ 2.0x 3.04x
Required
The following is a summary of the key financial covenants for our unsecured credit facility. These calculations are not based on
U.S. GAAP measurements and are presented to demonstrate compliance with current credit covenants.
| FCPT | SEPTEMBER 201711
PROPERTY LOCATIONS BY BRAND
508 Properties
22 Brands
___________________________
(1) Other includes 1 property for each of the following brands: Wildfish, Dairy Queen, Zaxby’s, Denny’s, Mod Pizza/Del Taco, and Fazoli’s.
| FCPT | SEPTEMBER 201712
18%
104 units
4%
13 units
11%
94 units
67%
297 units
BRAND & TENANT DIVERSIFICATION
Brand Breakdown(1)
ABR(2): $105.3m
___________________________
(1) Percentage of annual cash base rent as of September 30, 2017.
(2) Annualized cash base rent as defined in glossary.
| FCPT | SEPTEMBER 201713
GEOGRAPHIC DIVERSIFICATION
MN
SD
NJ
OH
INIL
VT NHID
AL
AZ
AR
CA
CO
CT
DE
FL
GA
IA
KS
KY
LA
ME
MD
MA
MI
MS
MO
MT
NE
NV
NM
NY
NC
ND
OK
OR
PA
RI
SC
TN
TX
UT
VA
WA
WV
WI
WY
% ABR(1)
≥10.0%
5.0%–10.0%
3.0%–5.0%
2.0%–3.0%
1.0 %–2.0%
<1.0%
No Properties
State % ABR Properties
Florida 11.1% 44 North Carolina 3.1% 17 Virginia 2.3% 14 Nevada 1.7% 6 Louisiana 1.2% 6
Texas 10.9 47 Pennsylvania 3.1 14 Mississippi 2.0 12 Minnesota 1.6 8 Missouri 1.0 6
Georgia 8.1% 44 California 3.0% 10 Alabama 2.0% 12 Colorado 1.5% 7 Other14 Other States 6.2% 27
Ohio 7.3 40 Illinois 2.6 17 South Carolina 1.9 9 Oklahoma 1.5 7
Michigan 4.3% 27 New York 2.4% 11 Kentucky 1.9% 10 West Virginia 1.3% 6
Indiana 3.8 29 Maryland 2.3 12 Iowa 1.8 10 Arkansas 1.3 7
Tennessee 3.4% 20 Wisconsin 2.3% 16 Arizona 1.8% 8 Kansas 1.2% 5
___________________________
(1) Annualized cash base rent as defined in glossary.
| FCPT | SEPTEMBER 201714
LEASE MATURITY SCHEDULE
0.0% 0.0% 0.0% 0.1% 0.1% 0.1% 0.2% 0.0% 0.1% 0.2%
15.3%
16.2%
14.3%
14.0%
12.7%
9.8%
9.0%
0.5%
0.2%
3.6% 3.6%
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037
Weighted average lease term
of 13.2 years
Lease Maturity Schedule (% ABR(1))
Less than 1% of rental income
matures prior to 2027
100% occupied as of
September 30, 2017
# Properties - - - 2 1 1 2 - 1 2 73 74 69 67 60 46 41 4 1 40 25
Cash ABR ($000s)
(1) - - - 130 87 59 207 - 1 7 234 16,157 17,027 15,080 14, 16 13,375 10,309 9,532 510 173 3,841 3,786
Total SF (000s) - - - 6 2 3 5 - 4 7 52 539 23 518 480 363 3 6 13 3 115 117
___________________________
(1) Annualized cash base rent as defined in glossary.
| FCPT | SEPTEMBER 201715
GLOSSARY AND NON -GAAP DEFINIT IONS
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.
ABR refers to Annual Cash Base Rent, defined as the current
scheduled minimum contractual rent as of 9/30/2017.
EBITDA represents earnings before interest, taxes, depreciation,
amortization, and non-recurring expenses. Reconciliation
provided on following page.
Tenant EBITDAR is calculated as EBITDA plus rental expense.
EBITDAR is derived from the most recent data provided by
tenants that disclose this information, representing approximately
98% of our ABR. For Darden, EBITDAR is updated twice
annually by multiplying the most recent individual property level
sales information (reported by Darden twice annually to FCPT) by
the brand average EBITDA margin reported by Darden in its most
recent comparable period, and then adding back property level
rent. FCPT does not independently verify financial information
provided by its tenants.
Tenant EBITDAR coverage is calculated by dividing our
reporting tenants’ trailing 12-month EBITDAR by annual
contractual rent.
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
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.
Non-GAAP Definitions and Cautionary Note Regarding Forward-Looking Statements:
| FCPT | SEPTEMBER 201716
RECONCILIATION OF NET INCOME TO
EBITDA
($000s, except shares and per share data)
Unaudited 2017 2016 2017 2016
Net Income 19,334$ 15,240$ 53,418$ 124,325$
Income tax expense (benefit) 33 52 139 (80,455)
Other income (172) (10) (211) (88)
Realized gain on sale (4,042) - (7,333) -
Depreciation and amortization 5,425 5,059 16,254 15,347
Interest expense 5,463 3,549 14,066 11,588
EBITDA 104,164$ 26,041$ 23,890$ 76,333$ 70,717$
Non-cash stock-based compensation 722 412 1,920 1,158
Straight-line rent (2,488) (2,609) (7,283) (7,799)
EBITDA (cash) 97,100$ 24,275$ 21,693$ 70,970$ 64,076$
Three Months Ended September 30, Nine Months Ended September 30,
Current
Quarter
(Annualized)
| FCPT | SEPTEMBER 201717
FOUR CORNERS PROPERTY TRUST
N YS E: FC PT