EX-99.2 3 d428643dex992.htm EX-99.2 EX-99.2

Exhibit 99.2

 

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Supplemental Financial & Operating Information

Six Months Ended – June 30, 2017

Four Corners Property Trust, Inc. (“FCPT” or the “Company”, NYSE: FCPT) 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 June 30, 2017, FCPT’s leased portfolio consists of 506 restaurant properties located in 44 states. The properties are 100% occupied under predominantly long-term, triple net leases with a weighted average remaining lease term of approximately 13.4 years and an estimated portfolio weighted average EBITDAR to lease rent coverage of 4.7x.

 

 

 

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Table of Contents

 

Non-GAAP Definitions

     3  

Consolidating Balance Sheets

     5  

Consolidated Statements of Income

     6  

FFO and AFFO Statement

     7  

Leased Portfolio Summary

     8  

Diversification by State

     9  

Lease Expirations

     10  

Debt Summary

     11  

 

 

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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 February 27, 2017.

 

 

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Consolidating Balance Sheet

As of June 30, 2017

(Unaudited)

(In thousands)

 

     Real Estate
Operations
    Restaurant
Operations
    Elimination     Consolidated
FCPT
 
ASSETS         

Real estate investments:

        

Land

   $ 437,974     $ 3,061     $ —       $ 441,035  

Buildings, equipment and improvements

     1,084,714       13,592       —         1,098,306  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total real estate investments

     1,522,688       16,653       —         1,539,341  

Less: accumulated depreciation

     (583,694     (6,219     —         (589,913
  

 

 

   

 

 

   

 

 

   

 

 

 

Total real estate investments, net

     938,994       10,434       —         949,428  

Real estate held for sale

     1,691       —         —         1,691  

Cash and cash equivalents

     79,826       1,502       —         81,328  

Deferred rent

     16,389       —         —         16,389  

Other assets

     4,963       494       —         5,457  

Investment in subsidiary

     10,953       —         (10,953     —    

Intercompany receivable

     38       —         (38     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Assets

   $ 1,052,854     $ 12,430     $ (10,991   $ 1,054,293  
  

 

 

   

 

 

   

 

 

   

 

 

 
LIABILITIES AND EQUITY         

Liabilities:

        

Revolving facility ($350,000 available capacity)

   $ —       $ —       $ —       $ —    

Term loan ($400,000, net of deferred financing costs)

     394,691       —         —         394,691  

Unsecured notes ($125,000, net of deferred financing costs)

     123,327       —         —         123,327  

Deferred rental revenue

     8,228       —         —         8,228  

Deferred tax liability

     157       —         —         157  

Dividends payable

     14,820       —         —         14,820  

Other liabilities

     3,027       1,905       —         4,932  

Intercompany payable

     —         38       (38     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     544,250       1,943       (38     546,155  
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity:

        

Preferred stock

     —         —         —         —    

Common stock

     6       —         —         6  

Additional paid-in capital

     468,933       10,953       (10,953     468,933  

Accumulated other comprehensive income

     1,059       —         —         1,059  

Noncontrolling interest

     7,717       —         —         7,717  

Retained earnings

     30,889       (466     —         30,423  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

     508,604       10,487       (10,953     508,138  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Liabilities and Equity

   $ 1,052,854     $ 12,430     $ (10,991   $ 1,054,293  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

 

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Consolidated and Combined Statements of Income

Three and Six Months Ended June 30, 2017 and 2016

(Unaudited)

(In thousands, except shares and per share data)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2017     2016     2017     2016  

Revenues:

        

Rental revenue

   $ 28,327     $ 26,192     $ 56,091     $ 52,385  

Restaurant revenue

     4,826       4,701       9,766       9,560  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     33,153       30,893       65,857       61,945  

Operating expenses:

        

General and administrative

     3,459       2,508       6,316       5,826  

Depreciation and amortization

     5,426       5,101       10,829       10,288  

Restaurant expenses

     4,583       4,593       9,251       9,291  

Interest expense

     4,508       3,858       8,604       8,039  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     17,976       16,060       35,000       33,444  

Other income

     34       18       39       78  

Realized gain on sale, net

     3,291       —         3,291       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax

     18,502       14,851       34,187       28,579  

Income tax (expense) benefit

     (61     (50     (106     80,506  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

   $ 18,441     $ 14,801     $ 34,081     $ 109,085  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to noncontrolling interest

     (128     —         (245     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income Available to Common Shareholders

   $ 18,313     $ 14,801     $ 33,836     $ 109,085  
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic net income per share

   $ 0.30     $ 0.25     $ 0.56     $ 2.02  

Diluted net income per share

   $ 0.30     $ 0.25     $ 0.56     $ 1.84  

Weighted-average shares outstanding:

        

Basic

     60,319,521       59,830,284       60,125,477       54,102,565  

Diluted

     60,430,606       59,844,059       60,215,050       59,271,807  

Regular dividends declared per share

   $ 0.2425     $ 0.2425     $ 0.4850     $ 0.4850  

 

 

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FFO and AFFO Statement

Three and Six Months Ended June 30, 2017 and 2016

(Unaudited)

(In thousands, except shares and per share data)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2017     2016     2017     2016  

Funds from operations (FFO):

        

Net income

   $ 18,441     $ 14,801     $ 34,081     $ 109,085  

Depreciation and amortization

     5,426       5,101       10,829       10,288  

Deferred tax benefit from REIT election

     —         —         —         (80,409

Realized gain on sales of real estate

     (3,291     —         (3,291     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

FFO (as defined by NAREIT)

   $ 20,576     $ 19,902     $ 41,619     $ 38,964  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-cash stock-based compensation

     704       429       1,198       742  

Non-cash amortization of deferred financing costs

     415       398       813       796  

Other non-cash interest expense

     11       55       63       435  

Straight-line rent

     (2,422     (2,595     (4,795     (5,191
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted funds from operations (AFFO)

   $ 19,284     $ 18,189     $ 38,898     $ 35,746  
  

 

 

   

 

 

   

 

 

   

 

 

 

Fully diluted shares outstanding (1)

     60,870,695       59,844,059       60,649,120       59,271,807  

FFO per diluted share

   $ 0.34     $ 0.33     $ 0.69     $ 0.66  

AFFO per diluted share

   $ 0.32     $ 0.30     $ 0.64     $ 0.60  

 

(1) Assumes the issuance of common shares for OP units held by non-controlling partners.

 

 

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Leased Portfolio Summary

As of June 30, 2017

 

Second
Quarter
2017

  

Properties

  

Number of
Four
Corners
Properties

   

Total
Square
Feet
(000s)

   

Cash Base
Rent
($000s)(1)

   

Percentage of
Total
Annualized
Base Rent
(2017)

   

Avg. Rent
Per
Square
Foot ($)

    

EBITDAR
Coverage(2)

    

Lease Term
Before
Renewals
(Yrs)(3)

 

Existing properties

                   
  

Olive Garden

     299       2,556     $ 70,892       67.4   $ 28        5.0x        13.3  
  

LongHorn Steakhouse

     104       579       19,038       18.1     33        4.4x        12.2  
  

Other Brands - Darden

     13       126       4,676       4.4     37        4.2x        11.7  
  

Other Brands - non-Darden

     68       214       7,286       6.9     34        2.7x        16.0  
Properties
acquired in
Q2 2017(4)
                                                 
  

2 Transactions

     23       111       3,565       3.4     32        2.7x        19.8  
Properties
sold
                                                 
  

Olive Garden

     (1     (9     (265     -0.3     29        3.5x        15.3  
Lease
terminations
                                                 
  

No terminations in Q2 2017

     —         —         —         —         —          —          —    
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 
  

Total/Weighted Avg.

     506       3,577     $ 105,192       100.0   $ 29        4.7x        13.4  
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

 

(1) Current scheduled minimum contractual rent as of 6/30/2017.
(2) 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 98% of our run-rate rental income. For Darden, EBITDAR represents estimated EBITDA plus rental expense. EBITDA is derived by multiplying the most recent individual property sales information reported by Darden twice annually to FCPT times the brand average EBITDA margin reported by Darden in its most recent public filing. FCPT does not independently verify financial information provided by its tenants.
(3) Lease term weighted by cash base rent.
(4) FCPT acquired 23 properties in Q2 2017 consisting of the following brands: Bob Evans (16) Burger King (7).

 

 

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Leased Portfolio Diversification by State

As of June 30, 2017

 

State

  

# of Properties

    

% of Annual
Base Rent

 

FL

     44        11.1

TX

     47        10.9

GA

     44        7.8

OH

     40        6.2

MI

     26        3.8

TN

     20        3.3

NC

     17        3.1

CA

     10        3.0

WI

     16        3.0

PA

     14        2.9

IN

     27        2.8

IL

     17        2.6

VA

     15        2.5

MS

     12        2.3

AL

     12        2.3

NY

     11        2.2

MD

     12        2.1

SC

     9        1.9

KY

     10        1.9

IA

     10        1.8

AZ

     8        1.8

NV

     6        1.7

MN

     8        1.7

CO

     7        1.5

OK

     7        1.5

AR

     7        1.3

KS

     5        1.2

LA

     6        1.2

WV

     6        1.2

MO

     6        1.0

14 States

     27        8.4
  

 

 

    

 

 

 

Grand Total

     506        100.0
  

 

 

    

 

 

 

 

 

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Lease Expirations

As of June 30, 2017

 

Leases
Expiring (Year)

   Number of
Properties
     Cash Base Rent
($ in thousands)(1)
     Total Square
Footage
(in thousands)
     Percent of Total
Expiring Annual
Rent
 

2017

     —          —          —          0.0

2018

     —          —          —          0.0

2019

     —          —          —          0.0

2020

     2        130        6        0.1

2021

     1        87        2        0.1

2022

     1        59        3        0.1

2023

     2        207        5        0.2

2025

     1        117        4        0.1

2026

     2        234        7        0.2

2027

     71        15,957        520        15.2

2028

     74        17,027        539        16.2

2029

     69        15,080        523        14.3

2030

     67        14,716        518        14.0

2031

     60        13,375        480        12.7

2032

     46        10,309        363        9.8

2033

     42        9,808        365        9.3

2034

     4        510        13        0.5

2035

     1        173        3        0.2

2036

     40        3,841        115        3.7

2037

     23        3,565        111        3.4

Vacant

     —          —          —          0.0
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     506        105,192        3,577        100
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Current scheduled minimum contractual rent as of 6/30/2017.

 

 

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Debt Summary

(In thousands)

As of June 30, 2017

 

Debt Type

  

Maturity Date

   Principal
Balance as of
June 30, 2017
    % of Debt    

Cash Interest
Rate as of
June 30,
2017(4)

   Weighted
Average
Maturity (Yrs.)
 

Credit Facility

            

Revolving Facility(1)

   November 9, 2019      —         —            2.3  

Term Loan(2)

   November 9, 2020    $ 400,000       76.2   3.06%      3.3  
     

 

 

        
   Principal Amount              400,000         

Deferred Financing Costs

     (5,309       
  

 

 

        
   Carrying Value      394,691         
     

 

 

        

Unsecured Notes

            

4.68% 7-Year Note

   June 7, 2024      50,000       9.5   4.68%      6.9  

4.93% 10-Year Note

   June 7, 2027      75,000       14.3   4.93%      9.9  
     

 

 

        
   Principal Amount      125,000         

Deferred Financing Costs

     (1,673       
  

 

 

        
   Carrying Value      123,327         
     

 

 

        

Mortgages Payable(3)

            

None

        —         —       —        —    
     

 

 

   

 

 

   

 

  

 

 

 

Total/Weighted Average

      $ 525,000       100.0   3.48%      4.6  
     

 

 

   

 

 

   

 

  

 

 

 

Fixed Rate

        525,000.00       100     

Variable Rate

        —         0     

 

(1) FCPT has a $350 million unsecured revolving credit facility with an initial term expiration on November 9, 2019 with two six-month extension options.
(2) Borrowings under the tem loan accrue interest at a rate of 6-month LIBOR plus 1.70%. FCPT has entered into interest rate swaps which fix the per annum interest rate at 3.06%.
(3) As of June 30, 2017, all FCPT properties are unencumbered.
(4) Excludes deferred financing costs on the credit facility and unsecured notes.

 

 

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