EX-99.2 3 supplemental02202018.htm EXHIBIT 99.2 supplemental02202018
| FCPT | DECEMBER 20171 SUPPLEMENTAL F INANCIAL & OPERATING INFORMATION | DECEMBER 2017 www. fcpt .com FOUR CORNERS PROPERTY TRUST NYSE: FCPT


 
| FCPT | DECEMBER 20172 CAUT IONARY NOTE REGARD ING FORWARD -LOOK ING 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. For a further discussion of these and other factors that could cause the company’s future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in the company’s most recent annual report on Form 10-K, and other risks described in documents subsequently filed by the company from time to time with the Securities and Exchange Commission.


 
| FCPT | DECEMBER 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 | DECEMBER 20174 CONSOLIDATING BALANCE SHEET As of 12/31/2016 ($000s, except shares and per share data) Unaudited Real Estate Operations Restaurant Operations Elimination Consolidated FCPT Consolidated FCPT ASSETS Real estate investments: Land 446,270$ 3,061$ -$ 449,331$ 421,941$ Buildings, equipment and improvements 1,101,989 13,635 - 1,115,624 1,055,624 Total real estate investments 1,548,259 16,696 - 1,564,955 1,477,565 Less: accumulated depreciation (592,293) (6,553) - (598,846) (583,307) Total real estate investments, net 955,966 10,143 - 966,109 894,258 Real estate held for sale - - - - - Cash and cash equivalents 63,229 1,237 - 64,466 26,643 Straight-line rent adjustment 21,130 - - 21,130 11,594 Other assets 16,175 779 - 16,954 4,656 Investment in subsidiary 10,757 - (10,757) - - Intercompany receivable - 96 (96) - - Total Assets 1,067,257$ 12,255$ (10,853)$ 1,068,659$ 937,151$ LIABILITIES AND EQUITY Liabilities: Term loan ($400,000, net of deferred financing costs) 392,222$ -$ -$ 392,222$ 393,895$ Revolving facility ($350,000 available capacity) - - - - 45,000 Unsecured notes ($125,000, net of deferred financing costs) 123,317 - - 123,317 - Accrued interest payable 1,290 - - 1,290 1,134 Rent received in advance 8,295 - - 8,295 7,974 Deferred tax liability - - - - 196 Dividends payable 16,843 - - 16,843 14,519 Other liabilities 2,097 2,327 - 4,424 4,316 Intercompany payable 96 - (96) - - Total liabilities 544,160$ 2,327$ (96)$ 546,391$ 467,034$ Equity: Preferred stock -$ -$ -$ -$ -$ Common stock 6 - - 6 6 Additional paid-in capital 473,685 10,757 (10,757) 473,685 438,864 Accumulated other comprehensive income 4,478 - - 4,478 207 Noncontrolling interest 7,781 - - 7,781 5,097 Retained earnings 37,147 (829) - 36,318 25,943 Total equity 523,097$ 9,928$ (10,757)$ 522,268$ 470,117$ Total Liabilities and Equity 1,067,257$ 12,255$ (10,853)$ 1,068,659 937,151$ As of 12/31/2017


 
| FCPT | DECEMBER 20175 CONSOLIDATED INCOME STATEMENT ___________________________ (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. ($000s, except shares and per share data) Unaudited 2017 2016 2017 2016 Revenues: Rental revenue 29,011$ 26,876$ 113,937$ 105,624$ Restaurant revenue 4,827 4,391 19,272 18,394 Total revenues 33,838$ 31,267$ 133,209$ 124,018$ Operating expenses: General and administrative 3,044$ 2,546$ 12,259$ 10,977$ Depreciation and amortization 5,557 5,231 21,811 20,577 Restaurant expenses 4,829 4,253 18,652 17,853 Interest expense 5,403 3,239 19,469 14,828 Total operating expenses 18,833$ 15,269$ 72,191$ 64,235$ Other income 113$ 9$ 324$ 97$ Realized gain on sale, net 3,198 16,623 10,532 16,623 Income before income tax 18,316$ 32,630$ 71,874$ 76,503$ Income tax benefit (expense) (1) 157 (108) 18 80,347 Net Income 18,473$ 32,522$ 71,892$ 156,850$ Net income attributable to noncontrolling interest (123) (41) (498) (41) Net Income Available to Common Shareholders 18,350$ 32,481$ 71,394$ 156,809$ Basic net income per share 0.30$ 0.54$ 1.18$ 2.75$ Diluted net income per share 0.30$ 0.54$ 1.18$ 2.63$ Weighted-average shares outstanding: Basic 61,130,319 59,837,636 60,627,423 56,984,561 Diluted 61,233,277 59,871,465 60,695,834 59,568,067 Regular dividends declared per share 0.2750$ 0.2425$ 1.0025$ 0.9700$ Three Months Ended December 31, Year Ended December 31,


 
| FCPT | DECEMBER 20176 FFO & AFFO RECONCILIATION ___________________________ (1) For the three months ended December 31, 2017, includes $228 thousand of non-cash impairment expense on intangible lease assets. (2) Assumes the issuance of common shares for OP units held by non-controlling interests. ($000s, except shares and per share data) Unaudited 2017 2016 2017 2016 Net income 18,473$ 32,522$ 71,892$ 156,850$ Real estate depreciation and amortization (1) 5,544 5,221 21,775 20,550 Deferred tax benefit from REIT election - - - (80,410) Realized gain on sales of real estate (3,198) (16,623) (10,532) (16,623) FFO (as defined by NAREIT) 20,819$ 21,120$ 83,135$ 80,367$ Non-cash stock-based compensation 756 394 2,676 1,550 Non-cash amortization of deferred financing costs 879 398 2,144 1,592 Other non-cash interest expense 40 (749) 145 (610) Non-real estate investment depreciation 13 10 36 27 Straight-line rent (2,252) (2,295) (9,536) (10,095) Adjusted Funds From Operations (AFFO) 20,255$ 18,878$ 78,600$ 72,831$ Fully diluted shares outstanding (2) 61,642,597 60,029,741 61,014,256 59,607,852 FFO per diluted share 0.34$ 0.35$ 1.36$ 1.35$ AFFO per diluted share 0.33$ 0.31$ 1.29$ 1.22$ Three Months Ended December 31, Year Ended December 31,


 
| FCPT | DECEMBER 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 12/31/2017. (4) FCPT acquired 8 properties in Q4 2017 (5 Red Lobsters, 2 Burger Kings, and 1 LongHorn Steakhouse); FCPT sold 1 Olive Garden. Real Estate Portfolio as of 12/31/2017 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 - 296 2,528 $28 5.0x 12.8 $71,170 65.9% LongHorn Steakhouse - 105 585 33 4.4x 11.7 19,423 18.0% Other Brands - Darden - 13 126 38 4.3x 11.2 4,746 4.4% Other Brands - Non-Darden - 101 381 33 2.7x 17.1 12,643 11.7% Total Owned Portfolio 515 3,620 $30 4.6x 13.0 $107,982 100.0% Q4'17 Activity(4) Acquired 24,202 8 50 33 3.1x 19.8 1,621 1.5% Sold (5,050) (1) (10) (24) 4.6x 16.0 (237) N/A Tangible Assets Book Value ($000s) Cash and cash equivalents 64,466$ Other tangible assets 7,751 Total Tangible Assets 72,217$ 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 ($000s) Dividends payable 16,843$ Deferred revenue, accrued interest, and other accrued expenses 13,301 Total Tangible Liabilities 30,144$ Shares Outstanding Common stock (shares outstanding as of 12/31/2017) 61,247,580 Operating partnership units (OP units outstanding as of 12/31/2017) 409,320 Total Common Stock and OP Units Outstanding 61,656,900


 
| FCPT | DECEMBER 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. ($000s, except per share data) Current Capitalization % of Total Market Capitalization Credit Metrics Net Debt (1) EBITDA(2) Ratio Equity: Net debt to EBITDA (straight-line rent) 477,377 103,860$ 4.6x Share price (12/31/2017) 25.70$ Net debt to EBITDA (cash rent) 477,377 97,876$ 4.9x Shares and OP units outstanding (12/31/2017) 61,656,900 Equity Value 1,584,582$ 75.1% Dividend Data (fully diluted) Q4 2017 Debt: Common dividend per share 0.2725$ Term loan 400,000$ 19.0% AFFO per share 0.33$ Revolving credit facility - 0.0% AFFO payout ratio 82.6% Unsecured notes 125,000 5.9% Total Debt 525,000$ 24.9% Total Market Capitalization 2,109,582$ 100% Less: cash (64,466) Plus: declared dividends 16,843 Implied Enterprise Value 2,061,959$


 
| FCPT | DECEMBER 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. (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 12/31/2017, 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 December 31, 2017 ($000s)(1) % of Debt Cash Interest Rate as of December 31, 2017(4) Weighted Average Maturity (Yrs.) Credit Facility Revolving facility(1) 11/9/2021 -$ - 3.9 Term loan (2) 11/9/2022 400,000 76.2% 2.7% 4.9 Principal Amount 400,000$ Unsecured Notes June 2024 notes 6/7/2024 50,000$ 9.5% 4.7% 6.4 June 2027 notes 6/7/2027 75,000 14.3% 4.9% 9.4 Principal Amount 125,000$ Mortgages Payable(3) None - - - - Total/Weighted Average 525,000$ 100.0% 3.2% 5.7 Unamortized Deferred Financing Costs Credit facility (7,778)$ Unsecured notes (1,683) Debt Carrying Value (GAAP) 515,539$ Fixed rate 525,000$ 100.0% Variable rate -$ 0.0% Credit Rating (Fitch): BBB-


 
| FCPT | DECEMBER 201710 DEBT COVENANTS As of December 31, 2017 Covenants Q4 2017 Results Limitation on incurrence of total debt ≤ 60% of consolidated capitalization value 30.1% Limitation on incurrence of secured debt ≤ 40% of consolidated capitalization value 0.0% Fixed charge coverage ratio ≥ 1.50x 5.68x Limitation on unencumbered leverage ≤ 60% 31.3% Unencumbered interest coverage ratio ≥ 1.75x 6.46x 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 | DECEMBER 201711 PROPERTY LOCATIONS BY BRAND 515 Properties (2) 22 Brands ___________________________ (1) Other includes 2 properties for Seasons 52 and 1 property for each of the following brands: Wildfish, Zaxby’s, Denny’s, Mod Pizza/Del Taco, and Fazoli’s. (2) Includes one vacant property. (1)


 
| FCPT | DECEMBER 201712 18% 105 units 4% 13 units 12% 101 units (3) 66% 296 units BRAND & TENANT DIVERSIF ICATION Brand Breakdown(1) ABR(2): $108.0m ___________________________ (1) Percentage of annual cash base rent as of December 31, 2017. (2) Annualized cash base rent as defined in glossary. (3) Does not include one vacant property.


 
| FCPT | DECEMBER 201713 GEOGRAPHIC DIVERSIF ICATION 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 ___________________________ (1) Annualized cash base rent as defined in glossary. State % ABR Properties Texas 10.8% 47 Pennsylvania 3.3% 15 Wisconsin 2.3% 16 Nevada 1.7% 6 Louisiana 1.2% 6 Florida 10.7% 43 North Carolina 3.1% 17 Mississippi 2.2% 14 Minnesota 1.6% 8 Missouri 1.0% 6 Georgia 8.2% 45 California 3.0% 10 South Carolina 2.0% 10 Colorado 1.5% 7 O14 Other States 6.1% 27 Ohio 7.7% 42 Illinois 2.6% 17 Alabama 2.0% 12 West Virginia 1.3% 6 Michigan 4.4% 28 New York 2.3% 11 Kentucky 1.9% 10 Oklahoma 1.3% 7 Indiana 3.7% 29 Maryland 2.3% 12 Iowa 1.8% 10 Arkansas 1.3% 7 Tennessee 3.4% 20 Virginia 2.3% 14 Arizona 1.7% 8 Kansas 1.2% 5


 
| FCPT | DECEMBER 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% 16.0% 14.2%13.8% 12.6% 9.7% 8.7% 0.7% 0.0% 3.6% 3.7% 0.0% 0.9% 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 Weighted average lease term of 13 years Lease Maturity Schedule (% Annualized Cash Based Rent1) Less than 1% of rental income matures prior to 2027 99.8% occupied as of December 31, 2017 # Properties - - - 2 1 1 2 - 1 2 73 74 69 67 60 46 40 5 1 40 27 - 4 Cash ABR ($000s)(1) - - - 134 87 64 207 - 117 234 16,494 17,273 15,301 14,936 13,574 10,452 9,438 787 - 3,853 4,011 - 1,021 Total SF (000s) - - - 6 2 3 5 - 4 7 530 539 523 518 480 363 346 21 3 115 123 - 31 ___________________________ (1) Annualized cash base rent as defined in glossary.


 
| FCPT | DECEMBER 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 12/31/2017. 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 on non-real estate assets 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 | DECEMBER 201716 RECONCILIATION OF NET INCOME TO EBITDA ($000s, except shares and per share data) Unaudited 2017 2016 2017 2016 Net Income 18,473$ 32,522$ 71,892$ 156,850$ Income tax expense (benefit) (157) 108 (18) (80,347) Other income (113) (9) (324) (97) Realized gain on sale (3,198) (16,623) (10,532) (16,623) Depreciation and amortization 5,557 5,231 21,811 20,577 Interest expense 5,403 3,239 19,469 14,828 EBITDA 103,860$ 25,965$ 24,468$ 102,298$ 95,188$ Non-cash stock-based compensation 756 394 2,676 1,550 Straight-line rent (2,252) (2,295) (9,536) (10,095) EBITDA (cash) 97,876$ 24,469$ 22,567$ 95,438$ 86,643$ Three Months Ended December 31, Year Ended December 31, Current Quarter (Annualized)


 
| FCPT | DECEMBER 201717 FOUR CORNERS PROPERTY TRUST NYSE: FCPT