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Four Corners (FCPT) on Buying Spree, Acquires New York Assets

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Four Corners Property Trust (FCPT - Free Report) shelled out $6.9 million for the acquisition of a Red Lobster property and a Smokey Bones property positioned in a highly trafficked corridor in New York. The move came as part of its portfolio-expansion efforts, with real estate leased to strong credit operators.

The properties are corporate-operated under triple net leases with a weighted average of 2.5 years of residual term. Priced at a 6.5% cap rate, excluding transaction costs, the buyout seems a strategic fit for FCPT.

This REIT has been on an acquisition spree and recently acquired a four-property Buffalo Wild Wings portfolio for $14.3 million. Positioned in strong retail corridors in Illinois, the properties are under individual long-term, triple net leases, each with roughly nine years of residual term.

Priced at a 7.3% cap rate on rent as of the closing date and excluding transaction costs, the abovementioned buyout seems a strategic fit for FCPT. The portfolio is likely to generate steady revenues over the long term.

In addition to these abovementioned acquisitions, Four Corners recently acquired a WellNow Urgent Care property in Michigan for $2.4 million and five Jiffy Lube properties in Indiana for $7.9 million. Further, it took over a Gerber Collision & Glass property in Texas for $2.8 million.

Mainly engaged in the ownership and acquisition of high-quality restaurants and retail properties, Four Corners seeks potential acquisition opportunities to enhance its portfolio. In the third quarter of 2022, FCPT acquired 26 properties for a combined purchase price of $69.9 million at an initial weighted average cash yield of 6.3%. The buyouts seem a strategic fit for Four Corners and are likely to generate steady revenues over the long term.

However, rate hikes, inflation and macroeconomic uncertainty are raising concerns. Four Corners currently carries a Zacks Rank #4 (Sell). Shares of FCPT have rallied 7.5% so far in the quarter, outperforming the industry’s increase of 2.2%.

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Stocks to Consider

Some better-ranked stocks from the REIT sector are VICI Properties Inc. (VICI - Free Report) and Lamar Advertising Company (LAMR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for VICI Properties’ 2022 FFO per share has moved 4.9% north to $1.92 over the past month.
 
The Zacks Consensus Estimate for Lamar Advertising Company’s ongoing year’s FFO per share has been raised 1.4% over the past two months to $7.34.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.


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