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Four Corners (FCPT) Continues Acquisitions, Buys $2.6M Asset
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Bolstering its overall portfolio quality, with real estate leased to strong credit operators, Four Corners Property Trust (FCPT - Free Report) shelled out $2.6 million for the buyout of a Fresenius Medical Care property in Georgia.
The property is corporate-operated under a triple net lease with three years of residual term and is likely to generate steady revenues over the long term. Priced at a cap rate of 6.9%, excluding transaction costs, FCPT’s latest acquisition seems prudent.
FCPT has been on an acquisition spree lately and recently concluded the buyout of three W.W. Williams properties, strategically located in the strong industrial corridors in Michigan and Ohio, for $10.3 million, through a sale-leaseback deal.
The properties are corporate-operated under long-term, triple net leases, with roughly 15 years of the remainder term, along with four to five-year options and annual rent hikes of 2%. The buyout was priced at a cap rate of 7.1%, excluding transaction costs, and is likely to garner long-term benefits for FCPT.
This May, this real estate investment trust (REIT), mainly engaged in the ownership and acquisition of high-quality, net-leased restaurant and retail properties, acquired a dual-tenant property housing Outback Steakhouse and Hook & Reel from Seritage Growth Properties for $5.2 million.
In the same month, it also added a National Veterinary Associates property in Washington to its portfolio for $1.4 million. The transaction was priced at a cap rate in range with the prior FCPT transactions.
Furthermore, in May, it entered a definitive agreement to acquire up to 14 Darden restaurant properties in strong retail corridors across Tennessee, Indiana, Kentucky and Ohio, with high traffic count and favorable demographics.
The deal, which includes 13 Cheddar’s Scratch Kitchen properties and one Olive Garden property, carries a purchase price of up to $85 million on an initial cash rent amounting to $5.35 million. The transaction is expected to materialize in the third quarter of 2023.
FCPT’s recent acquisitions pave the way for its external growth. Moreover, its focus on capital recycling reflects its prudent-capital management practices and relieves the pressure on its balance sheet.
In February 2023, it disposed of a Burger King property in Alabama for $2.4 million and a Red Lobster property in North Dakota for $4.7 million in January 2023. The company plans to redeploy the proceeds into new investment prospects in sync with its thresholds.
Nonetheless, a high-interest rate environment and macroeconomic uncertainty remain key concerns for the company.
Shares of this Zacks Rank #3 (Hold) company have lost 3.3% in the past three months compared with the real estate market’s decline of 4.3%.
The Zacks Consensus Estimate for Rexford Industrial’s current-year funds from operations (FFO) per share has moved 1.4% northward over the past two months to $2.19.
The Zacks Consensus Estimate for Stag Industrial’s ongoing year’s FFO per share has been raised marginally upward over the past month to $2.25.
The Zacks Consensus Estimate for Innovative Industrial Properties’ 2023 FFO per share has moved 3.6% upward in the past month to $8.66.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
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Four Corners (FCPT) Continues Acquisitions, Buys $2.6M Asset
Bolstering its overall portfolio quality, with real estate leased to strong credit operators, Four Corners Property Trust (FCPT - Free Report) shelled out $2.6 million for the buyout of a Fresenius Medical Care property in Georgia.
The property is corporate-operated under a triple net lease with three years of residual term and is likely to generate steady revenues over the long term. Priced at a cap rate of 6.9%, excluding transaction costs, FCPT’s latest acquisition seems prudent.
FCPT has been on an acquisition spree lately and recently concluded the buyout of three W.W. Williams properties, strategically located in the strong industrial corridors in Michigan and Ohio, for $10.3 million, through a sale-leaseback deal.
The properties are corporate-operated under long-term, triple net leases, with roughly 15 years of the remainder term, along with four to five-year options and annual rent hikes of 2%. The buyout was priced at a cap rate of 7.1%, excluding transaction costs, and is likely to garner long-term benefits for FCPT.
This May, this real estate investment trust (REIT), mainly engaged in the ownership and acquisition of high-quality, net-leased restaurant and retail properties, acquired a dual-tenant property housing Outback Steakhouse and Hook & Reel from Seritage Growth Properties for $5.2 million.
In the same month, it also added a National Veterinary Associates property in Washington to its portfolio for $1.4 million. The transaction was priced at a cap rate in range with the prior FCPT transactions.
Furthermore, in May, it entered a definitive agreement to acquire up to 14 Darden restaurant properties in strong retail corridors across Tennessee, Indiana, Kentucky and Ohio, with high traffic count and favorable demographics.
The deal, which includes 13 Cheddar’s Scratch Kitchen properties and one Olive Garden property, carries a purchase price of up to $85 million on an initial cash rent amounting to $5.35 million. The transaction is expected to materialize in the third quarter of 2023.
FCPT’s recent acquisitions pave the way for its external growth. Moreover, its focus on capital recycling reflects its prudent-capital management practices and relieves the pressure on its balance sheet.
In February 2023, it disposed of a Burger King property in Alabama for $2.4 million and a Red Lobster property in North Dakota for $4.7 million in January 2023. The company plans to redeploy the proceeds into new investment prospects in sync with its thresholds.
Nonetheless, a high-interest rate environment and macroeconomic uncertainty remain key concerns for the company.
Shares of this Zacks Rank #3 (Hold) company have lost 3.3% in the past three months compared with the real estate market’s decline of 4.3%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are Rexford Industrial Realty (REXR - Free Report) , Stag Industrial (STAG - Free Report) and Innovative Industrial Properties (IIPR - Free Report) . Each of these companies presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Rexford Industrial’s current-year funds from operations (FFO) per share has moved 1.4% northward over the past two months to $2.19.
The Zacks Consensus Estimate for Stag Industrial’s ongoing year’s FFO per share has been raised marginally upward over the past month to $2.25.
The Zacks Consensus Estimate for Innovative Industrial Properties’ 2023 FFO per share has moved 3.6% upward in the past month to $8.66.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.