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Four Corners (FCPT) Closes 13 Darden Restaurant Property Buyout
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Four Corners Property Trust (FCPT - Free Report) recently closed the significant acquisition of 13 Darden restaurant properties consisting of 12 Cheddar's Scratch Kitchen properties and 1 Olive Garden property. This strategic move strengthens FCPT's portfolio and is expected to drive long-term growth for the company.
The purchase price for these properties amounted to $79.5 million on initial full-year cash rent of around $5 million. Including this acquisition, Four Corners’ total investment year to date stands at $269.1 million for 71 properties at a weighted average cap rate of 6.7%.
The company is considering acquiring another Cheddar's Scratch Kitchen property, pending further due diligence. If this additional property is acquired, the total transaction size would include 14 properties for $85 million on initial full-year annual cash rent of $5.35 million.
The acquisition of these Darden restaurant properties adds to FCPT's already impressive portfolio. The company has a history of acquiring high-quality, net-leased properties in the restaurant and retail sectors, and this latest move is in line with its strategy.
In addition to Darden restaurant properties, Four Corners recently made several other noteworthy acquisitions. These include a WellNow property and a T-Mobile property for $4 million, an Optima Dermatology clinic for $9.3 million and two Tire Discounters properties for $5.3 million. These strategic acquisitions not only expand FCPT's presence in the retail and healthcare sectors but also provide a stable income stream and diversification to its portfolio, benefiting the company and its investors.
By diversifying the portfolio and expanding its presence in attractive markets, the company reduces risks and enhances stability. These properties bring a mix of strong tenants, long-term lease agreements and exposure to growing industries, ensuring a consistent rental income stream for the company and delivering value to shareholders.
While Four Corners’ recent acquisitions are a positive development, the company does face potential challenges in a high-interest-rate environment. Rising interest rates can increase borrowing costs for future acquisitions, potentially slowing down FCPT's expansion efforts.
However, the company's strategy of investing in properties with strong credit operators and long-term leases can help mitigate these headwinds. By focusing on properties that generate stable cash flows and maintaining a target range for financial leverage, Four Corners can navigate the challenges posed by higher interest rates.
Shares of this Zacks Rank #3 (Hold) company have declined 2.2% year to date, wider than the industry's fall of 0.5%.
The Zacks Consensus Estimate for EastGroup Properties’ current-year funds from operations (FFO) per share has moved marginally north over the past two months to $7.56.
The Zacks Consensus Estimate for Innovative Industrial Properties’ 2023 FFO per share has moved 3.6% upward in the past two months to $8.66.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.
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Four Corners (FCPT) Closes 13 Darden Restaurant Property Buyout
Four Corners Property Trust (FCPT - Free Report) recently closed the significant acquisition of 13 Darden restaurant properties consisting of 12 Cheddar's Scratch Kitchen properties and 1 Olive Garden property. This strategic move strengthens FCPT's portfolio and is expected to drive long-term growth for the company.
The purchase price for these properties amounted to $79.5 million on initial full-year cash rent of around $5 million. Including this acquisition, Four Corners’ total investment year to date stands at $269.1 million for 71 properties at a weighted average cap rate of 6.7%.
The company is considering acquiring another Cheddar's Scratch Kitchen property, pending further due diligence. If this additional property is acquired, the total transaction size would include 14 properties for $85 million on initial full-year annual cash rent of $5.35 million.
The acquisition of these Darden restaurant properties adds to FCPT's already impressive portfolio. The company has a history of acquiring high-quality, net-leased properties in the restaurant and retail sectors, and this latest move is in line with its strategy.
In addition to Darden restaurant properties, Four Corners recently made several other noteworthy acquisitions. These include a WellNow property and a T-Mobile property for $4 million, an Optima Dermatology clinic for $9.3 million and two Tire Discounters properties for $5.3 million. These strategic acquisitions not only expand FCPT's presence in the retail and healthcare sectors but also provide a stable income stream and diversification to its portfolio, benefiting the company and its investors.
By diversifying the portfolio and expanding its presence in attractive markets, the company reduces risks and enhances stability. These properties bring a mix of strong tenants, long-term lease agreements and exposure to growing industries, ensuring a consistent rental income stream for the company and delivering value to shareholders.
While Four Corners’ recent acquisitions are a positive development, the company does face potential challenges in a high-interest-rate environment. Rising interest rates can increase borrowing costs for future acquisitions, potentially slowing down FCPT's expansion efforts.
However, the company's strategy of investing in properties with strong credit operators and long-term leases can help mitigate these headwinds. By focusing on properties that generate stable cash flows and maintaining a target range for financial leverage, Four Corners can navigate the challenges posed by higher interest rates.
Shares of this Zacks Rank #3 (Hold) company have declined 2.2% year to date, wider than the industry's fall of 0.5%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are EastGroup Properties (EGP - Free Report) and Innovative Industrial Properties (IIPR - Free Report) , each presently carrying 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 EastGroup Properties’ current-year funds from operations (FFO) per share has moved marginally north over the past two months to $7.56.
The Zacks Consensus Estimate for Innovative Industrial Properties’ 2023 FFO per share has moved 3.6% upward in the past two months to $8.66.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.