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Four Corners (FCPT) Expands Portfolio With Property Buyout
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Four Corners Property Trust (FCPT - Free Report) has announced the buyout of a Taco Bell property situated in a strong retail corridor in Oklahoma for $2.2 million. The move aligns with the company’s portfolio expansion efforts, with real estate leased to strong credit operators.
FCPT’s newly acquired property was priced at a cap rate on rent of 7.3% as of the closing date, excluding transaction costs, and is franchisee-operated under a triple net lease to K-MAC Enterprises, LLC, with around five years of residual term. This is likely to enable the company to generate steady revenues over the long term, making its latest purchase seem prudent.
In a similar move, this October, the company purchased an Oak Street Health property in a highly trafficked corridor in Arkansas for $2.4 million. The property is corporate-operated under a long-term, net lease, and the transaction was priced at a cap rate in range with prior FCPT transactions.
This real estate investment trust (REIT), mainly engaged in the ownership and acquisition of high-quality, net-leased restaurant and retail properties, is making concerted efforts to enhance its portfolio quality and bolster growth through strategic capital-recycling moves.
During the third quarter, FCPT completed 31 property acquisitions for a combined purchase price of $130.2 million. The initial weighted average cash yield for rents in place as of Sep 30, 2023, was 6.4%. The properties have a weighted average remaining lease term of 12.1 years.
Per Bill Lenehan, CEO of the company, “Through the first three quarters, FCPT has achieved a record acquisition growth year, up 13% over 2022 total volume, funded through accretive capital raised earlier in the year. We believe that we are well-positioned in a higher rate environment and expect to be ready to take advantage of opportunities as they arise.”
Also, during the quarter, it disposed of two properties for $11.2 million. This yielded a gain of $0.3 million and a cash yield of 6.7% on rents that were earlier in place and exclusive of transaction costs.
FCPT reported third-quarter 2023 adjusted funds from operations per share of 42 cents, missing the Zacks Consensus Estimate by a whisker. The figure was a cent higher than the prior-year quarter’s tally.
The company’s expansion might face potential headwinds in a high interest rate environment, which could increase borrowing costs for future acquisitions. However, FCPT's investment strategy focused on properties with strong credit operators and long-term leases could help cushion these challenges.
Shares of this Zacks Rank #3 (Hold) company have lost 15% in the past three months compared with the real estate market’s decline of 8.5%.
The Zacks Consensus Estimate for Welltower’s current-year funds from operations (FFO) per share has moved marginally northward over the past week to $3.57.
The Zacks Consensus Estimate for Boston Properties’ ongoing year’s FFO per share has been raised marginally over the past two months to $7.30.
The Zacks Consensus Estimate for EastGroup Properties’ 2023 FFO per share has moved marginally upward in the past month to $7.66.
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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Four Corners (FCPT) Expands Portfolio With Property Buyout
Four Corners Property Trust (FCPT - Free Report) has announced the buyout of a Taco Bell property situated in a strong retail corridor in Oklahoma for $2.2 million. The move aligns with the company’s portfolio expansion efforts, with real estate leased to strong credit operators.
FCPT’s newly acquired property was priced at a cap rate on rent of 7.3% as of the closing date, excluding transaction costs, and is franchisee-operated under a triple net lease to K-MAC Enterprises, LLC, with around five years of residual term. This is likely to enable the company to generate steady revenues over the long term, making its latest purchase seem prudent.
In a similar move, this October, the company purchased an Oak Street Health property in a highly trafficked corridor in Arkansas for $2.4 million. The property is corporate-operated under a long-term, net lease, and the transaction was priced at a cap rate in range with prior FCPT transactions.
This real estate investment trust (REIT), mainly engaged in the ownership and acquisition of high-quality, net-leased restaurant and retail properties, is making concerted efforts to enhance its portfolio quality and bolster growth through strategic capital-recycling moves.
During the third quarter, FCPT completed 31 property acquisitions for a combined purchase price of $130.2 million. The initial weighted average cash yield for rents in place as of Sep 30, 2023, was 6.4%. The properties have a weighted average remaining lease term of 12.1 years.
Per Bill Lenehan, CEO of the company, “Through the first three quarters, FCPT has achieved a record acquisition growth year, up 13% over 2022 total volume, funded through accretive capital raised earlier in the year. We believe that we are well-positioned in a higher rate environment and expect to be ready to take advantage of opportunities as they arise.”
Also, during the quarter, it disposed of two properties for $11.2 million. This yielded a gain of $0.3 million and a cash yield of 6.7% on rents that were earlier in place and exclusive of transaction costs.
FCPT reported third-quarter 2023 adjusted funds from operations per share of 42 cents, missing the Zacks Consensus Estimate by a whisker. The figure was a cent higher than the prior-year quarter’s tally.
The company’s expansion might face potential headwinds in a high interest rate environment, which could increase borrowing costs for future acquisitions. However, FCPT's investment strategy focused on properties with strong credit operators and long-term leases could help cushion these challenges.
Shares of this Zacks Rank #3 (Hold) company have lost 15% in the past three months compared with the real estate market’s decline of 8.5%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are Welltower (WELL - Free Report) , Boston Properties (BXP - Free Report) and EastGroup Properties (EGP - Free Report) , each 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 Welltower’s current-year funds from operations (FFO) per share has moved marginally northward over the past week to $3.57.
The Zacks Consensus Estimate for Boston Properties’ ongoing year’s FFO per share has been raised marginally over the past two months to $7.30.
The Zacks Consensus Estimate for EastGroup Properties’ 2023 FFO per share has moved marginally upward in the past month to $7.66.
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.