Four Corners Property Trust (FCPT - Free Report) recently shelled out $4.3 million for the acquisition of a Texas Roadhouse property. The move comes as part of its portfolio-expansion efforts.
The property is occupied under a triple-net lease with the corporate operator and the lease has roughly five years of term remaining. Being positioned in a strong retail corridor, it is likely to keep witnessing solid demand. Moreover, the buyout seems a strategic one, with the transaction being priced at a 6.4% going-in cash capitalization rate.
Primarily engaged in the ownership of high-quality net-leased restaurant properties, Four Corners maintains an investment grade financial position (Fitch BBB-) and seeks attractive acquisition opportunities. The company acquired 23 properties for a total of $36.2 million in first-quarter 2020.
Apart from the above-mentioned acquisition, recently the company revealed a couple of other buyouts as well. Among those, is a four-property portfolio purchase for $6.8 million, as part of the previously-announced outparcel transaction with Pennsylvania Real Estate Investment Trust, commonly known as “PREIT” (PEI - Free Report) .
Located in Maryland, NC, and SC, the properties comprise a Burger King of Restaurant Brands International Inc. (QSR - Free Report) , a Firestone Auto Center, an Olive Garden, and a Starbucks (SBUX - Free Report) , occupied under net leases with a weighted average seven years of remaining term. Priced at a 6.5% going-in cash cap rate, on a portfolio basis, the transaction marked the fourth closing of the prior-announced PREIT portfolio transaction in November.
The other acquisition disclosed this month was that of a corporate-operated Big O Tires property buyout for $2.7 million. Guaranteed by the reputed independent tire retailer TBC Corporation (“TBC”) that operates or franchises 2,383 retail locations across its various brands, including Tire Kingdom, National Tire & Battery, Big O Tires and Midas, the triple-net lease has approximately five years of residual term.
Positioned in a strong retail corridor in Minnesota, the transaction, priced at a 6.6% going-in cash capitalization rate or a 7.3% cash capitalization rate, including a 12% contractual rent increase this October, seems a strategic fit for Four Corners.
While the restaurant industry has been affected by the coronavirus pandemic, the reopening of economy is boosting hopes and things are now looking much better compared with late March, thanks to the recovery in sales. Moreover, as of Jun 18, 2020, the company has been able to collect April, May and June rent payments, totaling roughly 91%, 87% and 87%, respectively, of its portfolio’s contractual base rent for those months. Also, acquisitions are expected to drive the company’s growth over the long term.
Shares of this Zacks Rank #3 (Hold) stock have appreciated 25.7%, so far in the quarter, compared with the industry’s rally of 8.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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