Four ners Property Trust(FCPT) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents FCPT's unaudited consolidated financial statements for Q2 2025, along with detailed accounting notes Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------------- | :------------ | :---------------- | | Total Assets | $2,765,517 | $2,653,026 | | Total Liabilities | $1,282,575 | $1,202,236 | | Total Equity | $1,482,942 | $1,450,790 | | Real estate investments, net | $2,538,855 | $2,423,139 | | Cash and cash equivalents | $5,981 | $4,081 | | Term loan and revolving credit facility, net | $580,780 | $516,250 | | Senior unsecured notes, net | $621,965 | $621,639 | Consolidated Statements of Income Consolidated Statements of Income Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $72,842 | $66,479 | $144,318 | $132,946 | | Total operating expenses | $31,807 | $29,517 | $64,695 | $59,842 | | Net income | $27,955 | $24,702 | $54,141 | $48,776 | | Net Income Available to Common Shareholders | $27,924 | $24,672 | $54,080 | $48,716 | | Basic net income per share | $0.28 | $0.27 | $0.54 | $0.53 | | Diluted net income per share | $0.28 | $0.27 | $0.54 | $0.53 | | Dividends declared per common share | $0.3550 | $0.3450 | $0.7100 | $0.6900 | Consolidated Statements of Comprehensive Income Consolidated Statements of Comprehensive Income Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $27,955 | $24,702 | $54,141 | $48,776 | | Other comprehensive income (loss) | $(5,594) | $98 | $(13,863) | $5,666 | | Comprehensive income | $22,361 | $24,800 | $40,278 | $54,442 | | Comprehensive Income Attributable to Common Shareholders | $22,336 | $24,770 | $40,233 | $54,375 | Consolidated Statements of Changes in Equity Consolidated Statements of Changes in Equity Highlights (in thousands) | Metric | June 30, 2025 (Six Months, in thousands) | December 31, 2024 (in thousands) | | :--------------------------------------- | :------------------------- | :---------------- | | Balance at beginning of period | $1,450,790 | $1,259,863 | | Net income | $54,141 | $48,776 | | Other comprehensive income (loss) | $(13,863) | $5,666 | | ATM proceeds, net of issuance costs | $61,993 | $9,283 | | Dividends and distributions to equity holders | $(71,700) | $(63,430) | | Stock-based compensation, net | $1,581 | $1,254 | | Balance at June 30, 2025 | $1,482,942 | $1,261,412 | Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $95,319 | $67,299 | | Net cash used in investing activities | $(144,672) | $(63,410) | | Net cash provided by (used in) financing activities | $51,253 | $(11,505) | | Net increase (decrease) in cash and cash equivalents | $1,900 | $(7,616) | | Cash and cash equivalents at end of period | $5,981 | $17,167 | Notes to Consolidated Financial Statements NOTE 1 – ORGANIZATION FCPT is a publicly traded REIT, owning and leasing restaurant and retail properties on a triple-net basis - FCPT is a publicly traded REIT focused on owning, acquiring, and leasing restaurant and retail properties on a triple-net basis[21] - The company operates primarily through Four Corners Operating Partnership, LP (FCPT OP), with FCPT GP as its sole general partner[21] - FCPT intends to maintain its REIT qualification, requiring distribution of at least 90% of its REIT taxable income to shareholders[24] NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Details FCPT's key accounting policies for consolidation, segments, real estate, leases, debt, and new standards - FCPT operates in two reportable segments: real estate operations and restaurant operations, with performance monitored by the CEO[27] - Real estate acquisitions are accounted for as asset acquisitions, with purchase price allocated to land, building, and improvements based on fair values[32][33] - The company uses interest rate derivatives for risk management, primarily cash flow hedges, to manage interest rate variability[47] - New accounting standards ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Expense Disaggregation Disclosures) are being evaluated for potential impact, with effective dates in 2024 and 2026/2027 respectively[76][77] NOTE 3 – CONCENTRATION OF CREDIT RISK FCPT faces significant credit risk concentration from Darden leases, Olive Garden brands, and Texas properties - Darden leases represent approximately 46.5% of FCPT's scheduled base rents, indicating significant tenant concentration[80] - Olive Garden branded locations account for approximately 33.0% of revenues received under leases, highlighting brand concentration[81] - Texas is a concentrated state, contributing approximately 10.2% of total rental revenue[81] NOTE 4 – REAL ESTATE INVESTMENTS, NET AND INTANGIBLE ASSETS AND LIABILITIES, NET Details FCPT's real estate investments and intangibles, totaling $2.54 billion net, with significant H1 2025 acquisitions Real Estate Investments, Net (in thousands) | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------------- | :------------ | :---------------- | | Total gross real estate investments | $3,334,117 | $3,198,644 | | Less: accumulated depreciation | $(795,262) | $(775,505) | | Real estate investments, net | $2,538,855 | $2,423,139 | | Int