Portfolio Performance - The portfolio is 99.8% leased, demonstrating stability[11] - Same-store rent growth has averaged 1.5% over the last four quarters, indicating consistent performance[11] - Unit-level coverage is strong at 3.6x, with approximately 99% of ABR required to report unit-level P&Ls, reflecting healthy tenant performance[11] - Only 4.5% of ABR is expiring through 2029, with a coverage of 4.0x, indicating low lease expiration risk[11] Balance Sheet & Liquidity - The company issued $400 million of 5.400% senior unsecured notes due 2035, strengthening the balance sheet[11] - Approximately $14 million of common equity was raised through the ATM Program[11] - Proforma Net Debt / Annualized Adjusted EBITDAre is 3.8x at 3Q'25-end, indicating low leverage[11] - The company has ~$1.4 billion of pro forma liquidity, providing excellent financial flexibility[11] Investment & Disposition Activity - Investments of approximately $370 million were closed at an initial cash yield of approximately 8.0%[11] - Dispositions of approximately $11 million were closed at a 6.6% cash yield, demonstrating accretive capital recycling[11]

Financial Data and Key Metrics Changes - For Q2 2025, the company recorded revenue of $124.9 million and a net loss attributable to common stockholders of $35.1 million, with AFFO at $53.1 million or $0.24 per share [16][19] - The gross outstanding debt balance was $3.1 billion at the end of Q2 2025, a reduction of $2 billion from the end of 2024 [17] - The net debt to adjusted EBITDA ratio improved to 6.6 times, down from 8.1 times at the end of 2024 [17] Business Line Data and Key Metrics Changes - The company completed the $1.8 billion sale of its multi-tenant retail portfolio, increasing occupancy to 98% from 97% as of year-end 2024 [5][6] - The percentage of leases with rent escalators increased to 88% from 81% [6] - The office portfolio maintained 100% rent collection and had the highest percentage of investment-grade tenancy at 77% [9] Market Data and Key Metrics Changes - Geographically, 70% of straight-line rent is earned in North America and 30% in Europe, providing diversification across economic cycles [13][14] - The company has reduced its exposure to the gas and convenience store sector, with assets sold amounting to approximately $108 million, decreasing portfolio exposure to 2.1% from 5.3% [10][11] Company Strategy and Development Direction - The company aims to drive sustainable long-term growth by optimizing its portfolio, reducing leverage, and lowering its cost of capital [5] - The strategic focus includes reducing exposure to non-core assets, particularly in the office sector, while maintaining a disciplined approach to tenant retention [9][10] - The company plans to use proceeds from asset sales to fund stock buybacks and further deleverage [43][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in performance and raised the lower end of AFFO per share guidance to a range of $0.92 to $0.96 for the remainder of 2025 [19] - The company is focused on completing ongoing initiatives, including dispositions and lease renewals, to maintain earnings within the stated guidance range [27] - Management acknowledged the disappointing share price performance despite improvements in the balance sheet and extended debt maturities [13] Other Important Information - The company repurchased 10.2 million shares at a weighted average price of $7.52, totaling $77 million, capitalizing on an AFFO yield of approximately 12% [12] - The company has no remaining debt maturities in 2025 and $95 million of debt tied to retail assets expiring in 2026 [12] Q&A Session Summary Question: What is the target percentage for office assets and the timeline for reduction? - Management indicated a strategic approach to office portfolio reduction, emphasizing the strong performance and high-quality tenants, without providing specific targets or timelines [25][26] Question: When does management expect earnings to begin growing again? - Management raised the lower end of the earnings guidance to $0.92 to $0.96 per share and indicated that they would provide guidance for 2026 later in the year [27] Question: Can management comment on the recent share sale by the CEO? - The CEO explained that the sale was due to personal obligations and should not be interpreted negatively regarding the company's future [28][29] Question: How does management view the auto manufacturing sector within the portfolio? - Management expressed confidence in the critical assets within the auto manufacturing sector, particularly those tied to US manufacturers, and does not foresee significant issues [33][34] Question: What is the pace of future dispositions? - Management indicated a pipeline of approximately $300 million in future dispositions and emphasized the strategic nature of these sales [42]

Financial Data and Key Metrics Changes - The company reported AFFO per share of $0.44, which is up 2.8% from Q2 last year [23] - Rental income for Q2 was $64.5 million, representing growth of over 11% compared to the previous year [23] - Cash G&A expense, excluding stock-based compensation, was $4.4 million, representing 6.9% of cash rental income for the quarter, down from 7.4% in the same quarter last year [24] Business Line Data and Key Metrics Changes - In Q2, the company acquired 24 properties for $84 million at a blended cap rate of 6.7% [14] - The automotive sector accounted for 68% of total acquisition volume, indicating a strong focus on this area [14] - The company has diversified its portfolio, with 34% of rent now coming from sectors outside casual dining [10] Market Data and Key Metrics Changes - The company reported a rent coverage ratio of five times for the majority of its portfolio, one of the strongest in the net lease industry [8] - The average age of passenger vehicles in the U.S. is now at a record 14 years, which is expected to drive demand for automotive services [16] Company Strategy and Development Direction - The company aims to maintain a defensive portfolio focused on central retail and services, which are seen as tariff resistant [11] - The strategy includes modulating acquisitions based on cost of capital, with a focus on high-quality assets [6][7] - The company is committed to maintaining a strong balance sheet, with a net debt to adjusted EBITDAre ratio of 4.5 times [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's resilience, highlighting a strong track record with low bad debt expense [65] - The company is well-positioned to execute its strategy regardless of near-term market conditions, with significant liquidity available for acquisitions [65] Other Important Information - The company has raised nearly $505 million in equity over the last twelve months, providing significant capacity for acquisitions [20] - The portfolio occupancy remains strong at 99.4%, with 99.8% of base rent collected for Q2 [25] Q&A Session Summary Question: Inquiry about acquisition team capacity - Management indicated that the team is appropriately staffed and has the capacity to do more acquisitions if favorable pricing is available [29] Question: Impact of cap rate changes on acquisition opportunities - A 25 basis point decrease in cap rates could potentially increase acquisition volume by $100 million to $200 million [31] Question: Darden exposure and acquisition strategy - Management confirmed that while they have diversified Darden exposure, they will still acquire Darden-related assets if the pricing is favorable [33] Question: Deal flow and competitive landscape - Management noted that deal flow has been consistent, but pricing remains a key factor in determining acquisition activity [48] Question: Outlook for veterinary retail property acquisitions - Management expressed interest in the veterinary retail space, indicating potential for more deals in the future [61]

Financial Data and Key Metrics Changes - The company reported AFFO per share of $0.44, which is up 2.8% from Q2 last year [20] - Rental income for Q2 was $64.5 million, representing growth of over 11% compared to the same quarter last year [20] - The net debt to adjusted EBITDAre was 4.5 times, which is below the stated guidance of 5.5 to 6 times [18] Business Line Data and Key Metrics Changes - In Q2, the company acquired 24 properties for $84 million at a blended cap rate of 6.7% [12] - The automotive sector accounted for 68% of total acquisition volume, indicating a strong focus on this area [12] - The company has diversified its portfolio, with 34% of rent now coming from sectors outside casual dining [8] Market Data and Key Metrics Changes - The company noted that same-store sales for Olive Garden and LongHorn grew nearly 7% for the quarter ended May 2025 [8] - Chili's reported a same-store sales growth of 32% for the quarter ended March 2025, indicating strong performance in the casual dining sector [7] Company Strategy and Development Direction - The company aims to maintain a defensive portfolio focused on central retail and services, which are seen as tariff resistant [9] - The strategy includes modulating acquisitions based on the cost of capital, allowing the company to protect spreads without compromising portfolio quality [6] - The company is committed to maintaining high-quality standards in acquisitions and has a strong competitive advantage in its ability to fluctuate acquisition volumes [6][7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's resilience, highlighting a strong track record with low bad debt expense and effective releasing results [65] - The company anticipates a pullback in consumer spending due to potential recession or high inflation but believes it is well-positioned with low rents [9] - Management indicated that the current market conditions allow for continued execution of the company's strategy, with significant available capital for acquisitions [65] Other Important Information - The company has raised nearly $505 million in equity over the last twelve months, providing significant capacity for acquisitions [17] - The portfolio occupancy remains strong at 99.4%, with 99.8% of base rent collected for Q2 [22] Q&A Session Summary Question: Inquiry about acquisition team capacity - Management stated that the company is appropriately staffed and has the capacity to do more acquisitions if favorable pricing is available [25][27] Question: Impact of cap rate changes on acquisition opportunities - Management indicated that a 25 basis point decrease in cap rates could significantly increase acquisition opportunities, potentially by $100 million to $200 million [29][30] Question: Darden exposure and acquisition strategy - Management confirmed that while they have diversified Darden exposure, they will not hesitate to acquire Darden-related assets if the pricing is favorable [31][32] Question: Deal flow and competitive landscape - Management noted that deal flow has been consistent, but pricing remains a key factor in determining acquisition activity [48][49] Question: Future of veterinary retail property acquisitions - Management expressed interest in the veterinary retail sector, indicating it is a space they are comfortable exploring further [61]

Group 1 - The article focuses on the real estate life cycle and the changes occurring within the net lease sector over the past three years [1] - The net lease sector has been analyzed in depth, highlighting the challenges it faces [1]

Portfolio & Leasing - The portfolio is healthy and stable, with 99.6% leased[11] - Same-store rent growth has averaged 1.4% over the last four quarters[11] - Only 4.9% of ABR is expiring through 2029, with a coverage of 4.0x[11] - The portfolio is diversified, with the top 10 tenants representing just 17.6% of ABR[11] - 93% of cash ABR comes from service-oriented and experience-based tenants, indicating e-commerce resilience[28] Financial Performance & Liquidity - The company raised approximately $119 million of common equity through the ATM Program in 2Q'25[11] - The company settled ~$20 million of forward common equity, leaving ~$507 million of net proceeds available from unsettled forward equity as of June 30, 2025[11] - Proforma Net Debt / Annualized Adjusted EBITDAre is 3.5x at 2Q'25-end[11] - The company has ~$1.3 billion of pro forma liquidity[11] Investment & Capital Recycling - Closed investments of ~$334 million at an initial cash yield of ~7.9%[11] - Closed ~$46 million of dispositions at a 7.3% cash yield[11] Debt Profile - Weighted average debt maturity is 3.8 years, and the weighted average interest rate is 4.2%[11]

Portfolio Performance - The portfolio is 99.7% leased, demonstrating stability[15] - Same-store rent growth has averaged 1.4% over the last four quarters[15] - Only 5.4% of ABR is expiring through 2029, with a coverage ratio of 4.0x[15] - The portfolio has experienced an annualized rent loss of approximately 30 bps since inception in 2016[19] Balance Sheet and Liquidity - Pro forma Net Debt / Annualized Adjusted EBITDAre is 3.4x at 1Q'25-end, indicating low leverage[15] - The company has approximately $1.5 billion of pro forma liquidity[15] - The weighted average debt maturity is 3.9 years, with a weighted average interest rate of 4.1%[15] Investment Activity - Closed investments of approximately $227 million in 2Q'25 to date, with an expected cash yield of approximately 7.8%[15] - Approximately $29 million of dispositions closed in 2Q'25 to date at a 7.2% cash yield[15] - Approximately $237 million under PSA or LOI, with 2Q'25 expected cash yield of ~7.8%[15] Portfolio Composition - Top 10 tenants represent 17.3% of ABR, indicating diversification[15] - 93% of cash ABR comes from service-oriented and experience-based tenants[39]

Company Highlights - FCPT acquired 64 properties for $199 million at a 71% cap rate in the last 5 months of 2024[7] - The company raised over $102 million in Q4 and $104 million in Q1 to date through ATM[7] - FCPT has $204 million of unsettled equity forwards as of March 17, 2025[7] - The company extended and upsized its credit facility capacity in January 2025, including a $350 million revolver capacity and a $225 million term loan[7] Portfolio Composition - Olive Garden accounts for 34% of the portfolio, while LongHorn represents 10%[7] - The company's portfolio consists of 1220 leases across 163 brands[50, 54] - Darden spin-off properties have 56x rent coverage[15, 18] Financial Metrics - FCPT's net debt to adjusted EBITDAre ratio is 49x[15, 52] - The company's average annual escalator is 14%[52] - FCPT's Q4 AFFO per share is $044[50]

Financial Highlights - FCPT's annual base rent has grown 2.6x from $94 million in 2015 to $244 million in Q1 2025[8, 12] - The company's enterprise value has increased 3.1x from $1.3 billion in 2015 to $4.1 billion in Q1 2025[8, 10] - FCPT raised $102 million in Q4 2024 and $169 million year-to-date in 2025 through ATM [7] - FCPT has $254 million of unsettled equity forwards as of April 30, 2025[7, 17] - The company has $350 million undrawn revolver capacity[7, 17] - FCPT reported AFFO per share of $0.44 in Q1 2025[15] Portfolio Composition - Olive Garden accounts for less than 34% of Annual Base Rent (ABR)[7, 28] - LongHorn Steakhouse accounts for less than 10% of ABR[7, 28] - The top five brands now represent less than 55% of ABR[7, 8] - The portfolio is 99.4% occupied[17, 33]