Four ners Property Trust(US:FCPT)2026-02-12 18:02Financial Data and Key Metrics Changes - The company reported Q4 AFFO per share of $0.45, with full-year AFFO at $1.78 per share, reflecting a 2.9% growth over 2024 [22] - Q4 cash rental income was $67.5 million, representing an 11.1% growth compared to the same quarter last year [23] - Annualized cash-based rent at quarter end was $264.2 million, with a weighted average five-year annual cash rent escalator of 1.5% [23] Business Line Data and Key Metrics Changes - In Q4, the company acquired 30 properties for $95 million at a blended cap rate of 7%, marking a 20 basis point expansion over the previous quarter [12] - For the full year 2025, the company acquired 105 properties for $318 million at a blended cap rate of 6.8% [12][13] - The company maintained a strong portfolio occupancy rate of 99.6%, with 95% of leases expiring in 2025 remaining occupied [24] Market Data and Key Metrics Changes - The company has diversified its tenant base, with 37% of rents coming from sectors outside casual dining, including automotive service (13%), quick service restaurants (11%), and medical retail (10%) [9] - The company sidestepped major tenant credit issues, reporting 0 bad debt expense in 2020 and 2025 [5] Company Strategy and Development Direction - The company focuses on acquiring high-quality real estate occupied by creditworthy tenants, emphasizing a conservative capital allocation strategy [3][4] - The company is expanding into new sectors such as grocery and equipment rental, while maintaining a cautious approach to ensure alignment with existing underwriting criteria [15][16] - The company aims to leverage its strong balance sheet and low leverage to capitalize on acquisition opportunities in 2026 [11][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the quality of their real estate and the ability to re-tenant properties, particularly in light of recent tenant brand changes [8] - The company anticipates a strong year in 2026, supported by favorable debt capital markets and a robust pipeline of acquisition opportunities [11][76] Other Important Information - The company has no debt maturities until December 2026, providing a stable financial outlook [21] - The company reported a cash G&A expense of $18 million for the year, at the bottom of its guidance range [23] Q&A Session Summary Question: Can you discuss the market for United Rentals and industrial outdoor storage? - Management noted that the sector is attractive due to the value in land residuals and the presence of creditworthy tenants, with a large addressable market [28] Question: What is the status of the Bahama Breeze properties? - Management confirmed that several properties will be converted to other Darden brands, with high interest from potential new tenants for the remaining locations [32][38] Question: How does the company view its leverage strategy? - Management indicated that they are disciplined in capital allocation and have ample liquidity for acquisitions without approaching their leverage ceiling [50] Question: What is the company's exposure to Red Lobster? - Management stated that Red Lobster is performing better under new ownership, with stores predominantly under a master lease affirmed at the same rent [45] Question: What is the company's approach to diversification? - Management emphasized a balanced approach, avoiding sectors that have not proven resilient through cycles, while focusing on high-quality, creditworthy tenants [46]