Four ners Property Trust(US:FCPT)2023-11-03 01:43Financial Data and Key Metrics Changes - The company reported third quarter AFFO of $0.42 per share, which is an increase of $0.01 from Q3 last year and in line with expectations [9] - Cash rental revenues grew by 12.3% year-over-year, benefiting from rental increases and $439 million of acquisitions in the last 12 months [18] - The existing portfolio achieved 99.9% rent collections and 99.8% occupancy at quarter end [9] Business Line Data and Key Metrics Changes - The company had a record acquisition year with $322 million of capital deployed year-to-date, up 13% from the full-year 2022 [9] - Acquisitions for 2023 year-to-date were split between restaurant assets (38%), medical retail (37%), and auto service (23%) [30] - Same-store sales growth was reported at 6.1% for Olive Garden and 8.1% for Longhorn [10] Market Data and Key Metrics Changes - The restaurant sector saw year-over-year sales growth in the 3% range, while the casual dining sector experienced small declines [26] - Cap rates have improved significantly in response to the higher interest rate environment, with expectations for further increases in the short term [14] Company Strategy and Development Direction - The company emphasizes disciplined capital allocation and does not provide earnings guidance to avoid perverse incentives [4][28] - The focus remains on acquiring high-quality properties at attractive pricing, with a scoring model applied consistently across different asset types [13][86] - The company is prepared to operate successfully in the current environment and expects to increase activity when it is accretive to do so [12] Management's Comments on Operating Environment and Future Outlook - Management noted that the current capital market environment is challenging for deploying capital accretively, but they remain disciplined [28] - There is a cautious approach to acquisitions, with a focus on maintaining leverage below 6 times [45] - Management is monitoring the potential impact of GLP-1 drugs on tenant businesses but does not see it as a major concern [60][62] Other Important Information - The company has no lease expirations for the remainder of 2023, with less than 2% of the rent stream maturing in 2024 [17] - The company ended the quarter with $6 million of unrestricted cash and $220 million of undrawn revolver capacity, totaling $237 million of available capacity [50] Q&A Session Summary Question: Can you discuss the differential between cap rates for restaurant assets and non-restaurant assets? - Management indicated that there is no significant gap currently, and they are focused on maintaining a balanced portfolio [22] Question: What is the baked-in earnings growth for 2024 if the company does nothing externally? - Management did not provide a specific number but emphasized that they focus on quality acquisitions rather than just growth [89] Question: How do you view the impact of GLP-1 drugs on your tenants? - Management believes that while there may be minor behavioral changes, they do not see it as a major concern due to long-term leases allowing tenants to adapt [60][62] Question: Are there any other tenants on the watch list? - Management confirmed that they are monitoring tenants but did not specify any additional concerns beyond what has been previously discussed [83]