Four Corners Property Trust Inc (FCPT) (Q2 2026) Earnings Call Highlights: Record Investment ...

Q & A Highlights

Q: Given the elevated acquisition volume might not be fully appreciated by the market, would you explore the idea of providing guidance in some form or how are you thinking about that? A: William Lenehan (President, CEO, Director): We've added a bunch of new disclosure that should help people get there. I would agree, it seems like analysts have been slow to update their numbers. But for now, I think we're going to be consistent with how we've done over the last decade since inception and not provide acquisition or earnings guidance.

Q: As you speak in discussions around the 2027 Darden expirations, what's your latest thinking on overall renewal economics with a healthy coverage of six times, does that create an opportunity to push rents higher or most of those leases governed by renewal extension options? A: William Lenehan (President, CEO, Director): They're entirely governed by renewal extension options for five years at 1.5% growth over the prior year. So we would expect, as I said in the prepared remarks, very high level of renewals. These are for '27 maturities, and we have a favorable 12-month notification period, so those will start coming in towards the end of October.

Q: You talked about grocery and industrial outdoor storage as subsectors you're exploring. What are some of the things that are making those subsectors more attractive to you? A: William Lenehan (President, CEO, Director): They match many of the dynamics that we like of restaurant, auto service and medical retail. Their mission-critical basis is reasonable, there are large tenants, and the pricing works consistently with the other sectors that we look at. On grocery, some grocery price is tighter, so we have to pick our spots. With storage, it's something I've done a lot of when I was on the board of Gramercy, so I have a lot of familiarity with it.

Q: I want to talk about Mission Pet Health. Tell me about how the business is performing and what the underwriting assumptions were in the context of really very high six times rent coverage, and how's the business growing, what's the capital structure with the private equity firm? A: William Lenehan (President, CEO, Director): These properties were already under a sale-leaseback with two large master leases making up 100 of the 102 properties. Shore had capitalized a real estate fund, and when they were buying vet businesses, if real estate was available for sale, the real estate fund would buy that real estate. We bought the entirety of that fund. It's six times covered, a very strong entity providing a guarantee. Silver Lake recently co-invested into the business along with Shore. It is a company that might go public in the next couple of years, but just a very large, stable, high-scoring portfolio. Out of the 102 properties, the vast majority we would have been interested in on a one-off basis, but to get them together in a master lease with 2% rent growth is very favorable.

Q: Following a couple of themes in the call, are you in the kind of a red, green or yellow zone on the equity bill? A: William Lenehan (President, CEO, Director): I think we're in the yellow zone. We've been very disciplined about that since inception. I think it's one of the things that makes us stand out is how disciplined we are in capital allocation. My background is as an equity investor, and I fundamentally believe that companies that are disciplined about capital allocation are worth more. So we feel like it's not being reflected in our stock right now, and we're putting up the results that should change that.

Q: Pat, maybe just to circle back on what you were talking about on the balance sheet. Some of the activity you had in the quarter is handling some maturities coming up, but you still have a few maturities that aren't spoken for yet. Could you just talk about your plans for those and what you're seeing on pricing? A: Joshua Zhang (Managing Director of Investments): We have the fully undrawn revolver, and it's always a backstop if we wanted to take out any of those maturities with that. I'd also point out the remarkable support we've had in the lending market, having completed $600 million of term loans in the last couple of months. The support for our name and the credit in our portfolio is just really strong, so there's a lot of opportunities to address it. We could have addressed them sooner, but those rates are really attractive rates and we want to enjoy them.

Q: The recent reduction in the debt spreads, have they benefited from that incremental diversification and the big portfolios that you closed or is that a future opportunity where you can see further benefit? A: William Lenehan (President, CEO, Director): I think it's just consistent with a consistent grinding down of our cost of capital as we get larger and the portfolio matures. The original spin portfolio is 30% of where we are today. We've gotten a lot bigger, it's a lot more diverse, it's a much more seasoned company. Our acquisition team at inception was just a handful of folks, now it's 10% and growing, so I think we just have a lot more capability and that's reflected in the stability of our balance sheet and improved pricing.

Q: Bill, as some of this leasing gets done over the next couple of years, has there been any consideration to maybe consider continuing to pare down your Darden exposure with some asset sales? A: William Lenehan (President, CEO, Director): As far as selling Darden assets, we've done it occasionally. These are very high-quality, very in-demand properties. We get unsolicited interest all the time and we feel very confident that they're going to renew. So there's not a ton of motivation to sell them. Every once in a while we get an offer that's too good to refuse, but we typically want to hold those assets.

Q: Is it safe to think that we'll at least see a little bit of a deceleration in acquisition activity for the next couple of months or is it still all systems go? A: William Lenehan (President, CEO, Director): I think it really depends on our equity cost of capital. Our debt cost of capital is very attractive. We have some leverage capacity to grow into. I think it really comes to our equity cost of capital, which isn't where we want it to be. We think that the market is missing

For the complete transcript of the earnings call, please refer to the full earnings call transcript .