You may not have heard of Four Corners Property Trust (NYSE: FCPT), but you may well have dined at one of its properties. This Mill Valley, California-based real estate investment trust (REIT) is the landlord for 810 locations of brand names like Arby’s, owned by Wendy's (NASDAQ: WEN); Chili’s, owned by Brinker International (NYSE: EAT); Olive Garden and Longhorn Steakhouse, both owned by Darden Restaurant Group (NYSE: DRI); Burger King, owned by Restaurant Brands International (NYSE: QSR); Buffalo Wild Wings; and Taco Bell and KFC, both owned by Yum! Brands (NYSE: YUM).
Restaurants are a subset of commercial real estate that have been particularly hard-hit during the pandemic, but FCPT has fared pretty darn well. In its May 2021 investors presentation, FCPT said occupancy was 99.7% and that it had collected more than 99% of the rent through 2020 and the first quarter of this year.
The portfolio includes 85 restaurant and retail brands with an average weighted lease of 10 years and less than 7.4% of its base rent expiring before 2027. FCPT’s properties are spread across 46 states, and it’s added 126 outparcels since 2017, investing $240 million that includes $34 million it spent in the first quarter of 2021 for new holdings, with a healthy weighted average cap rate of 6.6%.
Striking now while the iron is hot; no pandemic pause in dividends
Taking advantage of the opportunity presented by a troubled CRE market for many, the company now plans to buy up to $150 million more through a partnership with private equity investor Lubert-Adler Real Estate Funds, with the focus on vacant real estate it can lease to creditworthy, growing operators.
At market close on May 3, FCPT stock was trading at $28.79 a share, 5.36% below the 52-week high it reached on Dec. 29 and well off its low of $16.34 from May 14, 2020. It had a market cap of $2.2 billion and was yielding 4.41% based on an annual dividend of $1.27 per share.
Unlike some others in its sector, there’s been no dividend suspension. The company’s last dividend was $0.317 a share paid on April 15, the second-consecutive quarter at that level. Prior to that, FCPT paid $0.305 for four quarters and has consistently raised its payout, growing it by about 30% since March 2016.The Millionacres bottom line
Four Corners Property Trust has not only survived the pandemic recession, it’s thrived, and it seems positioned to continue to take advantage of new opportunities to further build a portfolio of brand-name restaurants and other retailers who have done the same. The tenants pay the rent, and the REIT pays the dividends.
It’s a formula for success that makes FCPT a strong candidate for a buy and hold and to consider accumulating more shares if this kind of performance continues going forward.