The property is occupied under a triple-net lease with roughly four years of residual term. The ground lease is guaranteed by BP corporate and it has a sub-lease to a Dunkin’ Donuts DNKN franchisee. The property also includes a convenience store.
The property is positioned in a robust retail corridor and is likely to keep witnessing solid demand. Moreover, the buyout seems a strategic one, with the transaction being priced at a 6.5% cash capitalization rate (excluding transaction costs).
Primarily engaged in the ownership of high-quality net-leased restaurant properties, Four Corners maintains an investment grade financial position (Fitch BBB-) and seeks solid acquisition opportunities. The company acquired 23 properties for a total of $36.2 million in first-quarter 2020.
Apart from the above-mentioned acquisition, recently the company revealed a couple of other buyouts as well. It has shelled out $1.6 million for the acquisition of Carrabba’s property from Seritage. This South Carolina property is corporate operated, with a remaining lease term of three years.
The company also recently bought a LongHorn Steakhouse property from Brookfield Properties for $1.8 million. This Oklahoma property is corporate operated under a triple-net lease, with the lease roughly having five years of term remaining.
Furthermore, the company has made acquisitions of the Texas Roadhouse property in Maine and Colorado. Also, there is a two-property portfolio purchase for $7.6 million, as part of the outparcel transaction with Pennsylvania Real Estate Investment Trust, commonly known as “PREIT” PEI.
While the coronavirus pandemic has hit the restaurant industry hard, the reopening of economy is boosting hopes and things are now looking much better compared with late March, thanks to the recovery in sales. In addition, as of Jun 18, 2020, the company has been able to collect April, May and June rent payments, totaling 91%, 87% and 87%, respectively, of its portfolio’s contractual base rent for those months. Further, acquisitions are expected to drive growth over the long term.
Shares of this Zacks Rank #3 (Hold) company have appreciated 22.6%, while its industry has gained 3.8% in the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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BP p.l.c. (BP): Free Stock Analysis Report
Pennsylvania Real Estate Investment Trust (PEI): Free Stock Analysis Report
Dunkin Brands Group, Inc. (DNKN): Free Stock Analysis Report
Four Corners Property Trust, Inc. (FCPT): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.