Four Corners (FCPT) to Buy Outparcel Properties From PREIT

Four Corners Property Trust FCPT recently announced signing a definitive agreement for the purchase of 11 outparcel properties from Pennsylvania Real Estate Investment Trust PEI, commonly known as “PREIT”, for $32.5 million. The move comes as part of its portfolio-expansion efforts.

However, reflecting broader market concerns, shares of Four Corners marginally declined to $26.66 during Friday’s regular session.

Located within highly trafficked and populated corridors in Maryland, Massachusetts, Pennsylvania and South Carolina, the retail outparcels are likely to keep witnessing solid demand.

The portfolio comprises eight single-tenant restaurant properties and three non-restaurant retail properties and each property has a separate, individual lease. The leases have a current weighted average residual term of roughly eight years. The transaction is priced at a 6.5% going-in cash cap rate, exclusive of transaction costs.

A large chunk of the portfolio is expected to be acquired in the second and third quarters of 2022. However, this is subject to customary closing norms, seller’s board approval and regulatory nods.

According to Bill Lenehan, CEO of FCPT, the company continues its “strategy of identifying low-rent outparcel properties leased to strong credit operators.”

Primarily engaged in the ownership and acquisition of high-quality, net-leased restaurants and retail properties, Four Corners seeks potential acquisition opportunities to enhance its portfolio with real estate catering to the restaurant and retail industries.

In sync with such efforts, the company is also shedding assets and redeploying proceeds for its growth endeavors. Recently, the company announced the disposition of an Olive Garden restaurant property, which is located in Florida and operated by Darden Restaurants, for $6.3 million. In an effort to repurpose proceeds into new investment opportunities, Four Corners plans proceeds redeployment from this move through an Internal Revenue Code Section 1031 like-kind exchange.

Four Corners currently carries a Zacks Rank #4 (Sell). Shares of FCPT have rallied 0.3% over the past three months against the industry’s decline of 8.8%.

Image Source: Zacks Investment Research

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Some key picks from the REIT sector include Terreno Realty TRNO and OUTFRONT Media OUT.

The Zacks Consensus Estimate for Terreno Realty’s 2022 funds from operations (FFO) per share has marginally moved upward in the past two months to $1.96. TRNO presently carries a Zacks Rank of 2 (Buy).

The Zacks Consensus Estimate for OUTFRONT Media’s ongoing year’s FFO per share has been raised 51.4% over the past two months to $2.09. OUT sports a Zacks Rank #1 currently.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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