Four Corners Property Trust, Inc.

Good morning and welcome to the FCPT third quarter 2020 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Jerry Morgan, CFO. Please go ahead, sir.

Thank you, Judith. During the course of this call, we will make forward-looking statements which are based on beliefs and assumptions made by us. Our actual results will be affected by known and unknown factors, including the uncertainty related to the scope, severity, and duration of the COVID-19 pandemic that are beyond our control or ability to predict. Our assumptions are not a guarantee of future performance, and some will prove to be incorrect. For a more detailed description of some potential risks, please refer to our FCC filings, which can be found at fcpt.com. All the information presented on this call is current as of today, October 28, 2020. In addition, reconciliation to non-GAAP financial measures presented on this call, such as FFO and AFFO, can be found in the company's supplemental report, also available on our website. And with that, I'll turn the call over to Bill.

Good morning. Thank you, everyone, for joining us to discuss our third quarter results. As we approach the fifth anniversary of FCPT's formation, we are proud of the progress made in building the team and growing and diversifying our high-quality portfolio. We are very pleased with the third quarter results and the strong level of 99% of contractual rent collections for the quarter and for October. While this has been one of the most challenging operating periods for restaurants in recent history, it's very important to differentiate between different restaurant types and specifically the kinds of properties that Four Corners owns. Our assets are typically suburban and not an urban course. They're all branded and they're all part of large chains. These restaurant operators have proven resilient in adjusting their business models as many in the quick service and casual dining sectors have returned to sales near 2019 levels. In the case of quick service operators, some have even exceeded 2019 levels. As we said last quarter, we continue to believe that strong operators, like those in our portfolio, should benefit in the long run from their scale and from their investment in technology and off-premise to-go capabilities. The coming months could be a fluid situation and, of course, hard to predict for restaurant operators, but we believe that the FCBT portfolio will continue to perform very well. On collections, a quick recap of the second and third quarters. For the second quarter, we collected over 92% of second quarter rent payments, agreed to defer approximately 3% of rent payments until defer the 3% and to abate an incremental 4% of rent as part of lease amendments with favorable modifications. Today, we're working with three remaining tenants representing less than 0.4% of the portfolio to either modify their leases or terminate and then release the properties. In the third quarter, we've collected 99.6% of contractual rent, and there were no additional deferrals or abatements. Our Caro subsidiary, which operates six Longhorn Steakhouses in San Antonio, continues to also be impacted by COVID. Caro provides a wonderful window and real-time understanding into what our tenants are doing to adapt. The Caro team's hard work resulted in a return to profitability in the third quarter with positive EBITDA of $110,000. We broke ground in October to construct our seventh Carrow Longhorn restaurant, which we located next to a brand new Olive Garden that we acquired in July. Now, returning to our reported results in the second quarter. We achieved AFFO per share of 37 cents, which represents a 2 cent and 5.7% year-over-year increase, and a 3 cent increase from the second quarter, which had been impacted by COVID-related variances. Turning to acquisitions. I would remind everyone that we resumed our acquisition activities in the second half of June after we had clarity that our portfolio was going to be in very strong shape. We sharpened our focus on the most stable and credit-worthy properties in our pipeline. This meant there were some targets that we decided to pass on, but in almost every case we found substitutes from the sellers that we liked. In the quarter, we acquired 18 properties for a combined purchase price of $48 million at an initial weighted average cash yield of 6.3%. Speaking to the quality of these recent acquisitions, 17 of the 18 leases are with a brand's corporate operator or guaranteed by the corporate entity, and 10 of the leases are ground leases where FCPT owns the land and a tenant constructed the building. This typically equates to very low rents. Stepping back, I'd like to make two additional comments on acquisitions. For the year to date through today, we've acquired or made investments into properties totaling over $133 million, even with the pause for the second quarter. We are quite busy now, which is typical for this time of the year, but specifically I wanted to highlight the potential for tax-driven transactions that we're seeing in large volumes right now, with sellers trying to get ahead of possible tax law changes. Secondly, our out-parcel acquisition strategy continues to pay dividends. Almost half of the acquisition volume in the quarter were out-parcels, and since we initiated the out-parcel effort in October 2017, We've now closed over $220 million, representing 120 properties. These can be difficult, lengthy transactions to close due to the parcelization and legal process, but they're compelling properties given the typically low rents and preponderance of ground leases and strong corporate operators. Now I'd like to turn to the announcement we made on October 5th regarding the strategic venture with Lupert Adler to invest up to $150 million to acquire and retenant vacant retail buildings. We began thinking about this idea in July of how we could position ourselves to buy vacated restaurant properties. These are brands that we avoided due to credit concerns, but some were well located from a fundamental real estate standpoint. Many of these operators have been in these locations for 30 or 40 years, and so we could see some good locations where there's an opportunity to convert them into new stores for strong and growing brands. This in turn will support the local retail areas and communities in their recovery from the economic impact of COVID-19. FCPT will invest up to $20 million in the venture, with Lupert Adler contributing the remainder of the capital. In addition, FCPT will have the right, but not the obligation, to purchase properties from the venture for FCPT's long-term ownership portfolio once the properties are re-tenanted and stabilized. We think this is a great vehicle for us to strengthen the relationships with existing tenants, and Lupert Adler brings experience and a strong track record of releasing vacant properties including transactions such as Toys R Us, Shopko, and Albertsons. Thus far, we are really impressed with what they bring to the table, and we very much enjoy working with them. Finally, before I turn it over to Jerry to discuss some of the financial results, an operational update. Our team continues to work in combination of remote and in-office days and remains highly effective. We made some wonderful additions to the group in the third quarter, with Samantha joining as real estate counsel Kelly coming on board as real estate controller, Christy becoming our new human resources manager, and Truman returning full-time from Claremont, Montana as an investment analyst. Everyone's bio is on the website if you're interested in learning more. In summary, we posted rent collections for Q3 that I believe are the highest in the net lease sector, which we hope and expect to continue on a go-forward basis. We are acquiring properties at good pace again, and we are excited – to be building the portfolio and working on a new strategic venture with Bluebird Adler. Now, Jerry, we'll take you through the financial results. Jerry.