Four Corners Property Trust, Inc.

Good morning and welcome to the FCPT second quarter 2023 financial results conference call. My name is Carla and I will be the operator of today's call. If you would like to register a question of the Q&A portion of the call, please press start followed by one on your telephone keypad. When asking your question, please ensure your telephone is unmuted locally. To evoke a question, you can press start followed by two. I would now like to pass the conference over to our host, Jerry, to begin. Please go ahead when you're ready.

Thank you, Carla. During the course of this call, we will make forward-looking statements which are based on our beliefs and assumptions. Actual results will be affected by known and unknown factors 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 potential risks, please refer to our SEC filings, which can be found on our website at fcpt.com. All the information presented on this call is current as of today, August 2nd, 2023. 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. And with that, I'll turn the call over to Bill.

Thank you, Jerry. Good morning. Thank you for joining us to discuss our second quarter results. I'm going to make introductory remarks. Patrick and Josh will give more details on acquisitions, and then Jerry will discuss the financial and capital raising results. While commercial real estate as a whole is facing challenges, FCPT specifically is very well positioned. Our portfolio continues to perform exceptionally well with 99.7% collections for the quarter and occupancy at 99.9%. We reported second quarter AFFO of 42 cents per share, which is up a cent from Q2 last year and the first quarter of this year. Our casual dining and quick service tenants continue to perform very well. which, along with our low rent levels, provides us ample support to continue growing our dividend. Our EBITDA to rent coverage in the second quarter was 4.8 times for the significant majority of our portfolio that reports this figure. This is amongst the strongest coverage within the net lease industry. Olive Garden, Longhorn Steakhouse, and Chili's, three of our most prominent brands, saw same-store sales rise 4%, 7%, and 10%, respectively. In all three cases, margins improved as commodity and labor inflation eased. For Q2, our cash rental revenues grew 11.1% on a year-over-year basis, including the benefit of rental increases and $379 million of acquisitions in the last 12 months. This included the acquisition of 48 properties in the second quarter for $170 million at an initial cash yield of 6.85%, reflecting rents in place as of June 30th. We have continued to be quite busy in July with the closing of the previously announced Darden transaction for $80 million and an $18 million acquisition of recently constructed developer portfolio with high quality and diversified corporate credit. Including the deals closed in July, for 2023 year to date, we have acquired 79 properties for $301 million at a 6-7 cap rate, which is more than our acquisitions for the full 12 months of 2022 or any prior year for that matter. I'd be remiss if I didn't acknowledge our incredibly talented and dedicated legal and accounting teams, led by our COO, Jim Bratt, and our chief accounting officer, Nicole Stewart. Without their efforts, we would not have been able to seize these acquisition opportunities over the past quarter. We have invested more time and energy over the years to build out our capabilities as a larger and more capable organization. Now, taking a step back, when speaking with investors, we sometimes get the feedback that they have come to know FCPT as a stable and predictable story. As a REIT, we take great compliment to have earned that conservative reputation. We will continue to carve out our niche for quality in the competitive field of net lease. However, we also believe that 2023 has been and may continue to be a differentiated breakout acquisition year for the company. In Q2, we saw FCBT continue to benefit both from an increase of cost of capital and reduce competition for acquisitions overall, particularly in the higher quality brands and credit opportunities we focus on. We are planning to continue to press our advantage, and we're working on an attractive pipeline. With that, I'll turn it over to Patrick.