Four Corners Property Trust, Inc.

Good morning all and thank you for joining us for the FCPT second quarter 2024 financial results conference call. My name is Carly and I'll be the call coordinator for today. During the presentation you can register a question by pressing star followed by one on your telephone keypad and to remove yourself from that line of questioning you can press star followed by two. I'll now hand over to Patrick Weining to begin. Please go ahead.

Thank you Carly. 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 some potential risks, please refer to our SEC filings, which can be found at fcpt.com. All the information presented on this call is current as of today, August 1, 2024. 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. With that, I will turn the call over to Bill.

Good morning. Thank you for joining us to discuss our second quarter results. I will make introductory remarks, Josh will comment further on the investment market, and Patrick will discuss our financial results and capital position. We reported second quarter AFFO of 43 cents per share, which is up one cent or 2.4% from Q2 last year. Our existing portfolio continues to perform very well with higher rent collections and occupancy. Our EBITDA to rent coverage in the second quarter was 4.9 times for the majority of our portfolio that reports this figure. This remains amongst the strongest coverage within the industry. As an update on the restaurant industry performance, we are seeing overall positive performance. According to Baird Research, year-over-year sales for the restaurant sector as a whole improved in the second quarter in the 5% range after 2% results in the first quarter. Similar to last quarter, casual dining saw small but improving declines of strong levels from the prior year. We note this broad view on the industry includes local restaurants and small regional chains. FCPT's casual dining operators are national brands and sector leaders that generally outperform the industry. For example, Darden reported a 4% increase for Longhorn and a modest 1.5% decline in same-store sales for Olive Garden for the quarter ending May 26, with an overall increase of 1.6% for fiscal year 2024. Overall, for Darden-operated brands, restaurant-level EBITDA margins improved 20 basis points to 20.9%, reflecting commodity pricing and productivity improvements. Our second-largest tenant, Brinker, reported chili same store growth of 3.5%. And their restaurant level EBITDA margin improved 90 basis points to 14.1% for their latest quarter ended March 27. We also note Darden continues to see external growth opportunities. The company recently announced the acquisition of casual dining Tex-Mex brand Chewy's. Chewy's has 101 locations and will be the 10th brand under the Darden umbrella. I would imagine the key intent would be to grow this brand store count in the near term. Importantly, we remain disciplined allocators of capital. As we've stated the past several quarters, we have established mental models and structured our team incentives to discourage deploying capital just to grow the company's size without also increasing pressure metrics of earnings or intrinsic value. Our investment team compensation goals are not tied to acquisition volumes, and we've never given acquisitions or earnings guidance. These mental models and team structure have allowed us to remain nimble. and we believe that we have operated successfully through today's environment. As such, we are seeing a lot of interesting opportunities that fit both our quality guidelines and are priced in a matter that makes sense for FCPT, by which I mean accretive. We will continue to look to add to the pipeline in a meaningful way in the second half of the year while maintaining our quality standards. Regarding Red Lobster, we have been in communication with the management, fortress, and external advisors since they entered into bankruptcy. As we stated last quarter, our 18 stores are well covered and profitable, and after reviewing the store's latest updated financials as of May, they continue to be. Importantly, our conversations with Red Lobster have also confirmed our belief that our stores are performing well and in strong locations. While negotiations and proceedings are ongoing, we expect all of our Red Lobster locations to remain open for there to be very minimal or no disruption from a rent perspective. We think this speaks to the quality of FCPT's underwriting and asset selection process. That said, we note that the bankruptcy process is still ongoing and we, along with their other landlords, are awaiting official confirmation. We expect them to exit the restructuring process before the end of Q3. On the issue of potential credit issues, we wanted to remind investors that FCPT's medical retail portfolio specifically avoids all pharmacy and medical office buildings. We have a great advantage in that our portfolio was formed after the advent of the cell phone, online shopping, and other new trends. We take a cautious approach to general retail merchandise, dollar stores, car wash, and large box retail, including theater and gyms. While potential softening in consumer spending will ripple through the entire economy, we believe our portfolio is very well positioned. With that, I'll turn it over to Josh to further discuss the investment environment.