Four Corners Property Trust, Inc.

Good morning all and thank you for joining us for the FCPT fourth quarter 2024 financial results conference call. My name is Carly and I'll be coordinating the call today. If you'd like to register or to question during the call, you can do so by pressing star followed by one on your telephone keypad and to remove yourself that line of questioning will be star followed by two. I'd like to hand over to your host, Patrick Wining, CFO. The floor is yours.

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, February 13, 2025. In addition, reconciliation to non-GAAP financial measures presented on this call, such as FFO and AFFO, can be found in the company supplemental report. With that, I will turn the call over to Bill.

Good morning. Following our typical cadence, I will make introductory remarks, Josh will comment further on the investment market, and Patrick will discuss our financial results and capital position. In its totality, 2024 was a strong year for us. The first half of the year was very similar to the second half of 2023. Rising interest rates created a challenging backdrop for net lease companies and acquisition volume was down for the sector as a whole. FCPT largely paused incremental acquisitions and waited for improved investment spreads. We refused to loosen our credit underwriting criteria. We said, We remain committed to our strike zone of small box net lease with strong brands, quality credit, and attractive real estate. Fortunately, by early Q3, our cost of capital had improved, and we found more seller willingness to transact at appropriate pricing. As we returned to the green zone, we immediately turned the acquisition machine back on with vigor. We ended the year with $265 million of acquisitions at a blended 7.1 cap rate. As we look forward to the new year, we've built up significant liquidity to fund new growth. While we do not give guidance, we are continuing to see opportunities that are consistent with our quality thresholds. We expect to add to our pipeline the same steady and sustainable manner that is the core of our investment approach. As far as cap rate volatility, we have not seen much movement in deals we've priced recently. While it's early in the year, we expect to be at or near the same cap rate we captured in 2024. To that end, We will also be continuing to build our investment team in 2025 and look forward to increasing our capabilities with some fantastic new hires that are starting in the coming months. Shifting to our in-place portfolio, we continue to perform very well with high collections and occupancy. Our rent coverage in the fourth quarter was 4.9 times for the majority of our portfolio that reports this figure. This remains amongst the strongest coverage in the net lease industry. As a reminder, FCPT's core tenants are nationally branded casual dining operators and sector leaders that generally outperform the industry. For example, Brinker recently reported Chile's same-store sales growth grew an astounding 31% for the quarter ended December 2024. Similarly, Olive Garden Longhorn reported same-store sales growth of 2% and 7.5% for the three months ended November 2024. Consistent with past performance, FCPT's casual dining tenants have proven to be stronger than high-end fine dining or local mom-and-pop-run restaurants. Our tenants are well-capitalized, high-performing operators servicing a wide variety of consumers and price points. As for portfolio management, we are not yet experiencing any material tenancy issues in the portfolio or signs that inflation or labor issues will impact our rent payments. We want to remind investors that our portfolio has zero or near zero exposure to problem at least subsectors, such as theaters, pharmacy, high-rank car washes, and big box retail. On the very, very, very few occasions where we have bought properties in these sectors, it is because they've passed very strict underwriting criteria to balance out the risk. We also have no exposure to the string of recent high-profile retail bankruptcies, including Zips Car Wash, Big Lots, Joann's, Party City, TGR Fridays, Rubio's, or Kahn's Home Plus. For the avoidance of doubt, we also don't have any properties leased to government agencies. Further, I would note that our business model does not directly rely on new construction. If tariffs were to cause inflation of business building materials such as steel, we do not anticipate that would have a direct negative impact. If anything, higher replacement costs should benefit tenant renewal rates. We would also like to continue to highlight our diversification efforts. Our three largest brands of Olive Garden, Longhorn, and Chili's now make up 34%, 10%, and 7% of our base brand, respectively. Darden is now 40%, 48% of our portfolio on a combined basis across all its brands. Over to you, Josh.