Four Corners Property Trust (FCPT - Free Report) recently acquired a Heartland Dental property located in a strong retail corridor in South Carolina for $2.2 million. The move is in line with the company’s portfolio-expansion efforts, with real estate leased to strong credit operators.
Following the announcement, shares of FCPT declined marginally on Mar 1 normal trading session on the NYSE.
The property is corporate-operated under a long-term net lease with around seven years of term remaining. Priced at a 7% cap rate on rent as of the closing date and excluding transaction costs, the buyout seems a strategic fit for FCPT. The portfolio is likely to generate steady revenues over the long term.
Of late, this real estate investment trust (REIT), mainly engaged in the ownership and acquisition of high-quality, net-leased restaurant and retail properties, has been on an acquisition spree.
In December 2022, FCPT acquired two Caliber Collision properties for $3.8 million, which are located in highly trafficked corridors in Illinois. The properties are corporate-operated under long-term net leases with seven years of the residual term. The transaction was priced at a cap rate of 6.7% on rent as of the closing date, excluding the transaction costs.
In the same month, Four Corners closed the acquisition of a portfolio of three properties in a strong retail corridor in Illinois for $11.5 million. The properties are leased to Aspen Dental, Addus Homecare, AT&T, WellNow and Banfield Pet Hospital.
Further, the company shelled out $6.9 million for the acquisition of a Red Lobster property and a Smokey Bones property positioned in a highly trafficked corridor in New York in December. The properties are corporate-operated under triple net leases with a weighted average of 2.5 years of the residual term. The transaction was priced at a 6.5% cap rate, excluding transaction costs.
In addition to the above-mentioned buyouts, earlier in December, Four Corners acquired a four-property Buffalo Wild Wings portfolio for $14.3 million, a WellNow Urgent Care property in Michigan for $2.4 million and five Jiffy Lube properties in Indiana for $7.9 million. Further, it took over a Gerber Collision & Glass property in Texas for $2.8 million.
Moreover, as part of its capital-recycling efforts, FCPT announced the disposition of a Burger King property in Alabama for $2.4 million in February 2023 and the selloff of a Red Lobster property in North Dakota for $4.7 million in January 2023. The company plans to redeploy the proceeds into new investment prospects in sync with its thresholds.
Although shares of this Zacks Rank #3 (Hold) company have gained 2.6% in the past six months against the real estate market’s fall of 7.3%, analysts seem bearish on the company as the Zacks Consensus Estimate for its 2023 funds from operations (FFO) has moved 1.2% downward over the past week.
Image Source: Zacks Investment Research
Some better-ranked stocks from the REIT sector are VICI Properties (VICI - Free Report) , Alexandria Real Estate Equities (ARE - Free Report) and Stag Industrial (STAG - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for VICI Properties’ current-year FFO per share is pegged at $2.10.
The Zacks Consensus Estimate for Alexandria’s 2023 FFO per share is pegged at $8.94.
The Zacks Consensus Estimate for Stag Industrial’s ongoing year’s FFO per share is pegged at $2.25.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.