Four Corners Property Trust (NYSE:FCPT) reported first-quarter results that management described as a “strong start to 2026,” led by year-over-year growth in adjusted funds from operations and continued acquisition activity, while also detailing new financing, lease extension progress, and a plan to address exposure to Darden’s Bahama Breeze brand.
First-quarter performance and portfolio metrics
In prepared remarks, CEO Bill Lenehan said first-quarter AFFO per share increased 3.4% from the prior-year period, reflecting what he characterized as the company’s focus on “steady risk-adjusted growth.” CFO Patrick Wernig reported AFFO per share of $0.45 for the quarter.
Portfolio occupancy remained high. Wernig said FCPT’s occupancy stood at 99.6% and the company collected 99.7% of base rent in the quarter. He added that there were no material changes to collectibility or credit reserves during the period.
Lenehan highlighted unit-level performance for tenants that report rent coverage, saying first-quarter rent coverage was 5.1x for most of the portfolio that provides the metric. He added that rent coverage for the company’s Garden properties was 5.8x and has remained above 5x for the past three years.
Acquisitions and investment pipeline
FCPT completed $26 million of net lease acquisitions during the first quarter. Lenehan said the purchases carried a 6.8% blended cash cap rate, which he said was equivalent to a 7.3% GAAP cap rate. Director of Investments Josh Zhang said the company acquired 10 properties with a weighted average lease term of 10 years, representing an average basis of $2.6 million per property.
Zhang detailed the mix of acquisitions, stating they were:
- 46% restaurant
- 28% auto service
- 26% medical retail
On the credit side, Zhang said all first-quarter acquisitions were leased to corporate operators except a McAlister’s Deli in Michigan leased to Southern Rock, which he identified as the largest McAlister’s franchisee with 178 locations across 13 states.
Management pointed to seasonality as a factor in first-quarter volume. Lenehan said the quarter’s acquisition volume was “marginally lower” than the start of 2025, adding that the company typically closes fewer deals in the first quarter and expects a ramp later in the year. Zhang echoed that view, saying second-quarter activity was “shaping up to be consistent with a typical seasonal volume ramp.”
Lenehan also said FCPT has acquired $288 million of properties over the last 12 months and expressed confidence in the pipeline, citing “a lot of attractive opportunities” even as pricing expectations from sellers remain a limiting factor.
Financing, leverage, and hedging
After quarter-end, FCPT closed a new $200 million term loan with a seven-year tenor. Lenehan said the term loan carried an all-in rate of 4.9%, which he described as “200 basis points of spread to historical acquisition yields.” Wernig said the loan’s credit margin is 125 basis points over SOFR and that the company funded $50 million in April, with the remaining proceeds expected to fund acquisitions in the second and third quarters.
Wernig provided additional detail on interest-rate management, stating that FCPT has fully hedged its outstanding term loan balance of $640 million as of April 30 at a blended SOFR rate of 3.1%, or approximately 4% all-in, with that rate steady through November 2027.
Regarding leverage, Wernig said net debt to adjusted EBITDA was 5.0x at the end of the first quarter, marking the seventh consecutive quarter below 5.5x and at the bottom end of the company’s stated 5x–6x range. He added that after fully funding and investing the term-loan proceeds, estimated run-rate leverage would be 5.4x. Fixed charge coverage was 4.8x at quarter-end, according to Wernig.
On maturities, Wernig said that after considering extension options for the existing term loan, the company has no debt maturities until December, when $50 million of private notes come due.
Lease extensions, disclosures, and tenant updates
Wernig said FCPT has extended 27 of 42 leases originally expiring in 2026, and the recapture rate on those locations is 6% above prior-year rent. He added the company is negotiating to re-tenant two properties, while the remaining 13 leases represent about 1% of annual base rent (ABR), down from 2.6% at the beginning of 2025.
Asked about how to think about renewal-related rent growth, Lenehan told analysts not to overemphasize the quarter’s recapture outcome and pointed back to the portfolio’s typical rent growth profile. “Our typical rent growth is 1.5%,” he said, adding that quarterly results can vary around that level.
Management also addressed the Bahama Breeze situation following Darden’s brand closure announcement. Lenehan said FCPT owns 10 Bahama Breeze properties, representing 1.3% of ABR. He said Darden plans to convert six of the locations to other brands it operates, and the remaining four properties represent about 50 basis points of ABR. Lenehan said the company is “actively negotiating letters of intent with new tenants to backfill these locations,” and based on figures under negotiation, FCPT expects to recover or possibly exceed prior rent, though timing and final economics will depend on negotiations.
Lenehan said FCPT expects no downtime, noting Darden remains obligated to pay rent for at least 1.5 years on all 10 locations, and in some cases up to four years. Wernig emphasized the exposure is relatively small, reiterating that the discussion centers on four stores representing 50 basis points of ABR for the non-converted sites.
In the question-and-answer session, Wernig said bad debt was “zero” year to date, adding that the company continues to monitor its more than 1,300 leases.
The company also introduced disclosure changes. Wernig said FCPT will now disclose GAAP cap rates alongside cash cap rates, and he noted that historically GAAP cap rates have averaged about 70 basis points higher than initial cash cap rates. Management also said it updated how it calculates and presents AFFO per share growth by removing the impact of two-decimal rounding, arguing it provides a more accurate growth figure.
Lenehan also said the company is continuing to diversify, with 37% of rent coming from tenants outside casual dining, including automotive service (13%), medical retail (11%), and quick-service restaurants (11%). He said FCPT is exploring new retail categories and property types, evaluating resiliency, AI disruption risk, tenant credit quality, real estate quality, and pricing.
Outlook and capital deployment comments
During the call, FCPT reaffirmed its 2026 cash G&A guidance range of $19.2 million to $19.7 million. Wernig said first-quarter cash G&A expense was $4.9 million, or 7% of cash rental income, compared with 7.7% in the prior year, attributing the change to operating leverage and scale.
Analysts asked whether the new term loan implied a higher acquisition run rate. Lenehan responded that the company provided “more specific timing guidance than we have in the past” and said it was “always curious” to see estimates implying declining acquisitions, noting that has not been the historical record.
In closing remarks, Lenehan said FCPT’s portfolio strength allows it to “focus on offense, where many of our peers are playing defense.” He said the $200 million term loan provides “a direct line of sight for funding between now and Q3,” and he added that pricing in the debt markets could provide additional low-cost funding later in the year. He characterized the acquisition market as stable and said the company expects “another successful year of building our portfolio brick by brick.”
About Four Corners Property Trust (NYSE:FCPT)
Four Corners Property Trust is a publicly traded real estate investment trust focused on acquiring and managing single-tenant commercial properties subject to long-term, triple-net leases. The company targets industrial, manufacturing, distribution, office and retail facilities leased to creditworthy tenants. By concentrating on net-lease structures, Four Corners seeks to generate stable, predictable income streams and mitigate operating cost variability.
The firm’s core activities include sourcing off-market and broker-sourced acquisition opportunities, conducting rigorous credit and property due diligence, and structuring lease agreements that shift property taxes, insurance and maintenance expenses to tenants.
