Four Corners Property Trust, Inc. (FCPT) has made a significant addition to its portfolio with the acquisition of four Christian Brothers Automotive sites for $16.9 million through a sale-leaseback transaction.
Key Details of the Acquisition
- Location: The properties are situated in high-visibility retail corridors across Ohio, Florida, and Nebraska.
- Demographics: These sites boast favorable demographic profiles that make them attractive for businesses.
- Lease Agreement: Under the terms of the deal, Christian Brothers Automotive’s corporate parent will occupy the locations under a long-term lease agreement, allowing FCPT to generate steady income from these properties.
Strategic Growth
This acquisition marks another milestone in FCPT’s growth as it expands its portfolio nationwide to over 1,000 properties. The company continues to strengthen its market position through strategic transactions like this one.
Analyst Insights
UBS analyst Michael Goldsmith has maintained his Buy rating on FCPT but lowered his price target to $30 from $33 following this latest acquisition.
Goldsmith stated:
"We believe FCPT is well-positioned for long-term success given its strong balance sheet and growing dividend yield. We expect FCPT’s same-store NOI growth rate will continue to be driven by rent escalators."
Economic Considerations
- Inflationary Pressures: Goldsmith noted potential near-term headwinds due to inflationary pressures on expenses such as insurance costs. However, he believes these factors will have only a minor impact on earnings per share (EPS).
- Expense Management: He expressed confidence that FCPT can offset most of these expense increases with rent escalators and other revenue growth drivers.
Future Growth Projections
Goldsmith highlighted the company’s ability to grow EPS at an annual rate of 10% over the next three years, despite modest same-store NOI growth. This growth is largely attributed to FCPT’s ability to acquire more than 2% new store net operating income (NOI) each year at an average cap rate below 6%.
"Given our expectation that FCPT can maintain its current dividend yield while continuing to grow EPS at an annual rate of 10% over the next three years, we believe investors should continue buying shares into any pullbacks."
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