FCPT Q3 AFFO Rises as Record Acquisitions Expand Portfolio

Four Corners Property Trust reported modest per-share earnings growth in the third quarter of 2026 while completing the largest acquisition quarter in its history, led by a $268 million veterinary-property portfolio that broadened the net-lease REIT’s exposure beyond casual dining. After the quarter ended, the company also secured renewals for all Olive Garden and LongHorn Steakhouse leases scheduled to expire in 2027, reducing near-term lease rollover risk.

Adjusted funds from operations, or AFFO, rose to $50.3 million from $46.4 million a year earlier. AFFO per diluted share increased 2.9% to $0.46 from $0.45, with the weighted average diluted share count rising to about 110.0 million from 104.3 million. Funds from operations increased to $47.4 million, or $0.43 per diluted share, from $43.9 million, or $0.42 per share.

Quarterly net income was nearly unchanged at $28.9 million. Total rental revenue increased 13.8% to $75.7 million, while adjusted EBITDAre rose 14.7% to $65.4 million. Interest expense increased to $17.4 million from $13.0 million, and depreciation and amortization rose to $18.6 million from $15.1 million.

For the first nine months of 2026, AFFO reached $149.5 million, or $1.36 per diluted share, compared with $135.0 million, or $1.33 per share, in the prior-year period. Nine-month net income increased to $89.2 million from $83.0 million, and total rental revenue rose to $215.5 million from $194.8 million.

Record acquisition quarter expands medical exposure

FCPT invested $326 million during the third quarter at a 6.6% initial cash capitalization rate and a 7.1% GAAP capitalization rate. Year-to-date investment volume totaled $410 million through September, already exceeding the $318 million completed in all of 2025.

The quarter’s main transaction was the July acquisition of 102 Mission Pet Health properties for $268 million. The portfolio generated initial annual cash rent of approximately $17.4 million, including contractual increases that took effect in September. One hundred of the properties are held under two master triple-net leases, with a weighted average remaining lease term of 10 years and annual rent increases above 2%.

FCPT said the acquired portfolio had aggregate tenant EBITDAR rent coverage of more than 6 times. The purchase was funded with cash and existing debt capacity and was not contingent on an equity offering. Including five Mission Pet Health properties already owned by FCPT, the brand accounted for 6.2% of annual base rent at September 30, making it the company’s third-largest brand.

The acquisition supported FCPT’s continuing shift away from its original concentration in Darden Restaurants properties. Olive Garden and LongHorn represented a combined 37% of annual base rent at quarter-end, down from 94% when FCPT was spun off. About 42% of annual base rent now comes from sectors outside casual dining, including medical retail and auto service. The five largest brands nevertheless still represented approximately 51% of annual base rent.

At September 30, the portfolio included 1,476 leases across 185 brands and generated $293 million in annual base rent. Occupancy was 99.5%, rent collection was 99.7%, and the average remaining lease term was 6.7 years. Average annual contractual rent escalation was 1.6%, while reported tenant EBITDAR coverage was 5.3 times. Investment-grade operators accounted for 48% of annual base rent.

Darden renewals reduce near-term expirations

On October 14, Darden renewed all 66 Olive Garden and LongHorn leases due to expire in 2027 and exercised early renewals on six additional leases expiring in October 2028. The leases were extended by an average of approximately five years and retain annual rent increases of 1.5%.

FCPT said it did not provide rent concessions or capital contributions to secure the renewals. On a pro forma basis, the transaction increased the portfolio’s weighted average lease term to approximately seven years and left about 2.7% of annual base rent scheduled to expire before 2028.

Management intends to maintain its acquisition focus on restaurant, auto-service and medical-retail properties, emphasizing smaller, reusable buildings, low rents and creditworthy tenants. FCPT said it would continue considering larger portfolio transactions when they meet its quality and accretion thresholds.

Leverage reaches the top of target range

Net debt stood at 6.0 times adjusted EBITDAre at September 30, the upper end of FCPT’s stated target range of 5.0 to 6.0 times. The company reported $397 million of available liquidity, including cash, an undrawn term loan and revolver capacity. Its revolving credit facility had $350 million available, and 85% of debt was fixed-rate after giving effect to interest-rate hedges.

FCPT had a weighted average debt maturity of 3.8 years, excluding extensions, with about 8% of debt due before 2028. The company has also extended approximately 23% of outstanding debt through a $200 million seven-year term loan priced at SOFR plus 125 basis points and a $400 million five-year loan priced at SOFR plus 90 basis points.

The presentation identified tenant concentration and tenant operating performance as continuing considerations despite FCPT’s diversification. Olive Garden alone represented 28.7% of annual base rent, while restaurants accounted for 68% of the portfolio. Tenant EBITDAR coverage data covered 63% of total annual base rent and was based on information supplied by tenants that FCPT does not independently verify. The company also noted that construction costs have risen faster than general inflation over the past 12 years, a factor relevant to property development and replacement values.