FCPT Rides the Storm: Strong First Quarter Results Amid Market Uncertainty
As the real estate investment trust (REIT) sector continues to navigate the challenges of market uncertainty, FCPT has emerged as a beacon of stability and resilience. The company's recent Q1 2025 financial results conference call provided valuable insights into its performance during this tumultuous period.
In a remarkable display of agility and strategic planning, FCPT has continued to thrive despite the uncertain economic environment. During the first quarter, the company closed $70 million in acquisitions at a blended cap rate of 6.7%, marking the highest acquisition volume for a first quarter in its history. This impressive feat is a testament to the company's ability to identify and capitalize on opportunities that meet its quality standards and pricing criteria.
"We took advantage of our sustained strong cost of capital and added to the pipeline, finding deals that both met our quality standards and with pricing that made sense," said William Lenehan, CEO of FCPT. "This led to a Q1 being the highest acquisition volume for a first quarter in the company's history."
FCPT's prudent capital management has been instrumental in its success story. The company has continued to build significant liquidity while delevering to preserve optionality on funding new opportunities as they arise. This includes leveraging its ATM program, which has raised $475 million in equity since July last year. Including unsettled equity forwards, FCPT now boasts its lowest leverage levels in the past 7 years.
Moreover, FCPT's in-place portfolio continues to perform admirably, with high rent collections and occupancy rates. The company's largest tenants – nationally branded restaurant operators like Olive Garden, LongHorn, and Chili's – have been performing well, with Brinker reporting a 31.6% same-store sales growth for the quarter ended March '25.
FCPT's diversification progress over the past decade has also been noteworthy. The company has grown from 418 properties at inception to 1,236 leases today. Darden's share of rent roll has decreased from 100% to 47%, while FCPT's top five brands make up 55% of its annual base revenue.
Despite the uncertain tariff environment, FCPT remains confident in its ability to weather any potential issues. The company's portfolio is built to be resilient, and its prudent capital management has provided a cushion on rent coverage. As William Lenehan noted, "We believe that we are well positioned with cushion on our rent coverage to weather any potential issues."
As the market continues to navigate uncertainty, FCPT stands out as a shining example of strategic planning, resilience, and prudent capital management. Its Q1 2025 financial results serve as a testament to the company's ability to ride the storm and emerge stronger than ever.
