8-K
Four Corners Property Trust, Inc. (FCPT)
01UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) : April 14, 2020
FOUR CORNERS PROPERTY TRUST, INC.
(Exact name of registrant as specified in its charter)
| Maryland | 001-37538 | 47-4456296 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
591 Redwood Highway, Suite 1150, Mill Valley, California 94941
(Address of principal executive offices, including zip code)
(415) 965-8030
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of Exchange on Which Registered |
|---|---|---|
| Common Stock, $0.0001 par value per share | FCPT | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 7.01 | Regulation FD Disclosure. |
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On April 14, 2020, Four Corners Property Trust, Inc. (the “Company”) issued a press release providing an update on the impact of COVID-19 on its business. The Company's press release is attached as Exhibit 99.1 hereto and is incorporated by reference in this Item 7.01.
The information in this Item 7.01 and Exhibit 99.1 to this Form 8-K is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall they be deemed to be incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
| Item 8.01 | Other Events. |
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Supplemental Risk Factor
The following risk factor supplements the risk factors described under “Item 1A. Risk Factors” in the Form 10-K and should be read in conjunction with the other risk factors presented in the Form 10-K.
Actual or perceived threats associated with epidemics, pandemics or public health crises could have a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, cash flow, liquidity and ability to access the capital markets and satisfy debt service obligations.
Epidemics, pandemics or other public health crises, including the recent spread of novel strain of coronavirus (“COVID-19”), that impact economic and market conditions, particularly in markets where our properties are located, and preventative measures taken to alleviate any public health crises, including “shelter-in-place” or “stay-at-home” orders issued by local, state or federal authorities, may have a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, liquidity and ability to access capital markets and satisfy our debt service obligations, and may affect our ability as a net-lease real estate investment trust to acquire properties or lease properties to our tenants, who may be unable, as a result of any economic downturn occasioned by public health crises, to make rental payments when due.
Our restaurant tenants, as well as our tenants that operate other retail businesses, depend on in-person interactions with their customers to generate unit-level profitability, and an epidemic, pandemic or other public health crisis may decrease customers’ willingness to frequent, and mandated “shelter-in-place” or “stay-at-home” orders may prevent customers from frequenting, our tenants’ businesses, which may result in our tenants’ inability to maintain profitability and make timely rental payments to us under their leases. In connection with the business stoppages at many of our properties, we have been engaged in discussions with tenants about how best to respond to the COVID-19 pandemic and restrictions intended to prevent its spread. In connection with these discussions, as of April 10, 2020, we have received rent concession requests from a substantial number of our tenants, including from many tenants who paid us rent for the month of April. Most requests have been rent deferment requests related to when rent will be received, not if rent will be received. In addition to responding to rent concession requests, we are also in active discussions with the vast majority of our tenants about how we can help them during this short-term crisis in ways that, on a long-term basis, create value for our stockholders as well. While we have not agreed to any lease amendments or rent concessions with any of our tenants as of April 10, 2020, discussions with these tenants are ongoing. Whether we enter into any lease amendments or agreements to defer rent with our tenants will be made by our management team and board, as appropriate, based on each tenant’s unique financial and operating situation.
However, the ongoing COVID-19 pandemic and restrictions intended to prevent its spread has already had a significant adverse impact on economic and market conditions around the world, including the United States and markets where our properties are located, in the first quarter of 2020 and could further trigger a period of sustained global and U.S. economic downturn or recession. Moreover, the ongoing COVID-19 pandemic and restrictions intended to prevent its spread could have significant adverse impacts on our business, financial condition, results of operations, cash flows, liquidity and ability to access the capital markets and satisfy our debt service obligations in a variety of ways that are difficult to predict. Such adverse impacts could depend on, among other factors:
| • | our tenants’ ability or willingness to pay rent in full on a timely basis; |
|---|---|
| • | state, local, federal and industry-initiated efforts that may adversely affect landlords, including us, and their ability to collect rent and/or enforce remedies for the failure to pay rent; |
| --- | --- |
| • | our need to restructure leases with our tenants and our ability to do so on favorable terms or at all; |
| --- | --- |
| • | our ability to renew leases or re-lease available space in our proprieties on favorable terms or at all, including as a result of a deterioration in the economic and market conditions in markets where our properties are located or due to restrictions intended to prevent the spread of COVID-19 that frustrate our leasing activities; |
|---|---|
| • | a severe and prolonged disruption and instability in the global financial markets, including the debt and equity capital markets, all of which have already experienced and may continue to experience significant volatility, or deteriorations in credit and financing conditions (or a refusal or failure of one or more lenders under our revolving credit facility or purchasers under our note purchase agreement to fund their respective financing commitment to us) may affect our or our tenants’ ability to access capital necessary to fund our respective business operations or replace or renew maturing liabilities on a timely basis, on attractive terms or at all and may adversely affect the valuation of financial assets and liabilities, any of which could affect our and our tenants’ ability to meet liquidity and capital expenditure requirements; |
| --- | --- |
| • | complete or partial shutdowns of one or more of our tenants’ facilities or distribution centers, temporary or long-term disruptions in our tenants’ supply chains from local, national and international suppliers or delays in the delivery of products, services or other materials necessary for our tenants’ operations, which could force our tenants’ to reduce, delay or eliminate offerings of their products and services, reduce or eliminate their revenues and liquidity and/or result in their bankruptcy or insolvency; |
| --- | --- |
| • | our and our tenants’ ability to manage our respective businesses to the extent our and their management or personnel are impacted in significant numbers by the COVID-19 pandemic and are not willing, available or allowed to conduct work; and |
| --- | --- |
| • | our and our tenants’ ability to ensure business continuity in the event our continuity of operations plan is not effective or improperly implemented or deployed during the COVID-19 pandemic. |
| --- | --- |
The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of the COVID-19 pandemic or restrictions intended to prevent its spread. Nevertheless, the ongoing COVID-19 pandemic and restrictions intended to prevent its spread and the current financial, economic and capital markets environment and future developments in these and other areas present material risks and uncertainties with respect to our business, financial condition, results of operations, cash flows, liquidity and ability to access the capital markets and satisfy our debt service obligations. Moreover, to the extent any of these risks and uncertainties adversely impact us in the ways described above or otherwise, they may also have the effect of heightening many of the other risks described under the section entitled “Item 1A. Risk Factors” in the Company’s most recent annual report on Form 10-K for the year ended December 31, 2019.
| Item 9.01 | Financial Statements and Exhibits. |
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(d) Exhibits
| Exhibit<br><br>No. | Exhibit Description |
|---|---|
| 99.1 | Press Release dated April 14, 2020 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FOUR CORNERS PROPERTY TRUST, INC. | |
|---|---|
| By: | /s/ JAMES L. BRAT |
| James L. Brat<br><br>General Counsel and Secretary |
Date: April 14, 2020
EXHIBIT LIST
| Exhibit<br><br>No. | Exhibit Description |
|---|---|
| 99.1 | Press Release dated April 14, 2020 |
fcpt2020updatevff4132020
FCPT Provides Company and COVID-19 Update MILL VALLEY, CA – April 14, 2020 / Business Wire – Four Corners Property Trust, Inc. (“FCPT” or the “Company”, NYSE: FCPT) today announced certain year-to-date activities and its response to the ongoing COVID-19 pandemic, including a summary of its recent capital markets activities, liquidity, acquisition activities, and an update on its real estate portfolio. In appreciation of stockholders’ enhanced need for information during this volatile period, FCPT will endeavor to provide periodic updates to shareholders as material information becomes available during the quarter ending June 30, 2020. Capital Markets and Liquidity Update As previously announced on March 31, 2020, FCPT recently entered into agreements to issue $125 million of senior unsecured notes (the “Notes”). The Notes consist of $75 million of notes with a ten-year term, which funded on April 8, 2020, and mature on April 8, 2030, and priced at a fixed interest rate of 3.20%, and $50 million of notes with a nine-year term, which are expected to fund on June 9, 2020, and mature on June 9, 2029, and priced at a fixed interest rate of 3.15%. These notes were issued at par value. In connection with this offering, FCPT terminated interest rate swaps entered into previously to hedge the interest rate of this offering at a loss that will be amortized over the life of the Notes and add approximately 0.67% to the all-in annual interest rate expense. During the first quarter, FCPT also entered into and settled a forward sale agreement in connection with its ATM program and sold 144,321 shares of common stock at an average forward offering price per share of $30.23, for total net proceeds of approximately $4.3 million after deducting fees and expenses. On March 16, 2020, FCPT declared a regular quarterly dividend of $0.305 per share, payable in cash on April 15, 2020. The aggregate dividend payment will be approximately $21.5 million. During the first quarter, out of an abundance of caution and in addition to the use of FCPT’s credit facility in the ordinary course of business, FCPT also drew down an incremental $60 million on its credit facility to retain as a cash reserve. After giving effect to these additional borrowings, including the portion of the Notes that funded on April 8, 2020 but excluding the additional $50 million of notes expected to fund on June 9, 2020, and deducting the $21.5 million dividend payable, FCPT had over $140 million in cash and cash equivalents on hand and over $70 million of remaining availability under its revolving credit facility as of April 10, 2020. FCPT also has no near-term debt maturities. Acquisitions Activity FCPT plans to continue announcing all real estate acquisitions upon closing. During the first quarter in 2020, FCPT acquired an aggregate amount of approximately $36 million of restaurant and retail real estate properties. However, starting in March, the COVID-19 pandemic and the various measures intended to prevent its spread began to affect FCPT’s business and acquisitions pipeline in a number of ways, which FCPT is still evaluating. As a result, FCPT has requested counterparties to its current planned acquisitions to agree to extensions so that FCPT can reevaluate the transaction with more information later in the year. These conversations have thus far been constructive. As of April 10, 2020, FCPT did not have any material non-refundable deposits outstanding with respect to the acquisitions in its pipeline.
Real Estate Portfolio Update FCPT is currently engaged in discussions with tenants about how best to respond to the COVID- 19 pandemic and the various measures intended to prevent its spread. While these discussions are ongoing and FCPT expects certain tenants who have not paid rent yet will do so before the month is over, as of April 10, 2020, the Company has received approximately 87% of rent owed to it for the month of April. This includes rent from FCPT’s largest tenant, Darden Restaurants, Inc., which represented approximately 70% of FCPT’s annual cash base rent as of quarter ended March 31, 2020. In connection with the COVID-19 pandemic and resulting government ordered shutdowns, as of April 10, 2020, FCPT has received rent concession requests from a substantial number of its tenants, including from many tenants who paid FCPT rent for the month of April. Most requests have been rent deferment requests related to when rent will be received, not if rent will be received. In addition to responding to rent concession requests, FCPT is also in active discussions with the vast majority of its tenants about how FCPT can help them during this short-term crisis in ways that, on a long-term basis, create value for FCPT’s stockholders as well. While FCPT has not agreed to any lease amendments or rent concessions with any of its tenants as of April 10, 2020, discussions with these tenants are ongoing. Whether FCPT enters into any lease amendments or agreements to defer rent with its tenants will be made by FCPT’s management team and board, as appropriate, based on each tenant’s unique financial and operating situation. FCPT plans to continue to actively seek ways to create stockholder value by working through these difficult times with its tenants, and potentially develop novel solutions to the current situation, while also maintaining its contractual rights under its leases to the fullest extent permitted by law. About FCPT FCPT, headquartered in Mill Valley, CA, is a real estate investment trust primarily engaged in the acquisition and leasing of restaurant properties. The Company seeks to grow its portfolio by acquiring additional real estate to lease for use in the restaurant and retail industries. Additional information about FCPT can be found on the website at www.fcpt.com. Cautionary Note Regarding Forward-Looking Statements This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements include all statements that are not historical statements of fact and those regarding FCPT’s intent, belief or expectations, including, but not limited to, statements regarding: operating and financial performance, acquisition pipeline, expectations regarding the making of distributions and the payment of dividends, and the effect of pandemics such as COVID-19 on the business operations of FCPT and FCPT’s tenants and their continued ability to pay rent in a timely manner or at all. Words such as “anticipate(s),” “expect(s),” “intend(s),” “plan(s),” “believe(s),” “may,” “will,” “would,” “could,” “should,” “seek(s)” and similar expressions, or the negative of these terms, are intended to identify such forward- looking statements. Forward-looking statements speak only as of the date on which such statements are made and, except in the normal course of FCPT’s public disclosure obligations, FCPT expressly disclaims any obligation to publicly release any updates or revisions to any forward-looking statements to reflect any change in FCPT’s expectations or any change in events, conditions or circumstances on which any statement is based. Forward-looking statements are based on management’s current expectations and beliefs and FCPT can give no assurance that its expectations or the events described will occur as described. For a further discussion of these and other factors that could cause FCPT’s future results to differ materially from any forward-looking statements, see the risk factors described under the section entitled “Item 1A. Risk Factors” in FCPT’s annual report on Form 10-K for the year ended December 31, 2019, as supplemented by the risk factor described under “Item 8.01 Other Events” in FCPT’s
current report on Form 8-K filed with the Securities and Exchange Commission on April 14, 2020, and other risks described in documents subsequently filed by FCPT from time to time with the Securities and Exchange Commission Although FCPT received the substantial majority of rents owed to it in April, the COVID-19 pandemic may affect its tenants and properties in a variety of ways that are difficult to predict. These trends may influence the ability or willingness of certain of FCPT’s tenants to pay rent in full or on a timely basis. Numerous state, local, federal and industry-initiated efforts have also affected or may affect landlords and their ability to collect rent and or enforce remedies for the failure to pay rent. As such, FCPT cannot guarantee its rent collections for future periods.