FCPT

Hello, everyone. Thank you for joining us, and welcome to Four Corners Property Trust's second quarter 2026 conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Pat Wernig, CFO. Please go ahead.

Thank you, Aidan. During the course of this call, we will make forward-looking statements which are based on our beliefs and assumptions. Actual results will be affected by known and unknown factors that are beyond our control or ability to predict. Our assumptions are not a guarantee of future performance, and some will prove to be incorrect. For a more detailed description of some potential risks, please refer to our SEC filings, which can be found at fcpt.com. All the information presented on this call is current as of today, July 30th, 2026. In addition, reconciliation to non-GAAP financial measures presented on this call, such as FFO and AFFO, can be found in the company's supplemental report. With that, I will turn the call over to Bill.

Good morning. Following my initial remarks, Josh will comment on our investment activity, Patrick will discuss financial results and capital position. It has been a remarkable time for FCPT. First, we are only through the first seven months, and we've already exceeded our prior record annual investment volume. Year to date, we've acquired $382 million of properties at a blended 6.6 cash cap rate. This investment activity has pushed us past an important diversification milestone, as FCPT has now acquired over 1,000 properties since inception. Our original spinoff portfolio is now just 29% of the properties we own today. Since April, we have also completed two large financings with very low coupons for a total proceeds of $600 million. Not only do these refinancings push our maturity schedule meaningfully, but also provide us with sufficient dry powder for our investments in 2026.

It is also worth noting that the coupon represent approximately a 200 basis point spread to our historical investment yields. We encourage our analysts and investors to revisit their models given the major developments at FCPT, including those that occurred in July, closing after Q2. These major developments aren't yet reflected in our Q2 financials and have not been realized in our reported AFFO. For ease of reference, we have included a number of slides in our latest investor presentation with pro forma figures. Lastly, we also recently announced switching to a monthly dividend, with the first monthly payment scheduled for August. This move aligns timing of rent payments from our tenants with distributions to our shareholders. We believe a monthly dividend is consistent with our longstanding focus on shareholder alignment, transparency, and predictable cash flow generation.

Moreover, this reflects our confidence in stable rent receipts from our fortress portfolio, and we believe the change will better match the income preferences of many retail investors. Switching over to an update on portfolio performance. Occupancy remains above 99%, and our rent coverage for Q2 was 5.2 times for the majority of our portfolio that reports this figure. This is amongst the best coverage within the net lease industry and what we believe is a reflection of our conservative underwriting. The rent coverage figure for our Darden property specifically is 6.0 times and has improved over time, remaining above five times for the past three years. Our three largest restaurant brands, Olive Garden, LongHorn, and Chili's, continue to outperform their peers in gross sales quarter after quarter, most recently 2.4 times, 9.5%, and 4%, respectively.

As such, we note that we have avoided some of the most problematic net lease sectors experienced headwinds in recent years, including pharmacies, experiential retail. By scoring every property and targeting low basis fundable properties with skilled operators, we have built a recession and e-commerce resistant portfolio. As a reminder, to date, we have had no major tenant credit issues, limited vacancy, and very, very low bad debt expense. We continue to significantly diversify. Pro forma for the Mission Pet Health portfolio, approximately 41% of our rent now comes from outside the casual dining tenants, including medical retail at 16%, auto service at 13%, and quick service restaurants at 10%. Darden now represents just 41% of cash rent approximately.

We note that the first tranche of the original Darden spin properties is due to send us extension notices by no later than October of this year for leases maturing the following year in Q4 2027. We are expecting a very, very high renewal percentage given the strong performance of the stores and six times coverage overall on our Darden properties. I'll leave you with this before turning it over to Josh. ABR has grown by 11% annually since inception, and we have meaningfully diversified results on a very granular, safe portfolio. FCPT has matured a great deal over the past decade, and as we look forward, we believe we are uniquely positioned within the net lease universe. We are clearly able to execute on large transactions while also maintaining a strong regular way pipeline as a baseline for sustained, attractive, risk-adjusted growth.

We believe we've built a very strong credit-focused portfolio all the way staying within our stated leverage metrics. The world has a lot of volatility, especially today, but FCPT has been remarkably stable. Over to you, Josh.

Thanks, Bill. I'll start with a review of Q2 activity, walk through the Mission Pet Health portfolio, and then touch on our investment pipeline. In Q2, we acquired 23 properties with a weighted average lease term of 10 years for $57 million at a blended 6.8% cash cap rate or a 7.5% GAAP cap rate. Our investment activity in the quarter was heavily weighted towards automotive at 64% of volume and anchored by a $26 million acquisition of 14 properties leased to Sun Auto Tire & Service, a leading operator in the automotive service and repair sector. The remainder were restaurant and medical retail investments at 22% and 14% of volume respectively. As a reminder, we do not maintain sector quotas or pipeline targets, but allocate capital purely on the opportunity set, finding the best risk-adjusted returns with what we see as the strongest spread generation.

Subsequent to quarter end, we completed the acquisition of a 102 property portfolio leased to Mission Pet Health for $268 million. The seller was Shore Capital Partners, and the portfolio represented the entirety of Shore Capital's Real Estate Fund I. The portfolio closed very early in Q3, so we will have the benefit of nearly all of the annualized cash rent of $17.4 million in our Q3 results and further gain from its approximately 2% annual rent growth on a go-forward basis. While it was the largest acquisition in our 10-year history, it was also highly consistent with the characteristics that have defined FCPT since inception. Low basis properties, conservative rents, strong unit-level economics, and a leading operator as our tenant. We've historically preferred to build our portfolio granularly, as large portfolios on the market often come with properties that may not fit our selection criteria.

This was not the case here, and it was clear that Shore constructed this high-quality platform with a buyer like us in mind. First, the portfolio is largely structured across two absolute triple net master leases of high institutional quality. The master leases have approximately 10 years of term remaining, approximately 2% annual rent escalations, and strong financial reporting requirements. Next, the rents were set conservatively and align with our net lease philosophy. Unit-level coverage is over six times, and an average basis per property at $2.6 million compares well with our Q2 rent coverage of 5.2 times an average basis of approximately $3 million. Lastly, and similar to many of our favorite investment sectors, veterinary real estate is mission critical, and their services are often non-discretionary. Additionally, Mission is one of the largest veterinary operators with over 900 locations across the country.

Their recent investment from Silver Lake valued the company at $8.6 billion. We were already familiar with the credit and team as they are an existing tenant of ours, which makes us even more excited to welcome them as our number three brand across the portfolio. We'd like to thank Shore, Mission, and Eastdil Secured teams, as well as everyone at FCPT involved in executing this transaction. Completing diligence on 102 properties with the same rigor as our usual process while still closing less than 49 days from announcement is a strong testament to the talented and motivated team we've assembled and the strength of our platform. Moving on to our pipeline, we've also continued to source and execute our regular way investments as well, spanning restaurants, automotive service, and other medical retail investments across 10 distinct transactions in Q2.

I'd like to commend our investment team and the entire platform for their ability to diligently execute both large and small transactions in an extremely organized and efficient manner. Looking forward, we're continuing to explore potential investments in new subsectors such as grocery and industrial outdoor storage, as evidenced by our July investment activity. We remain active in evaluating opportunities across these two sectors, among others, as we actively expand our opportunity set and build domain expertise. Whether it's a grocery store in Florida or a restaurant in Texas, we remain committed to acquiring low basis properties that are leased to best-in-class operators at pricing accretive to our cost of capital. Patrick, back to you.

Thanks, Josh. I'll start by talking about our recently closed debt deals and updated balance sheet. I'll provide some commentary on the quarterly results. Since April, we have closed a total of $600 million in new debt capital while adding Citi and RBC to our already strong lending syndicate to provide further borrowing support. This $600 million represents over a third of our total in-place debt, creating meaningful improvement for our balance sheet while avoiding dilutive refinancings. This included closing both the $200 million term loan facility with seven-year tenor at SOFR plus 125 basis points and a $400 million term loan with a five-year tenor at SOFR plus 90 basis points just a few days ago. I'd call out that at current SOFR levels, this debt has all-in rates of approximately 4.5%-4.9%.

Use of proceeds for the new five-year term loan will be, one, repaying $190 million of term loans coming due in the next six months. Two, remaining amounts will be used to fund the investment pipeline as well as for general corporate purposes. I'd also like to highlight the positive interest savings we were able to achieve in our most recent refinancings. Our lenders agreed to refresh the credit spread pricing on our facility to save 5-10 basis points annually versus prior levels of $450,000 in annual interest expense across the total $800 million in this facility. It is demonstration of FCPT's steady pace in improving our cost of capital through scale and conservative balance sheet management.

Importantly, before this debt transaction and closing on the Mission Pet portfolio, we are now fully undrawn on our $350 million revolver, on a run rate leverage remaining below the six times upper bound of our stated range of five to six times. From a maturity schedule perspective, these deals have pushed out our maturity profile. Our pro forma weighted average debt tenor now 4.3 years. We've removed all near-term maturities aside from a small $50 million private note coming due in December. As noted previously, we expect to handle that private note maturity in due course closer to the maturity date, but believe we have ample options at our disposal. Our staggered maturity schedule ensures we will not face a significant maturity wall in any year thereafter. Turning to some of our earnings highlights for Q2.

Q2 AFFO per share was $0.45, representing 1.4% growth versus prior year. Q2 cash rental income was $70 million, representing 8.7% growth versus prior year. Annualized cash-based rent for leases in place as of quarter end was $270.5 million. Our weighted average five-year annual cash rent escalator is 1.5%. Our cash G&A expense was $4.8 million for the quarter, representing 6.8% of cash rental income, compared to 6.9% for the prior year. This improvement in operating leverage illustrates our continued efforts at achieving efficient growth and the benefits of our rising scale. Our fixed charge coverage ratio remains a very healthy 4.6 times as of quarter end. Following our Q2 results, we are affirming our guidance range for 2026 cash G&A remains $19.2 million-$19.7 million.

As a brief update on Bahama Breeze, we learned earlier this year that Darden would be closing four of our 10 Bahama Breeze properties, with the other six being renovated and converted to other Darden brands. The four Darden properties represent about half a percent of ABR and are supported by leases expiring one to four years from now, and benefit from Darden entities committed to rent units through expiration. While we have that multiyear cushion, we've also had strong backfill demand, so we are deep in LOI and lease negotiations to retenant the properties with strong brands. Based on the rents being negotiated and the small scale of the exposure, we expect to have little to no AFFO disruption.

Remarkable results to be sure. Again, just worth noting the risk in quantum here was never significant to begin with. We don't expect to continue detailed updates on this topic going forward. Our portfolio occupancy remains strong at 99.5% today. We collected 99.7% of base rent for Q2. Finally, last quarter did not see any material changes to our collectibility or credit reserves. With that, we'll turn the call back over to Aidan for questions.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of John Kilichowski with Wells Fargo. John, your line is open. Please go ahead.

Hi. Good morning. Thanks for taking my question. Pat, maybe just to circle back on what you were talking about on the balance sheet. Some of the activity you had in the quarter is handling some maturities coming up, but you still have a few maturities that aren't spoken for yet. I guess could you just talk about your plans for those and what you're seeing on pricing?

Yeah, sure. Thanks for the question. We have the fully undrawn revolver. That's always kind of a backstop if we wanted to take out any of those maturities with that. I'd also point out that the remarkable support we've had in the lending market, having completed $600 million of term loans in the last couple of months. The support for our name and the credit in our portfolio is just really strong. There's a lot of opportunities to address it. We could have addressed them sooner now, but those rates are really attractive rates, and we want to enjoy them and utilize the tenor that we paid for at the beginning of putting those issuance out there.

Got it. Bill, maybe just on the back of that, could you talk about given where your stock is trading today and as you think about your cost of capital, are you imputing that based off of where you're seeing the pricing of maybe some of these term loans? Or are you still thinking about it in terms of where your longer-term tenor unsecured cost of debt may be and where that blends relative to where your equity trades?

Sure. I don't see any change in the way we think about calculating WACC. We've always looked at long-term rates. Frankly, we don't use much debt in acquisitions. The difference between a private note and a term loan is not very substantial. It's under 100 basis points. It's much more driven by the cost of equity. We have raised very substantial amount of equity on a forward, which we've used for two years to make acquisitions all with equity. The way I would think about up until this point this year is using attractively priced debt to get our leverage metrics back to where they typically were.

Got it. Thank you.

Yep.

Your next question comes from the line of Eric Borden with BMO Capital Markets. Eric, your line is open. Please go ahead.

Great. Thanks for taking my question. As you begin discussions around the 2027 Darden expirations, what's your latest thinking on overall renewal economics? With a healthy coverage of six times, does that create an opportunity to push rents higher? Are most of those leases governed by renewal extension options?

They're entirely governed by renewal extension options for five years at 1.5% growth over the prior year. We would expect, as I said in the prepared remarks, a very high level of renewals. Again, these are for 2027 maturities. We have a favorable 12-month notification period. Those will start coming in towards the end of October.

Okay, great. Just one on the monthly dividend. In a world where

short-term cash yields are relatively attractive, can you talk about the give and takes around moving to a monthly dividend and effectively accelerating the timing of those cash outflows to shareholders versus keeping the cash on a balance sheet and earning interest income for a little bit longer?

Yeah. It wasn't really a corporate finance decision. That cash flow is our shareholder's cash flow, and we're returning it to them as quickly as we can. It was more getting the logistics right because it increases the number of payments. We wanted to feel comfortable that wasn't a cost burden or an operational burden. I think we're very comfortable that it'll be neither. It just is, again, more aligns with how we receive our shareholders' capital and getting it back to them in the form of dividends quickly.

All right. Well, appreciate it. Thank you, guys.

Yep, of course.

Your next question comes from the line of Michael Goldsmith with UBS. Michael, your line is open. Please go ahead.

Hi, this is Anna O'Neill on for Michael Goldsmith. You talked about grocery and industrial outdoor storage as sub-sectors you're exploring. What are some of the things that are making those sub-sectors more attractive to you?

It's a great question, Anna. We've been working on both for many years. They match many of the dynamics that we like of restaurant, auto service, and medical retail. Their mission-critical basis is reasonable. There are large tenants, and the pricing is consistent with the other sectors that we look at. I will say on grocery, some grocery price is tighter, so we'll have to pick our spots. I would say with the storage, it's something that I've done a lot of when I was on the board of Gramercy. That was one of the investments we regularly made, so I have a lot of familiarity with it.

Great. Thank you.

Sure

Given the elevated acquisition volume might not be fully appreciated by the market, would you explore the idea of providing guidance in some form, or how are you thinking about that?

Yeah. I would say that we've added a bunch of new disclosure that should help people get there. I would agree that it seems like analysts have been slow to update their numbers, and in my prepared remarks, I think I alluded to that. For now, I think we're going to be consistent with how we've done over the last decade since inception and not provide acquisition or earnings guidance.

Got it. Thanks so much.

Your next question comes from the line of Alec Feygin with Baird. Alec, your line is open. Please go ahead.

Hey, thanks for taking my question. First one for me would be, the recent reduction in the debt spreads, have they benefited from that incremental diversification and the big portfolios that you closed, or is that a future opportunity where you can see further benefit?

Yeah, I think it's just consistent with, as Pat mentioned, a consistent grinding down our cost of capital as we get larger, and the portfolio matures and as we mentioned, the original spin portfolio is 30% of where we are today. We've gotten a lot bigger. It's a lot more diverse. It's a much more seasoned company. Our acquisition team at inception was just a handful of folks. Now it's 10 and growing. I think we just have a lot more capability, and that's reflected in the stability of our balance sheet and improved pricing.

Got it. Second one for me, kind of on the theme of new sectors. Could you provide any additional details about the Drilling Tools International property you acquired?

Sure.

Should we expect that industrial type properties maybe become part of the sandbox going forward?

Yeah, sure.

Yeah.

It's just one property out of a number, but just off the top of my head, DTI manufactures drilling equipment. It's got over a 50% North American rig penetration. This is like a 10-acre parcel. It's one of only a handful of properties where they manufacture. I think it's actually on their cover of their annual report. Josh, anything you want to add to that?

Just that, Bill, exactly what you stated, it's just an extension of our IOS, industrial outdoor storage, strategy that Bill mentioned. We view it very similar to the United Rentals property we acquired in Q4 of 2025, we're just constantly evaluating new opportunities in the space, we're just dipping our toes in.

Got it. Thanks. That's it for me.

Your next question comes from the line of Rich Hightower with Barclays. Rich, your line is open. Please go ahead.

Hey, good morning out there, guys. I want to talk about Mission Pet Health. I know we talked about the deal when it was first announced a little bit, just to go a little deeper. Tell me about how the business is performing and what the underwriting assumptions were in the context of really very high, 6x rent coverage, and how's the business growing? What's the capital structure with the private equity firm? Where the sale leaseback financing here fits into that. I've got one follow-up.

Yeah. These properties were already under a sale leaseback. Two large master leases make up 100 of the 102 properties, and then there's two individual properties. Shore had capitalized a real estate fund, Shore Real Estate Fund I, that when Shore, the private equity firm, was buying vet businesses, if real estate was available for sale, the real estate fund would buy that real estate. We bought the entirety of that fund. As Josh mentioned, 6x covered, a very strong entity providing a guarantee. Silver Lake recently co-invested into the business along with Shore. It is a company that I would guess might go public in the next couple of years. Just a very large, stable, high-scoring portfolio. Out of the 102 properties, the vast majority we would have been interested in on a one-off basis.

To get them together in a master lease with 2% rent growth is very favorable. We leaned in a little bit on pricing. I think it also was strategic in getting our under-levered balance sheets back in line and should provide growth that we think folks are missing in the second half of the year and into 2027.

Okay. That's helpful. I guess just to follow up on maybe that last point, Bill, or even for Patrick. Granting you're towards the low end of the comfort range leverage-wise, I presume you wouldn't want to sort of bump up against the high end if you didn't need to. What do you think your comfortable investment capacity is from here without really thinking you would need to raise new equity?

Yeah. I'm not going to answer that because it gets really close to providing acquisition guidance, which for us is basically the same as AFFO guidance. We put a bunch of pro forma numbers in the book. You can see where we stand. We are committed to that five to six times leverage ratio. We haven't been offsides of that, other than below it, since inception. I think you'll see these acquisitions that we've announced in the last couple of weeks and the remainder of our pipeline really pencil to favorable growth for the second half of the year. I just encourage folks to update their numbers.

Okay. Thanks.

Your next question comes from the line of Mitch Germain with Citizens Bank. Mitch, your line is open. Please go ahead.

Thank you. Bill, as some of this leasing gets done over the next couple of, or I guess the validation of maybe some of this leasing, has there been any consideration to maybe consider continuing to pare down your Darden exposure with some asset sales?

Yeah. The leasing that's been done, just to make sure everyone's clear, there will be no interruption of payments from the Bahama Breeze leases. Those 10 buildings, six of them will become other brands within the Darden portfolio. The others we will release, quite likely before any of those leases come to maturity. That will be uninterrupted. Justin has done a terrific job addressing the small number of properties that have become vacant at maturity, and we've picked up rent. As far as selling Darden assets, we've done it occasionally. These are very high quality, very in-demand properties. We get unsolicited interest all the time. We feel very confident that they're going to renew. There's not a ton of motivation to sell them. Every once in a while, we get an offer that's too good to refuse, but we typically want to hold those assets.

Great. God, I hate asking this question because I know that you don't give guidance, but is it safe to think that we'll at least see a little bit of a deceleration in acquisition activity for the next couple of months, or is this still all systems go?

I think it really depends on our equity cost of capital. Our debt cost of capital is very attractive. We have some leverage capacity to grow into. I think it really comes to our equity cost of capital, which isn't where we want it to be. We think that the market's missing our growth, so we're really trying to double underline that on this call. You've seen that I've bought a bunch of stock. I think that speaks volumes to where I think we're trading versus the value of the company.

Thanks. Congrats to you and the team.

Thanks, Mitch.

Your next question comes from the line of James Kammert with Evercore. Jim, your line is open. Please go ahead.

Thank you. Good morning for you. Following a couple themes in the call, are you in the kind of a red, green, or yellow zone on the equity, Bill? I guess that last topic you were just touching on.

Yeah, I think we're in the yellow zone.

Yeah.

We've been very disciplined about that since inception. I think it's one of the things that makes us stand out is how disciplined we are on capital allocation. My background is I spent the formative part of my career as an equity investor and I fundamentally believe that companies that are disciplined about capital allocation are worth more. We feel like it's not being reflected in our stock right now, but we're putting up the results that should change that.

Fair enough. Thank you. Second question, obviously it's brand new with the Mission Pet and a very large new exposure. It sounds very constructive. Would you do other veterinary activity at this point, or do you think that this was more of a, such a standout sort of portfolio construction, all that you're kind of full up on that particular line of exposure?

I think we would still seek out very high-scoring assets. Keep in mind, Tim, we've been working on this Mission Pet Health portfolio probably for 5+ years. We're very close with the seller on a personal basis and their advisors are folks that we've worked with a lot. This was, in some ways, put together with a strong sense that we might be the likely buyer. We're happy that after all the time that we put into it, that the portfolio was at such a high quality and was available at a price that was accretive. We would certainly, as we grow, if we find things that we think score highly, we would add to it irregardless of what sector it's in.

Fair enough. Thank you.

A reminder, if you would like to ask a question, please press star one on your telephone keypad. Your next question comes from the line of Anthony Paolone with JPMorgan. Anthony, your line is open. Please go ahead.

Thanks. I just have one left here. You expressed your confidence in just the renewals or just leases getting extended over the next few years. Bill, maybe if we were to think about anything that doesn't get renewed, even if you feel good about just getting these things back filled because you own good assets, what's typical downtime for us to think about if you have to switch tenants?

Sure. We would have 12 months with Darden operating and paying rent in any event. Historically for assets like this, it's been less than 12 months. We have a long runway that's supported by Darden rents. Again, these properties have long operating histories, very high coverage, and they're in great locations. I think there'd be a pretty good line waiting to get access to them, to be honest. That's been our experience.

Okay

With Bahama Breeze as a recent test case.

Got it. We're looking at the 2027, 2028 expirations, or lease maturities. They have to let you know 12 months in advance of the maturity whether they're staying or going, that gives you the time to market it and find a backup tenant.

Correct. Yep.

Okay.

Exactly.

Thank you.

We have reached the end of the Q&A session. I will now turn the call back to Bill Lenehan for closing remarks.

Thank you. Ultimately, the first seven months of 2026 have been a defining period for FCPT. We have already exceeded our prior record annual investment volume, completed the largest acquisition in our history with the Mission Pet Health portfolio, and continue to demonstrate the consistency and durability of the portfolio we have built over the past decade. Our occupancy, rent collections, and tenant coverage outcomes remain amongst the strongest in our sector. On the back of some of our largest and most accretive capital raising. We believe that we are well positioned to execute with the same underwriting discipline that has defined FCPT since inception. Our team will be at the Wells Fargo and Bank of America conferences in September, and we would welcome the opportunity to meet in person. Please reach out to Patrick or me to coordinate schedules. With that, thank you.

This concludes today's call. Thank you for attending. You may now disconnect.

I will now hand the conference over to Patrick Wernig, CFO. Patrick, please go ahead.

Thank you. During the course of this call, we will make forward-looking statements which are based on our beliefs and assumptions. Actual results will be affected by known and unknown factors that are beyond our control or ability to predict. Our assumptions are not a guarantee of future performance, and some will prove to be incorrect. For a more detailed description of some potential risks, please refer to our SEC filings, which can be found at fcpt.com. All the information presented on this call is current as of today, April 30, 2026. In addition, reconciliation to non-GAAP financial measures presented on this call, such as FFO and AFFO can be found in the company's supplemental report. Please note if you are a research analyst you have been emailed a meeting ID which is 865913566.

We'll repeat that at the end of our prepared remarks. That pin will allow you to ask questions during the Q&A session. With that, I will turn the call over to Bill.

Good morning. Following my initial remarks, Josh will comment on our investment activity, and Patrick will discuss financial results and capital position. Q1 marked a continuation of the momentum from 2025 and a strong start to 2026. AFFO per share grew by 3.4% versus the prior year period, continuing our focus on steady risk-adjusted growth. During Q1, we acquired $26 million of net lease properties at a 6.8% blended cash cap rate, equivalent to a 7.3% GAAP cap rate. This is marginally lower volume versus the start of 2025. I'd emphasize we're seeing a lot of attractive opportunities and feel good about the strength of our pipeline. Seasonally, we tend to see fewer deals close in Q1 versus later in the year. Q2 is shaping out that way so far.

Over the last 12 months, we've acquired $288 million of properties. We're also excited to have closed on a new $200 million term loan with seven-year tenor earlier this month. The term loan all-in rate is 4.9%, which represents 200 basis points of spread to historical acquisition yields. We will be able to invest that money creatively. Our rent coverage in Q1 was 5.1x for the majority of our portfolio that reports this figure. This remains amongst the strongest coverage within the net lease industry. The rent coverage figure for our Garden properties specifically is 5.8x, which has been very consistent, remaining above a very lofty 5x for the past three years. As a reminder, the first tranche of lease maturities is due to send us extension notices by October of this year.

While we can't know the outcome with certainty, barring a material change in the operating performance of lease source, we would expect a very high renewal percentage for the spin-off portfolio in the coming years. To that end, our largest brands, Olive Garden, LongHorn, and Chili's, continue to be leaders within the net lease tenant universe. Most recently, Brinker reported Chili's same-store growth of 4% for the quarter ended March 2026, after a 31% increase a year ago. Olive Garden and LongHorn reported same-store sales growth of 3% and 7% respectively for the quarter. Remarkable results for the three brands that represent 47% of our portfolio rent combined. To bring that point home, I'll call to a new slide on page seven of our investor deck that shows the strong outperformance of our publicly traded tenants versus the generic all restaurant index.

The key takeaway is portfolio construction is extremely important. By being selective with our tenant partners, we are building what we believe is a fortress portfolio brick by brick. Our lead restaurant tenants appear to be taking market share and have not shown signs of slowing down. To that end, our portfolio has avoided some of the more problematic lease sectors experiencing long-term macro headwinds. This includes theaters, pharmacies, and experiential retail more generally. We benefit from our strong portfolio construction with low basis, fundable buildings operated by tenants and sectors that are e-commerce and recession-resistant. We have had no major tenant credit issues, leading to very low bad debt expense and very little vacancy in our portfolio. On this topic, we would like to provide a brief update on our Bahama Breeze properties.

As a point of clarification, we own 10 Bahama Breeze properties, which is 1.3% of our ABR. That said, Darden's planning to convert six of these locations to other brands they operate: Yard House, Olive Garden, LongHorn, Chili's, et cetera. They'd like to convert more, but they are limited by already having nearby existing locations and in some cases, co-tenancy restrictions. The remaining four properties are 50 basis points of ABR, and we already have actively negotiating letters of intent with new tenants to backfill these locations. Based on the figures we're negotiating, we expect to recover or possibly even exceed the prior rent paid by Darden. Although the timing and final economics will ultimately depend on the outcome of these negotiations. It takes a few months to negotiate a lease, and we should have further updates on timing at the Q2 earnings call.

Overall, very good shape. Remarkably, I'd like to point out that it's been less than three months since Darden announced the brand closure. For us to have potential solutions across the board for all 10 locations so quickly just highlights how our focused strategy of strong underlying real estate and irreplaceable rent levels will benefit us long-term. In any case, we'll continue to collect rent throughout the backfill process, as Darden is still obligated to make rent payments on these leases for all 10 locations for at least one and a half years, and in some cases, up to four. That provides us flexibility as we work through the preferred backfill tenant options. Shifting gears, we continue to diversify our portfolio.

37% of our rent now comes from tenants outside the casual dining subsector, including automotive service at 13%, medical retail at 11%, and QSR restaurants at 11%. We are actively exploring new retail categories and property types as we look to expand the top of our funnel for investments. As when we developed our automotive service and medical retail property strategies, prior to investing in a new sector, we evaluate the business resiliency and AI disruption risk, availability of credit-worthy tenants, real estate quality, and pricing attractiveness. That said, for us, the limiting factor on new sectors and deals is typically sellers' lofty pricing expectations. Finally, this is a very exciting point, I'd like to mention that Michael Friedland has joined our board.

Michael recently retired from JPMorgan and brings 30 years of Wall Street experience in real estate finance and corporate credit to FCPT. We've known Michael a long time, and we're really impressed and glad he's joined our board. Welcome, Michael. Over to you, Josh.

Thanks, Bill. I'll start with a review of Q1 activity and then touch on our investment pipeline. In Q1, we acquired 10 properties with a weighted average lease term of 10 years for $26 million at a blended 6.8% cash cap rate or a 7.3% GAAP cap rate. This represents an average basis of $2.6 million per property, extending our strategy of partnering with credit-worthy operators while focusing on fungible, low-cost basis assets to help mitigate downside risk. We are really happy with the asset selection this quarter. As Bill noted, Q1 is typically a lower volume period for us, and the ending volume for the period lined up well with our internal expectations. That said, Q2 is shaping up to be consistent with a typical seasonal volume ramp.

Our Q1 acquisitions were composed of 46% restaurant, 28% auto service, and 26% medical retail properties. On the credit side, all of our properties acquired in Q1 were leased to corporate operators. The only exception being our McAlister's Deli in Michigan, which is leased to Southern Rock, the largest McAlister's franchisee with 178 locations across 13 states. Our team continues to partner with leading operators in each of our chosen retail subsectors. Coupled with our low basis rent filtering, we have a proven track record of building a resilient and long-standing portfolio. In the meantime, our team continues to actively explore all avenues for investment, both large portfolios and small granular deals, in addition to assets in new subsectors, as evidenced in Q4 2025.

While we are expanding the top of our investment funnel, we will continue to maintain our discipline in acquiring low basis investments leased to best-in-class operators at pricing accretive to our cost of capital. Patrick, back to you.

Thanks, Josh. I'll start by talking about the state of our balance sheet and an update on our capital sourcing, including our recently closed term loan. We funded $50 million of new incremental of the new incremental $200 million term loan in April, and the balance will be used to fund acquisitions in Q2 and Q3. The term loan credit margin is 125 basis points over SOFR for an all-in rate of approximately 4.9%. We have fully hedged our current outstanding term loan balance of $640 million as of April 30th at a blended SOFR rate of 3.1% or approximately 4% all in with that rate steady through November 2027. Our supplemental disclosure includes a detailed pro forma hedge schedule.

We also continue to benefit from full capacity under our $350 million revolver. With respect to leverage at the end of Q1, our net debt to adjusted EBITDA was just 5x. It was our seventh consecutive quarter of leverage below 5.5x and at the bottom end of our stated leverage range of 5x-6x. Noting that our term loan closed after quarter end, after fully funding and investing the proceeds, estimated run rate leverage will be 5.4x. Our fixed charge coverage ratio remains a very healthy 4.8x as of quarter end. Turning to debt maturities. Once factoring in the extension options for our existing term loan, we have no debt maturities until December, when just $50 million of private notes come due. We plan to address this in due course closer to the maturity date.

Our staggered maturity schedule will ensure we do not face a significant maturity wall at any point thereafter. Turning to some of our earnings highlights for Q1. AFFO per share was $0.45, representing 3.4% growth versus prior year. Cash rental income was $70 million, representing 10% growth versus prior year. Annualized cash-based rent for leases in place as of quarter end was $266 million, and our weighted average five-year annual cash rent escalator is 1.5%. Cash G&A expense was $4.9 million for the quarter, representing 7% of cash rental income, compared to 7.7% for the prior year. The 70 basis point improvement in operating leverage and flat cash G&A compared to the prior year illustrates our continued efforts at achieving efficient growth and the benefits of our rising scale.

Following our Q1 results, we are reaffirming our guidance range for 2026 cash G&A of $19.2 million-$19.7 million. We've also continued to make progress with 27 of the 42 leases originally expiring in 2026 extended. Recapture rate on these locations is 6% above prior year rent. We are currently negotiating to re-tenant two of those properties, and the remaining 13 now represent just 1% of ABR, down from 2.6% at the beginning of 2025. Our portfolio occupancy remains very strong at 99.6% today, which benefits from re-leasing some of our very limited number of vacant sites. We collected 99.7% of base rent in Q1. Last quarter did not see any material changes to our collectibility or credit reserves.

As an aside, during this call, we've referenced two of our new disclosure updates, which I'll highlight again now. First, going forward, we plan to disclose GAAP cap rates along with the cash cap rate figure we've always done. We have very low default rates historically, and our intention is to hold our properties long-term. Therefore, the data related to those expected long-term returns is another helpful metric for our investors.

Our presentation includes a new slide on page eight that has GAAP cap rates going back to 2023, which shows that historically they have averaged about 70 basis points higher than our initial cash cap rates. Second, we are updating the way we show the AFFO per share growth by calculating without the impact of two decimal rounding. Based on our share count, rounding can be impactful on this figure, particularly for quarterly comparisons. Our updated approach will allow us to quote a more accurate growth figure. We continue to aim for ways to improve transparency with the investor community and believe that these changes are aligned with value thus. With that, we'll turn over to questions for the Q&A session. And just as a reminder, the meeting ID is 865913566 if you would like to ask a question. Thank you.

We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Michael Goldsmith from the line of UBS. Michael, go ahead.

Thank you. It's Michael Goldsmith from UBS. Thanks for taking the question. First question is, I know you guys don't provide discrete guidance, but maybe this $200 million term loan is shadow guidance in that you've talked about fully drawing that down to the second and the third quarter. Is that, you know, as we think about just acquisition activity, you've got the $200 million there, you know, consensus at $275 million in acquisitions for the year, and that's stepping down to $250 million next year. Just trying to get a sense of, you know, your liquidity, the acquisition market, and now, you know, you kind of have clear line of sight into acquisitions of, let's say, $200 million through the third quarter.

You know, should you be able to exceed that and continue to acquire healthily into next year? Thanks.

Michael, you know our business well. I think the answer might be hidden in your question. Yeah, if we, you know, very are particular about how our press releases are drafted, and I think we gave more specific timing guidance than we have in the past. I would say it's always curious that analysts seem to have declining acquisitions for us, which is unusual in the space. I don't think there are other companies that that's the case. I'm not sure why. That's not what has been the historical record.

Got it. As a follow-up, appreciate the new slides in the presentation. I think pages seven and eight. Can you just kind of walk through what you're trying to show here? I think you're indicating that the Four Corners portfolio, how your tenants are outperforming maybe the general overall restaurant industry. Separately, right, like your cash cap rate or GAAP cap rates are exceeding your cash flow. Maybe you could just provide a little bit more detail about what the point that you're trying to make with both of these things.

Yeah, absolutely. Great question. We had an investor show us our stock price versus, like, some generic index. I think it might have been MSCI or Morgan Stanley, some generic restaurant index. You had to be a little cute with the start date to get it to line up. There was a pretty high correlation. They were sort of making the point, do you trade like a restaurant index? We think that that's a silly concept on its face. If we were going to trade like in a restaurant index, at a minimum, you should weight the index by our rent and look at the stock, well, performance of our tenants weighted by our rent.

If you do that, you get the yellow line, which is, you know, shows how strong Darden and Chili's has been. That we don't have, well, you know, because we weighted it basically down as far as we could with public companies. We don't have, you know, companies that have fallen into distress. Our tenant roster is really strong. The GAAP cap rate, we have a competitor, Agree, that we admire. It's a great company. They have historically used GAAP cap rates. We have gotten questions about where our cap rates are versus theirs. There seem to be some investor confusion that they're quoting two different things. Both numbers are perfectly legitimate ways of looking at it. Sometimes we felt our cash cap rates were being compared against their GAAP cap rates.

We just did the math and showed you the data so you can pick and choose the way you wanna do it. I'll handle the last new disclosure. You didn't ask about it, Michael, but I'll just handle it now, about rounding. Which is, you know, we just thought this is a more accurate way of doing it. We went back, you know, not surprisingly, some of the times the rounding would comparing rounded to rounded versus more closely actual to actual would, you know, have a higher growth rate some of the time, a lower growth rate some of the time. We just thought this was a better way of showing it. There seems to be a lot of focus on growth today, and we wanted to give you the most accurate number we can.

If you have more questions about that, it's a pretty technical calculation. I'd probably recommend you reach back out to Pat after the call on the rounding issue.

Thanks so much, guys. Good luck in the second quarter.

Appreciate it.

Thanks, Michael.

Your next question comes from the line of Eric Borden from BMO Capital Markets. Eric, go ahead.

Hey, good morning. Thanks for taking my question. Just given your strong relationship with Yum! and Brinker, you know, are there any identical acquisition opportunities as Yum! expands on its Taco Bell platform and Brinker expands on its Chili's platform, just given the strength in same-store sales there, whether it's, you know, on the acquisition front or potentially, you know, a development opportunity? Thank you.

Thank you. We're, we're always working on those. You know, we, the one comment I'd make is Taco Bell tends to trade some very, very tight cap rates. We're always working on things like that. Being aligned with strong brands where we can play offense and not have to be licking the wounds of prior investment mistakes is a huge advantage. I would say that both of the brands you mentioned, they traded very, very, competitive cap rates on the secondary market.

Okay, that's helpful. Then just on the bad debt side of things, can you just talk about anything that's been realized year to date and, you know, how are you thinking about bad debt for the remainder of 2026? Thank you.

Yeah. The number is zero for the year to date. You know, we have over 1,300 leases, we're always kind of monitoring, you know, something in the portfolio. We have not had any bad debt this year. The portfolio continues to perform really strong. Say like, you know, you probably saw Brinker's results yesterday, recent prints by Darden as well. You know, the brands we've aligned with are weathering any sort of macro headwinds very well. There's gonna be some brands that don't. You know, we try to pick our horses very carefully so that we avoid that.

All right. Thank you for the time. Appreciate it.

Yeah, of course.

Your next question comes from the line of Wes Golladay with Baird. Wes, please go ahead.

Thank you. Hey, good morning, everyone. Can you go back to that comment on the expirations? I think you said 27 of 42 have been renewed. I believe you said 6%, so I would've thought maybe it'd been a little bit lower with the contractual rent extensions. Maybe how should we think about that going forward?

I wouldn't overemphasize it. I think we've had a positive quarter. You know, our typical rent growth is 1.5%. If you're modeling our company, I think that's a good place to go. There'll be quarters where it's better. There might be a quarter where it isn't as good. 1.5%, I think is a good place to start and finish.

Okay. Thanks for that.

And I would also just-

When we look at.

I would also just real quick, Wes, I would just like to, you know, emphasize that Justin and his team have done a just a terrific job on property management and asset management and re-leasing. That's a new, you know, capability for us, frankly. In the last couple years, Justin has really aggressively restructured his team and has done a terrific job. We are more on top of that as a company than we've ever been by far.

Okay. Thanks for the additional color there. When we look at the pipeline going forward, is there a bigger percentage of that in the new categories that you're evaluating, or are you looking to enter those new categories a little bit more methodically?

Yeah, we're really score-focused. We're not really putting emphasis on one category over the other. We're trying to find the assets that score the best and make sure that those rise to the top with appropriate pricing.

Okay. Thanks a lot.

We, you know, we are looking at some new, some new sectors as we talked about last quarter, and really leaning into building relationships, finding what tenants we wanna emphasize, et cetera. The, the aperture is bigger than it's ever been.

Okay. I appreciate the color.

Your next question comes from the line of John Kilichowski with Wells Fargo. John, please go ahead.

Hi, good morning. Thanks for taking my question. First one for me, Bill, thanks for the color on Bahama Breeze. I guess just to expand on that, you know, you mentioned the positive mark on the other assets that weren't being converted. Is there gonna be downtime there? Will there be rent loss before the mark, or do you think there'll be no net credit loss there?

No, I don't think there'll be downtime. The Darden is responsible for a year and a half, up, at the minimum, up to four years for the handful that we're converting to other tenants. You know, to the extent that there's rent growth or capital provided, you know, all that's baked into our comments. We feel really good about being able to re-lease these to strong tenants. Darden's taking, you know, a lot of them too, so, a good diversification move. I think it shines a light on the Bahama Breezes that we sold a number of years ago for really, really high prices, that we did a good job managing our value at risk with any one particular tenant. Could be a good result.

I would just add to that. I mean, Bill said in his comments that we're talking about four stores and 50 basis points of ABR. It's a small amount.

Yeah.

Understood. Just quarter to date, if we kind of run the numbers here, it looks like the average blend is about 20 basis points higher than what you closed in 1Q. I know that's early based on what you've released. Is there any sort of upward creep in yields that you're seeing, I think, driving that? Or is that just, you know, small sample size there that's driving that move?

Small sample size.

Okay. Got it. Thank you.

Yep.

Your next question comes from the line of Mitch Germain from Citizens Bank. Mitch, please go ahead.

Yeah, thank you. Bill, you mentioned just a second ago, you know, obviously looking at a couple new industries. I think it was capital that you allocated to a rental company and, so a rental operator and a grocer. How do you know, what sort of education do you and your team take in reviewing the sector? You know, kind of what are the attributes that made those sort of assets or sectors interesting for you? Does that really, obviously it clearly changes the TAM in terms of how you're allocating capital. Is that the way we should be thinking about this now?

Yeah, I think that's a good way of thinking about it. You know, I guess we use what we call the triple filter, which is this something that we know enough to buy? I'll talk a little bit more about that in a second. Do we have our permission from our investors to buy it? Would we buy it with our own money? While those sound very high level, that is a very challenging gauntlet for an asset class to get through. You know, I personally wouldn't buy a pickleball facility with my own money, so that makes it pretty easy to, you know, not buy pickleball facilities. I wouldn't buy a Carvana with my own money, so that makes it pretty easy. Do we have permission from our investors? That's a harder one.

I think we tend to take it pretty gradually to make sure that we're bringing our investors along with us. Pretty clearly, you know, our investors don't need Four Corners to buy a Class A office in New York City. They have other ways to get that exposure. Do we know enough to know is manifest in writing white papers for our board, going to conferences, meeting and talking with tenants, walking the floors. Then I would say humbly that a lot of these sectors are things that I have experience with in the past, it just preceded Four Corners. When I was at [Trailion], when I was on Gramercy’s investment committee, you know, and other things I worked on, you know, we bought outdoor industrial storage. We bought grocery.

I have a familiarity with it. It's making sure we bring the team along with me.

Great. Last one from me. I asked this a couple times this quarter, but I'm just curious, are you seeing any real changes in the competitive landscape within the investment sales market? You know, I mean, obviously, for quite some time, there was a lot of competition that was sitting on the sidelines, and some of that appears to be back. Is that, you know, shifting, you know, kinda any way that you're approaching underwriting and bidding on properties?

You know, where we are buying these onesies and twosies, you know, we obviously look at portfolios, and have closed on several in our existence. I think we're really well competitively positioned. We can build a portfolio throughout a year that we're proud of doing onesies and twosies, but we have the scale to do bigger things as well. You know, you read a lot in the news about private credit and the private credit firms, you know, trading at discounts to NAV, questioning of their marks. You know, will that cause them to pull back? I don't think we have evidence of that yet. Certainly, there's been recently, you know, there's been a lot of corporate M&A activity. I think there's a lot of shadow of corporate M&A activity. There's a lot of things to work on now.

Thank you.

There are no further questions at this time. I will now turn the call over to Bill Lenehan, CEO, for closing remarks. Bill, go ahead.

Great. Terrific, glad to land the plane on the 30-minute mark. Ultimately, our existing portfolio strength is compelling for us to focus on offense, where many of our peers are playing defense. Our $200 million term loan gives us a direct line of sight for funding between now and Q3. Attractive pricing we're seeing in the debt markets should give us even more access to low-cost funding later this year at scale. The acquisition market is stable. With a bit larger aperture for our property types, we expect another successful year of building our portfolio brick by brick. Our team will be at ICSC the week of May 18th and Nareit in New York the week of June 1st. As many of you know, we host a cocktail party in conjunction with ICSC.

We'd love to meet with you in person at either of these events. Please reach out Patrick or myself to coordinate schedules. Thank you all. Look forward to continuing to see many of you in person this year.

This concludes today's call. Thank you for attending. You may now disconnect.