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What changed in Four Corners Property Trust, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Four Corners Property Trust, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+187 added−183 removedSource: 10-K (2025-02-13) vs 10-K (2024-02-15)

Top changes in Four Corners Property Trust, Inc.'s 2024 10-K

187 paragraphs added · 183 removed · 164 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest change(3) Lease term remaining is defined as the lease term weighted by the annual cash base rent. 7 The following table summarizes the diversification of FCPT’s lease portfolio by state as of December 31, 2023: State # of Leases % of Annual Base Rent Texas 89 10.1% Florida 83 9.0% Ohio 85 7.3% Illinois 77 6.9% Georgia 61 5.3% Indiana 73 5.1% Michigan 62 4.3% Tennessee 37 4.0% Virginia 32 2.8% New York 34 2.7% Maryland 33 2.7% North Carolina 32 2.5% South Carolina 31 2.5% Pennsylvania 23 2.5% Wisconsin 32 2.3% Alabama 32 2.2% California 15 2.1% Colorado 26 2.0% Mississippi 24 2.0% Kentucky 24 2.0% 27 other states (none greater than 2%) 230 19.7% Total 1,135 100.0% Leases with Darden The estimated annual cash rent based on current rates for the leases in place with Darden is approximately $112.7 million, with average annual rent escalations of 1.5% through December 31, 2028.
Biggest changeThe following table summarizes the diversification of FCPT’s lease portfolio by state as of December 31, 2024: State # of Leases % of Annual Base Rent Texas 96 9.9% Florida 88 8.7% Ohio 85 6.7% Illinois 82 6.7% Georgia 73 6.1% Indiana 78 5.4% Tennessee 43 4.4% Michigan 63 4.1% 39 other states (none greater than 3%) 612 48.0% Total 1,220 100% Leases with Darden The estimated annual cash rent based on current rates for the leases in place with Darden is approximately $114.6 million, with average annual rent escalations of 1.5% through December 31, 2029.
We expect this acquisition strategy will decrease our reliance on Darden and help 4 us gain exposure to non-restaurant retail properties over time. We intend to purchase properties that are well located, occupied by durable concepts, with creditworthy tenants whose operating cash flows are expected to meaningfully exceed their lease payments to us.
We expect this acquisition strategy will decrease our reliance on Darden and help us gain exposure to non-restaurant retail properties over time. We intend to purchase properties that are well located, occupied by durable concepts, with creditworthy tenants whose operating cash flows are expected to meaningfully exceed their lease payments to us.
We will employ a 5 disciplined, opportunistic acquisition strategy and price transactions appropriately based on, among other things, the mix of assets acquired, length and terms of the lease, location and submarket attractiveness, and the credit worthiness of the existing tenant. Increase Diversity of Portfolio: We seek to develop a diverse asset portfolio as we continue to expand.
We will employ a disciplined, opportunistic acquisition strategy and price transactions appropriately based on, among other things, the mix of assets acquired, length and terms of the lease, location and submarket attractiveness, and the credit worthiness of the existing tenant. Increase Diversity of Portfolio: We seek to develop a diverse asset portfolio as we continue to expand.
The tenants under our leases may have the ability to self-insure or use a captive provider with respect to its insurance obligations. We believe that the amount and scope of insurance coverage provided by our policies and the policies maintained by our tenants are customary for similarly situated companies in our industry.
The tenants under our leases may have the ability to self-insure or use a captive provider with respect to its insurance obligations. We believe that the amount and scope of insurance coverage provided by our policies and the policies maintained by our 7 tenants are customary for similarly situated companies in our industry.
We do not intend our website to be an active link or to otherwise incorporate the information contained on our website into this report or other filings with the SEC. Our filings can also be obtained for free on the SEC’s Internet website at www.sec.gov. We are providing our website address solely for the information of investors. 11
We do not intend our website to be an active link or to otherwise incorporate the information contained on our website into this report or other filings with the SEC. Our filings can also be obtained for free on the SEC’s Internet website at www.sec.gov. We are providing our website address solely for the information of investors.
In addition to maintenance requirements, the tenant is also generally responsible for insurance required to be carried under the leases, taxes levied on or with respect to the properties, payment of common area maintenance charges and all utilities and other services necessary or appropriate for the properties and the business conducted on the properties.
In addition to maintenance requirements, the tenant is also generally responsible for insurance 4 required to be carried under the leases, taxes levied on or with respect to the properties, payment of common area maintenance charges and all utilities and other services necessary or appropriate for the properties and the business conducted on the properties.
See “Risk Factors - Risks Related to Our Business - We are dependent on our major tenants successfully operating their businesses, and a failure to do so could have a material adverse effect on our business, financial position or results of operations.” 8 Franchise Agreements Pursuant to the Franchise Agreements, Darden grants the right and license to our subsidiary, Kerrow, to operate the Kerrow Restaurant Operating Business.
See “Risk Factors - Risks Related to Our Business - We are dependent on our major tenants successfully operating their businesses, and a failure to do so could have a material adverse effect on our business, financial position or results of operations.” 6 Franchise Agreements Pursuant to the Franchise Agreements, Darden grants the right and license to our subsidiary, Kerrow, to operate the Kerrow Restaurant Operating Business.
As of December 31, 2023, we hold an investment grade rating of BBB from Fitch Ratings and an investment grade rating of Baa3 from Moody’s Investor Service. Flexible UPREIT Structure We operate in what is commonly referred to as an UPREIT structure, in which substantially all of our properties and assets are held through FCPT OP.
As of December 31, 2024, we hold an investment grade rating of BBB from Fitch Ratings and an investment grade rating of Baa3 from Moody’s Investor Service. Flexible UPREIT Structure We operate in what is commonly referred to as an UPREIT structure, in which substantially all of our properties and assets are held through FCPT OP.
The leases in place with Darden provide for a weighted average remaining initial term of approximately 6.7 years as of December 31, 2023, with no purchase options provided that Darden will have a right of first offer with respect to our sale of any property, if there is no default under the lease, and we will be prohibited from selling any Properties to (i) any nationally recognized casual or fine dining brand restaurant or entity operating the same or (ii) any other regionally recognized casual or fine dining brand restaurant or entity operating the same, with 25 or more units.
The leases in place with Darden provide for a weighted average remaining initial term of approximately 5.7 years as of December 31, 2024, with no purchase options provided that Darden will have a right of first offer with respect to our sale of any property, if there is no default under the lease, and we will be prohibited from selling any Properties to (i) any nationally recognized casual or fine dining brand restaurant or entity operating the same or (ii) any other regionally recognized casual or fine dining brand restaurant or entity operating the same, with 25 or more units.
We believe that we have operated in conformity with the requirements for qualification and taxation as a REIT for the taxable year ended December 31, 2023, and we intend to continue to operate in a manner that will enable us to maintain our qualification as a REIT.
We believe that we have operated in conformity with the requirements for qualification and taxation as a REIT for the taxable year ended December 31, 2024, and we intend to continue to operate in a manner that will enable us to maintain our qualification as a REIT.
These properties were held for investment, with an aggregate leasable area of approximately 7.5 million square feet, and had a weighted average remaining lease term of 7.8 years before any lease renewals. An additional seven properties, representing the Kerrow Restaurant Operating Business, are operated by Kerrow subject to franchise agreements with Darden (“Franchise Agreements”).
These properties were held for investment, with an aggregate leasable area of approximately 8.0 million square feet, and had a weighted average remaining lease term of 7.3 years before any lease renewals. An additional seven properties, representing the Kerrow Restaurant Operating Business, are operated by Kerrow subject to franchise agreements with Darden (“Franchise Agreements”).
Item 1. Business. Unless the context indicates otherwise, all references to “FCPT,” the “Company,” “we,” “our” or “us” include Four Corners Property Trust, Inc. and all of its consolidated subsidiaries. History We were incorporated as a Maryland corporation on July 2, 2015 as a wholly owned indirect subsidiary of Darden Restaurants, Inc.
Item 1. B usiness. Unless the context indicates otherwise, all references to “FCPT,” the “Company,” “we,” “our” or “us” include Four Corners Property Trust, Inc. and all of its consolidated subsidiaries. History We were incorporated as a Maryland corporation on July 2, 2015 as a wholly owned indirect subsidiary of Darden Restaurants, Inc.
Two of these restaurants are subject to ground leases to third parties. The following table summarizes the rental properties by brand as of December 31, 2023: Brand Number of FCPT Properties and Leasehold Interests Total Square Feet (000s) Annual Cash Base Rent $(000s) % Total Cash Base Rent (1) Avg.
Two of these restaurants are subject to ground leases to third parties. 5 The following table summarizes the rental properties by brand as of December 31, 2024: Brand Number of FCPT Properties and Leasehold Interests Total Square Feet (000s) Annual Cash Base Rent $(000s) % Total Cash Base Rent (1) Avg.
As a result, this structure potentially may facilitate our acquisition of assets in a more efficient manner and may allow us to acquire assets that the owner would otherwise be unwilling to sell to us. Our Portfolio At December 31, 2023, our investment portfolio included 1,111 rental properties located in 47 states, all within the continental United States.
As a result, this structure potentially may facilitate our acquisition of assets in a more efficient manner and may allow us to acquire assets that the owner would otherwise be unwilling to sell to us. Our Portfolio At December 31, 2024, our investment portfolio included 1,198 rental properties located in 47 states, all within the continental United States.
Darden is currently the source of a majority of our revenues, and its financial condition and ability and willingness to satisfy its obligations under the leases and its willingness to renew the leases upon expiration of the initial base term thereof significantly impacts our revenues and our ability to service our indebtedness and make distributions to our shareholders.
Darden is currently the primary source of our revenues, and its financial condition and ability and willingness to satisfy its obligations under the leases and its willingness to renew the leases upon expiration of the initial base term thereof significantly impacts our revenues and our ability to service our indebtedness and make distributions to our shareholders.
Our properties are leased to our tenants on a net lease basis with a weighted average remaining lease term of approximately 7.8 years before any renewals and an average annual rent escalation of 1.4% through December 31, 2028 (weighted by annualized base rent), thereby providing a long-term, stable income stream.
Our properties are leased to our tenants on a net lease basis with a weighted average remaining lease term of approximately 7.3 years before any renewals and an average annual rent escalation of 1.4% through December 31, 2029 (weighted by annualized base rent), thereby providing a long-term, stable income stream.
As of February 15, 2024, we have not been notified by any governmental authority of, nor is management aware of, any non-compliance with the ADA that management believes would have a material adverse effect on our business, financial position or results of operations. 9 Other Regulations State and local fire, life-safety and similar entities regulate the use of the properties.
As of February 13, 2025, we have not been notified by any governmental authority of, nor is management aware of, any non-compliance with the ADA that management believes would have a material adverse effect on our business, financial position or results of operations. Other Regulations State and local fire, life-safety and similar entities regulate the use of the properties.
As of February 15, 2024, we have not been notified by any governmental authority of, nor is management aware of, any non-compliance or liability with respect to environmental laws that management believes would have a material adverse effect on our business, financial position or results of operations.
As of February 13, 2025, we have not been notified by any governmental authority of, nor is management aware of, any non-compliance or liability with respect to environmental laws that management believes would have a material adverse effect on our business, financial position or results of operations.
Our principal sources of liquidity will be our cash generated through operations, our revolving credit facility which has an undrawn capacity as of December 31, 2023 of $234 million, our ability to access the public equity markets, and our ability to access bank and private placement debt markets.
Our principal sources of liquidity will be our cash generated through operations, our revolving credit facility which has an undrawn capacity as of December 31, 2024 of $245.0 million, our ability to access the public equity markets, and our ability to access bank and private placement debt markets.
Additionally, as of December 31, 2023, restaurant properties and non-restaurant retail properties accounted for 80.3% and 19.7%, respectively, of our total revenues. Acquiring restaurant properties while also acquiring non-restaurant retail properties allows us to leverage our experience with the restaurant industry and accelerate our diversified growth and, in doing so, reduce our concentration with Darden.
Additionally, as of December 31, 2024, restaurant properties and non-restaurant retail properties accounted for 77.3% and 22.7%, respectively, of our total revenues. Acquiring restaurant properties while also acquiring non-restaurant retail properties allows us to leverage our experience with the restaurant industry and accelerate our diversified growth and, in doing so, reduce our concentration with Darden.
Human Capital Resources and Management As of February 15, 2024, we had 516 employees, of which 476 were employed at our Kerrow Restaurant Operating Business. None of these employees are represented by a labor union. Our human capital development goals and initiatives are focused on enhancing employee growth, satisfaction and wellness while maintaining a diverse and thriving culture.
Human Capital Resources and Management As of February 13, 2025, we had 536 employees, of which 498 were employed at our Kerrow Restaurant Operating Business. None of these employees are represented by a labor union. Our human capital development goals and initiatives are focused on enhancing employee growth, satisfaction and wellness while maintaining a diverse and thriving culture.
We intend to continue to invest in both restaurant properties and, increasingly over time, other retail property types beyond the restaurant industry. 6 We expect that future investments in properties, including any improvements or renovations of currently owned or newly-acquired properties, will be financed, in whole or in part, with cash flow from our operations, borrowings under our $250 million revolving credit facility, or the proceeds from issuances of common stock, preferred stock, debt or other securities.
We expect that future investments in properties, including any improvements or renovations of currently owned or newly- acquired properties, will be financed, in whole or in part, with cash flow from our operations, borrowings under our $250 million revolving credit facility, or the proceeds from issuances of common stock, preferred stock, debt or other securities.
Our employees, many of whom have been employed by the Company for the majority of the Company’s existence, frequently express satisfaction with management including by responding positively about the Company’s management in anonymous surveys. 10 Available Information All filings we make with the Securities and Exchange Commission (the “SEC”), including this Annual Report on Form 10-K, our quarterly reports on Form 10-Q, and our current reports on Form 8-K, and any amendments to those reports are available for free on our website, www.fcpt.com, as soon as reasonably practicable after they are filed with, or furnished to, the SEC.
Available Information All filings we make with the Securities and Exchange Commission (the “SEC”), including this Annual Report on Form 10-K, our quarterly reports on Form 10-Q, and our current reports on Form 8-K, and any amendments to those reports are available for free on our website, www.fcpt.com, as soon as reasonably practicable after they are filed with, or furnished to, the SEC.
As of December 31, 2023, our lease portfolio had the following characteristics: • 1,111 free-standing properties located in 47 states and representing an aggregate leasable area of 7.5 million square feet; • 99.8% occupancy (based on leasable square footage); • An average remaining lease term of 7.8 years (weighted by annualized base rent); • An average annual rent escalation of 1.4% through December 31, 2028 (weighted by annualized base rent); and • 59% investment-grade tenancy (weighted by annualized base rent).
Pursuant to these transactions, we acquired 87 rental properties and ground leasehold interests, aggregating 546.6 thousand square feet. 3 As of December 31, 2024, our lease portfolio had the following characteristics: • 1,198 free-standing properties located in 47 states and representing an aggregate leasable area of 8.0 million square feet; • 99.6% occupancy (based on leasable square footage); • An average remaining lease term of 7.3 years (weighted by annualized base rent); • An average annual rent escalation of 1.4% through December 31, 2029 (weighted by annualized base rent); and • 56% investment-grade tenancy (weighted by annualized base rent).
(2) We have estimated Darden current quarter EBITDAR coverage using latest FCPT portfolio reported sales results for the quarter ended November 2023 and Darden brand average margins reported for the same period.
(2) We have estimated Darden current quarter EBITDAR coverage using latest FCPT portfolio reported sales results for the quarter ended November 2024 and Darden brand average margins reported for the same period. (3) Lease term remaining is defined as the lease term weighted by the annual cash base rent.
As of December 31, 2023, properties in our leasing portfolio were located in 47 different states across the continental United States, comprised of 148 unique tenant brands, and our properties in only one state, Texas, i ndividually accounted for more than 10% of our total revenue at 10.1% of our total revenue .
As of December 31, 2024, properties in our leasing portfolio were located in 47 different states across the continental United States, comprised of 163 unique tenant brands, and no concentrations of 10% or greater of total rental revenue in any one state.
Rent Per Square Foot ($) Tenant EBITDAR Coverage (2) Lease Term Remaining (Yrs) (3) Olive Garden 314 2,673 $ 80,839 37.1 % $ 30 5.9x 6.8 LongHorn Steakhouse 115 645 22,730 10.4 % 35 5.3x 5.5 Other Brands - Restaurant 394 1,920 62,403 28.6 % 33 2.8x 9.7 Other Brands - Retail 262 2,016 43,036 19.7 % 21 3.3x 7.7 Other Brands - Darden 26 231 9,161 4.2 % 40 3.3x 9.0 Total 1,111 7,485 $ 218,169 100.0 % $ 29 4.9x 7.8 (1) Current scheduled minimum contractual rent as of December 31, 2023.
Rent Per Square Foot ($) Tenant EBITDAR Coverage (2) Lease Term Remaining (Yrs) (3) Olive Garden 314 2,674 $ 82,061 34.2 % $ 31 5.8 x 5.8 LongHorn Steakhouse 116 650 23,232 9.7 % 36 5.8 x 4.6 Other Brands - Restaurant 427 2,123 71,112 29.6 % 33 3.2 x 9.2 Other Brands - Retail 315 2,364 54,460 22.7 % 23 2.7 x 8.2 Other Brands - Darden 26 230 9,306 3.9 % 40 3.4 x 8.0 Total 1,198 8,041 $ 240,172 100.0 % $ 30 4.9 x 7.3 (1) Current scheduled minimum contractual rent as of December 31, 2024.
In 2023, FCPT engaged in various real estate transactions for a total investment of $341.1 million, including capitalized transaction costs. Pursuant to these transactions, we acquired 92 rental properties and ground leasehold interests, aggregating 757 thousand square feet.
In 2024, FCPT engaged in various real estate transactions for a total investment of $273.0 million, including capitalized transaction costs.
In November 2022, the Company renewed its “At-the-Market” (“ATM”) program under which it can sell common stock with an aggregate gross sales price of up to $450 million through sales agents and forward sellers.
On September 17, 2024, the Company terminated the prior ATM program (the "prior ATM program") and entered into a new ATM program (the "ATM program" together with the prior ATM program, the "ATM programs"), pursuant to which shares of the Company’s common stock having an aggregate gross sales price of up to $500.0 million through sales agents and forward sellers.
Added
We intend to continue to invest in both restaurant properties and, increasingly over time, other retail property types beyond the restaurant industry.
Added
Our employees, many of whom have been employed by the Company for the majority of the Company’s existence, frequently express satisfaction with management including by responding positively about the Company’s management in anonymous surveys.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, the properties subject to leases with Darden provide them a right of first offer with respect to our sale of any such property, provided there is no default under the lease, and we are prohibited from selling any of our properties to (i) any nationally recognized casual or fine dining brand restaurant or entity operating the same or (ii) any other regionally recognized casual or fine dining brand restaurant or entity operating the same, with 25 or more units.
Biggest changeIf we want to sell a property, we cannot assure you that we will be able to dispose of it in the desired time period, or at all, or that the sale price of a property will exceed the cost of our investment in that property. 14 In addition, the properties subject to leases with Darden provide them a right of first offer with respect to our sale of any such property, provided there is no default under the lease, and we are prohibited from selling any of our properties to (i) any nationally recognized casual or fine dining brand restaurant or entity operating the same or (ii) any other regionally recognized casual or fine dining brand restaurant or entity operating the same, with 25 or more units.
While the tenants under our leases generally indemnify, defend and hold us harmless for the foregoing liabilities, there can be no assurance that the respective tenant will have sufficient assets, income or access to financing to enable it to satisfy its payment obligations to us under its lease.
While the tenants under our leases generally indemnify, defend and hold us harmless for the foregoing liabilities, there can be no assurance that the respective tenant will have sufficient assets, income or access to financing to enable it to satisfy its payment obligations to us under its lease.
While the tenants under our leases generally indemnify, defend and hold us harmless for the foregoing liabilities, there can be no assurance that the respective tenant will have sufficient assets, income or access to financing to enable it to satisfy its payment obligations to us under its lease.
While the tenants under our leases generally indemnify, defend and hold us harmless for the foregoing liabilities, there can be no assurance that the respective tenant will have sufficient assets, income or access to financing to enable it to satisfy its payment obligations to us under its lease.
While the tenants under our leases generally indemnify, defend and hold us harmless for the foregoing liabilities, there can be no assurance that the respective tenant will have sufficient assets, income or access to financing to enable it to satisfy its payment obligations to us under its lease.
While the tenants under our leases generally indemnify, defend and hold us harmless for the foregoing liabilities, there can be no assurance that the respective tenant will have sufficient assets, income or access to financing to enable it to satisfy its payment obligations to us under its lease.
In addition, any net taxable income earned directly by our TRSs will be subject to U.S. federal, state, and local corporate-level income taxes and we may incur a 100% excise tax on transactions 27 with a TRS if they are not conducted on an arm’s-length basis. Any of these taxes would decrease cash available for distribution to our stockholders.
In addition, any net taxable income earned directly by our TRSs will be subject to U.S. federal, state, and local corporate-level income taxes and we may incur a 100% excise tax on transactions with a TRS if they are not conducted on an arm’s-length basis. Any of these taxes would decrease cash available for distribution to our stockholders.
In addition, subject to certain exceptions, rents received or accrued by us from Darden will not be treated as qualifying rent for purposes of the REIT gross income requirements if we or a beneficial or constructive owner of 10% or more of our stock beneficially or constructively owns 10% or more of the total combined voting power of all classes of Darden stock entitled to vote or 10% or more of the total value of all classes of Darden stock.
In addition, subject to certain exceptions, rents received or accrued by us from Darden will not be treated as qualifying rent for purposes of the REIT gross income requirements if we or a beneficial or constructive owner of 10% or more of our stock beneficially 20 or constructively owns 10% or more of the total combined voting power of all classes of Darden stock entitled to vote or 10% or more of the total value of all classes of Darden stock.
Numerous sources can cause these types of incidents, including: physical or electronic security breaches; viruses, ransomware or other malware; hardware vulnerabilities such as Meltdown and Spectre; accident or human error by our own personnel or third parties; criminal activity or malfeasance (including by our own personnel); fraud or impersonation scams perpetrated against us or our partners or tenants; or security events impacting our third-party service providers or our partners or tenants.
Numerous sources can cause these types of incidents, including: physical or electronic security breaches; viruses, ransomware or other malware; 15 hardware vulnerabilities such as Meltdown and Spectre; accident or human error by our own personnel or third parties; criminal activity or malfeasance (including by our own personnel); fraud or impersonation scams perpetrated against us or our partners or tenants; or security events impacting our third-party service providers or our partners or tenants.
Any such regulation could impose substantial costs on our tenants, thereby impacting the financial condition of our tenants and their ability to meet their lease obligations and to lease or re-lease our properties. 19 Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unanticipated expenditures that materially adversely impact our cash flow.
Any such regulation could impose substantial costs on our tenants, thereby impacting the financial condition of our tenants and their ability to meet their lease obligations and to lease or re-lease our properties. Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unanticipated expenditures that materially adversely impact our cash flow.
In order for us to qualify as a REIT, not more than 50% in value of our outstanding shares of stock may be owned, beneficially or constructively, by five or fewer individuals at any time during the last half of each taxable year after the first year for which we elect to be subject to tax and qualify as a REIT.
In order for us to qualify as a REIT, not more than 50% in value of our outstanding shares of stock may be owned, beneficially or constructively, by five or fewer individuals at any time during the last half of each taxable year after the first year for which we elect to 18 be subject to tax and qualify as a REIT.
Properties in our leasing portfolio and the Kerrow Restaurant Operating Business are located in 47 states, and if one of our properties experiences a loss that is uninsured or that exceeds policy coverage limits, we could lose the capital invested in the damaged property as well as the anticipated future cash flows from the property.
Properties in our leasing portfolio and the Kerrow Restaurant Operating Business are located in 47 states, and if one of our properties experiences a loss that is uninsured or that exceeds policy coverage limits, we could lose the capital invested in the damaged property 13 as well as the anticipated future cash flows from the property.
We intend to continue to pursue acquisitions of additional properties and seek acquisitions and other strategic opportunities, including, but not limited to, continuing to expand 15 our tenant base to third parties other than Darden and acquiring non-restaurant properties. Accordingly, we may often be engaged in evaluating potential transactions, potential new tenants and other strategic alternatives.
We intend to continue to pursue acquisitions of additional properties and seek acquisitions and other strategic opportunities, including, but not limited to, continuing to expand our tenant base to third parties other than Darden and acquiring non-restaurant properties. Accordingly, we may often be engaged in evaluating potential transactions, potential new tenants and other strategic alternatives.
The franchising services include licensing the right to use and display certain trademarks, utilize trade secrets and purchase proprietary products from Darden in connection with the operation of the Kerrow Restaurant Operating Business. Other services provided pursuant to the Franchise Agreements are marketing services, training and access to certain LongHorn operating procedures.
The franchising services include licensing the right to use and display certain trademarks, utilize trade secrets and purchase proprietary products from Darden in connection with the operation of the Kerrow Restaurant Operating Business. Other services provided pursuant to the Franchise Agreements are marketing services, training and access to certain LongHorn operating 10 procedures.
We are dependent on Darden to make payments to us and fulfill its obligations under its leases, as well as to provide services to us under the Franchise Agreements, and an event that materially and adversely affects Darden’s business, financial 13 position or results of operations could materially and adversely affect our business, financial position or results of operations.
We are dependent on Darden to make payments to us and fulfill its obligations under its leases, as well as to provide services to us under the Franchise Agreements, and an event that materially and adversely affects Darden’s business, financial position or results of operations could materially and adversely affect our business, financial position or results of operations.
As a result, during inflationary periods in which the inflation rate exceeds the annual rent escalation percentages within our lease contracts, we may not adequately mitigate the impact of inflation, which may adversely affect our business, financial condition, results of operations, and cash flows.
As a result, during inflationary periods in which the 12 inflation rate exceeds the annual rent escalation percentages within our lease contracts, we may not adequately mitigate the impact of inflation, which may adversely affect our business, financial condition, results of operations, and cash flows.
Interest rate increases would increase our interest costs for any new debt and our variable rate debt obligations pursuant to the Loan Agreement, which could, in turn, make the financing of any acquisition more expensive as well as lower our current period earnings.
Interest rate increases would increase our interest costs for any new debt and our variable rate debt obligations pursuant to the Amended Loan Agreement, which could, in turn, make the financing of any acquisition more expensive as well as lower our current period earnings.
Furthermore, the dividend yield on our common stock, as a percentage of the price of such common stock, will influence the price of such common stock. Thus, an increase in market interest rates may lead prospective purchasers of our common stock to expect a higher dividend yield, which could 23 adversely affect the market price of our common stock.
Furthermore, the dividend yield on our common stock, as a percentage of the price of such common stock, will influence the price of such common stock. Thus, an increase in market interest rates may lead prospective purchasers of our common stock to expect a higher dividend yield, which could adversely affect the market price of our common stock.
Additionally, while our leases typically contain provisions, such as rent escalators, designed to mitigate the adverse impact of inflation on our results of operations, the increases in rent provided by many of our leases may not keep up with the rate of 16 inflation.
Additionally, while our leases typically contain provisions, such as rent escalators, designed to mitigate the adverse impact of inflation on our results of operations, the increases in rent provided by many of our leases may not keep up with the rate of inflation.
The Loan Agreement and the terms of the Notes contain customary events of default including, without limitation, payment defaults, violation of covenants and other performance defaults, defaults on payment of indebtedness and monetary obligations, bankruptcy-related defaults, judgment defaults, REIT status default and the occurrence of certain change of control events.
The Amended Loan Agreement and the terms of the Notes contain customary events of default including, without limitation, payment defaults, violation of covenants and other performance defaults, defaults on payment of indebtedness and monetary obligations, bankruptcy-related defaults, judgment defaults, REIT status default and the occurrence of certain change of control events.
We or our designee will have the right to purchase the shares from the trustee at this calculated price as well. A transfer of shares of our capital 24 stock in violation of the limit may be void under certain circumstances.
We or our designee will have the right to purchase the shares from the trustee at this calculated price as well. A transfer of shares of our capital stock in violation of the limit may be void under certain circumstances.
Furthermore, with respect to certain non-U.S. stockholders, we may be required to withhold U.S. federal income tax with respect to such dividends, including in respect of all 28 or a portion of such dividend that is payable in our stock.
Furthermore, with respect to certain non-U.S. stockholders, we may be required to withhold U.S. federal income tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in our stock.
The remainder of our investments (other than government securities, qualified real estate assets and securities issued by a TRS) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer.
The remainder of our investments (other than government securities, qualified real estate assets and securities issued by a TRS) generally 21 cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer.
We also may not be able to implement security measures in a 20 timely manner or, if and when implemented, we may not be able to determine the extent to which these measures could be circumvented.
We also may not be able to implement security measures in a timely manner or, if and when implemented, we may not be able to determine the extent to which these measures could be circumvented.
We 25 cannot assure shareholders that we will achieve investment results that will allow us to make a specified level of cash dividends or year-to-year increases in cash dividends in the future.
We cannot assure shareholders that we will achieve investment results that will allow us to make a specified level of cash dividends or year-to-year increases in cash dividends in the future.
Therefore, we are subject to risks associated with having a highly concentrated property brand base. As of December 31, 2023, our restaurant properties include 314 Olive Garden restaurants. As a result, our success, at least in the short-term, is dependent on the continued success of the Olive Garden brand and, to a lesser extent, Darden’s other restaurant brands.
Therefore, we are subject to risks associated with having a highly concentrated property brand base. As of December 31, 2024, our restaurant properties include 314 Olive Garden restaurants. As a result, our success, at least in the short-term, is dependent on the continued success of the Olive Garden brand and, to a lesser extent, Darden’s other restaurant brands.
Our active management and operation of a restaurant business may expose us to potential liabilities beyond those traditionally associated with REITs. In addition to our real estate investment activities, we also manage and operate the Kerrow Restaurant Operating Business, which consists o f seven LongHorn Steakhouse restaurants located in the San Antonio, Texas area.
Our active management and operation of a restaurant business may expose us to potential liabilities beyond those traditionally associated with REITs. In addition to our real estate investment activities, we also manage and operate the Kerrow Restaurant Operating Business, which consists of seven LongHorn Steakhouse restaurants located in the San Antonio, Texas area.
The Notes consist of $50 million of notes due in June 2024 priced at a fixed interest rate of 4.68%, $50 million of notes due in December 2026 priced at a fixed interest rate of 4.63%, $75 million of notes due in June 2027 priced at a fixed interest rate of 4.93%, $50 million of notes due in December 2028 priced at a fixed interest rate of 4.76%, $50 million of notes due in April 2029 priced at a fixed interest rate of 2.74%, $50 million of notes due in June 2029 priced at a fixed interest rate of 3.15%, $75 million of notes due in April 2030 priced at a fixed interest rate of 3.20%, $50 million of notes due in March 2031 priced at a fixed interest rate of 3.09%, $50 million of notes due in April 2031 priced at a fixed interest rate of 2.99%, $75 million of notes due in March 2032 priced at a fixed interest rate of 3.11%, and $100 million of notes due in July 2033 priced at a fixed interest rate of 6.44%.
The Notes consist of $50 million of notes due in December 2026 priced at a fixed interest rate of 4.63%, $75 million of notes due in June 2027 priced at a fixed interest rate of 4.93%, $50 million of notes due in December 2028 priced at a fixed interest rate of 4.76%, $50 million of notes due in April 2029 priced at a fixed interest rate of 2.74%, $50 million of notes due in June 2029 priced at a fixed interest rate of 3.15%, $75 million of notes due in April 2030 priced at a fixed interest rate of 3.20%, $50 million of notes due in March 2031 priced at a fixed interest rate of 3.09%, $50 million of notes due in April 2031 priced at a fixed interest rate of 2.99%, $75 million of notes due in March 2032 priced at a fixed interest rate of 3.11%, and $100 million of notes due in July 2033 priced at a fixed interest rate of 6.44%.
We have entered into interest rate swaps to effectively fix $375 million of our variable-rate indebtedness, and we may enter into other hedging transactions. Because tenants are typically required to pay all property operating expenses, increases in property-level expenses at our leased properties generally do not affect us.
We have entered into interest rate swaps to effectively fix $435 million of our variable-rate indebtedness, and we may enter into other hedging transactions. Because tenants are typically required to pay all property operating expenses, increases in property-level expenses at our leased properties generally do not affect us.
Although our properties have an average annual rent escalation of 1.4% through December 31, 2028 , the impact of the current rate of inflation may not be adequately offset by some of our rent escalations, and it is possible that the resetting of rents from our renewal and re-leasing activities would not fully offset the impact of the current inflation rate.
Although our properties have an average annual rent escalation of 1.4% through December 31, 2029, the impact of the current rate of inflation may not be adequately offset by some of our rent escalations, and it is possible that the resetting of rents from our renewal and re-leasing activities would not fully offset the impact of the current inflation rate.
If our or our tenants’ reputation is damaged, it could adversely affect our business, results of operations, financial condition or ability to attract the most highly qualified employees. 21 Third-party expectations relating to environmental, social and governance factors may impose additional costs and expose us to new risks.
If our or our tenants’ reputation is damaged, it could adversely affect our business, results of operations, financial condition or ability to attract the most highly qualified employees. 16 Third-party expectations relating to environmental, social and governance factors may impose additional costs and expose us to new risks.
As of December 31, 2023, no other executive officer or director of FCPT owns common stock of Darden. Risks Related to Our Common Stock The market price and trading volume of our common stock may be volatile and may face negative pressure including as a result of future sales or distributions of our common stock.
As of December 31, 2024, no other executive officer or director of FCPT owns common stock of Darden. Risks Related to Our Common Stock The market price and trading volume of our common stock may be volatile and may face negative pressure including as a result of future sales or distributions of our common stock.
The Loan Agreement (defined below) and the terms of the Notes contain customary affirmative and negative covenants that, among other things, restrict, subject to certain exceptions, the incurrence of debt, the incurrence of secured debt, the ability of FCPT OP and the guarantors to enter into mergers, consolidations, sales of assets and similar transactions, limitations on distributions and other restricted payments, and limitations on transactions with affiliates and customary reporting obligations.
The Amended Loan Agreement and the terms of the Notes contain customary affirmative and negative covenants that, among other things, restrict, subject to certain exceptions, the incurrence of debt, the incurrence of secured debt, the ability of FCPT OP and the guarantors to enter into mergers, consolidations, sales of assets and similar transactions, limitations on distributions and other restricted payments, and limitations on transactions with affiliates and customary reporting obligations.
Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT. Item 1B. Unresolved Staff Comments. Not applicable. 29
Also, the law relating 22 to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT. Item 1B. Unresolved Staff Comments. Not applicable.
Risks Related to Our Taxation as a REIT • If we do not qualify as a REIT, or fail to remain qualified as a REIT, we will be subject to U.S. federal income tax as a regular corporation and could face a substantial tax liability, which would reduce the amount of cash available for distribution to our stockholders. • We could fail to qualify as a REIT if income we receive from Darden and other tenants is not treated as qualifying income. • REIT distribution requirements could adversely affect our ability to execute our business plan.
Risks Related to Our Taxation as a REIT • If we do not qualify as a REIT, or fail to remain qualified as a REIT, we will be subject to U.S. federal income tax as a regular corporation and could face a substantial tax liability, which would reduce the amount of cash available for distribution to our stockholders. • We could fail to qualify as a REIT if income we receive from Darden and other tenants is not treated as qualifying income. • REIT distribution requirements could adversely affect our ability to execute our business plan. 9 We attempt to mitigate the foregoing risks.
Our leases typically contain provisions, such as rent escalators, designed to mitigate the adverse impact of inflation on our results of operations. As of December 31, 2023, we had $446 million of variable-rate debt, excluding the impact of interest rates swaps in effect.
Our leases typically contain provisions, such as rent escalators, designed to mitigate the adverse impact of inflation on our results of operations. As of December 31, 2024, we had $520 million of variable-rate debt, excluding the impact of interest rates swaps in effect.
Currently, Darden is our primary lessee in our lease portfolio and, therefore, is the source of a majority of our revenues.
Currently, Darden is our primary lessee in our lease portfolio and, therefore, is the primary source of our revenues.
In addition, we have issued $675 million of senior unsecured fixed rate notes (the “Notes”).
In addition, we have issued $625 million of senior unsecured fixed rate notes (the “Notes”).
Real estate development projects present other risks, including construction delays or cost overruns that increase expenses, the inability to obtain required zoning, occupancy and other governmental approvals and permits on a timely basis, the incurrence of significant development costs prior to completion of the project, abandonment of development activities after expending significant resources, and exposure to fluctuations in the general economy due to the significant time lag between commencement and completion of redevelopment projects.
Real estate development projects present other risks, including construction delays or cost overruns that increase expenses (including as a result of increased trade restrictions, tariffs or taxes on imports), the inability to obtain required zoning, occupancy and other governmental approvals and permits on a timely basis, the incurrence of significant development costs prior to completion of the project, abandonment of development activities after expending significant resources, and exposure to fluctuations in the general economy due to the significant time lag between commencement and completion of redevelopment projects.
As of December 31, 2023, we are in compliance with our existing financial covenants.
As of December 31, 2024, we are in compliance with our existing financial covenants.
Dividends payable by REITs, however, generally are not qualified dividends. Effective for taxable years beginning after December 31, 2017 and before January 1, 2026, non-corporate U.S. stockholders may deduct 20% of their dividends from REITs (excluding qualified dividend income and capital gains dividends).
Effective for taxable years beginning after December 31, 2017 and before January 1, 2026, non-corporate U.S. stockholders may deduct 20% of their dividends from REITs (excluding qualified dividend income and capital gains dividends).
Our portfolio has some geographic concentration, which makes us more susceptible to adverse events in these areas. Our properties are located throughout the United States with t he highest concentration located in the state of Texas, where 10.1% of our annualized base rent was derived as of December 31, 2023.
Our portfolio has some geographic concentration, which makes us more susceptible to adverse events in these areas. Our properties are located throughout the United States with the highest concentration located in the state of Texas, where 9.9% of our annualized base rent was derived as of December 31, 2024.
We are dependent on our major tenants successfully operating their businesses, and a failure to do so could have a material adverse effect on our business, financial position or results of operations. For the year ended December 31, 2023, Darden and Brinker International, Inc. (“Brinker”) constituted approximately 51.7% and 7.8%, r espectively, of our annual cash base rent.
We are dependent on our major tenants successfully operating their businesses, and a failure to do so could have a material adverse effect on our business, financial position or results of operations. For the year ended December 31, 2024, Darden and Brinker International, Inc. (“Brinker”) constituted approximately 47.7% and 7.2%, respectively, of our annual cash base rent.
New legislation, Treasury Regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify as a REIT, the U.S. federal income tax consequences of such qualification or the U.S. federal income tax consequences of an investment in us.
We cannot predict how changes in the tax laws might affect our investors or us. New legislation, Treasury Regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify as a REIT, the U.S. federal income tax consequences of such qualification or the U.S. federal income tax consequences of an investment in us.
In addition, the revolving credit and term loan agreement contains an accordion feature allowing the facility to be increased by an additional aggregate amount not to exceed $350 million, subject to certain conditions. As of December 31, 2023, the term loan facility is fully drawn and the undrawn revolving credit facility had $234 million remaining capacity.
In addition, the Amended Loan Agreement contains an accordion feature allowing the facility to be increased by an additional aggregate amount not to exceed $450 million, subject to certain conditions. As of February 13, 2025, the term loan facility is fully drawn and the undrawn revolving credit facility had $350 million remaining capacity.
Risks Related to Our Indebtedness • Our level of indebtedness could materially and adversely affect our financial position, including reducing funds available for other business purposes and reducing our operational flexibility, and we may have future capital needs and may not be able to obtain additional financing on acceptable terms. • An increase in market interest rates would increase our interest costs on existing and future debt and could adversely affect our stock price, as well as our ability to refinance existing debt and conduct acquisition activity. • Hedging transactions could have a negative effect on our results of operations. 12 Risks Related to Our Organizational Structure • Our charter restricts the ownership and transfer of our outstanding stock, which may have the effect of delaying, deferring or preventing a transaction or change of control of our company.
Risks Related to Our Indebtedness • Our level of indebtedness could materially and adversely affect our financial position, including reducing funds available for other business purposes and reducing our operational flexibility, and we may have future capital needs and may not be able to obtain additional financing on acceptable terms. • An increase in market interest rates would increase our interest costs on existing and future debt and could adversely affect our stock price, as well as our ability to refinance existing debt and conduct acquisition activity. • Hedging transactions could have a negative effect on our results of operations.
Risks Related to Our Business • Risks related to real estate ownership could reduce the value of our properties. • We are dependent on Darden, Brinker, and our other tenants to successfully operate their businesses, make rental payments to us and fulfill their obligations under their respective leases and other contracts with us. • Actual or perceived threats associated with epidemics, pandemics or public health crises, could have a material adverse effect on our and our tenants’ businesses. • A significant portion of our restaurant properties are Olive Garden properties.
Such risks, including those set forth in the summary of material risks in this Item 1A, should be carefully considered before purchasing our securities. 8 Risks Related to Our Business • Risks related to real estate ownership could reduce the value of our properties. • We are dependent on Darden, Brinker, and our other tenants to successfully operate their businesses, make rental payments to us and fulfill their obligations under their respective leases and other contracts with us. • Actual or perceived threats associated with epidemics, pandemics or public health crises, could have a material adverse effect on our and our tenants’ businesses. • A significant portion of our restaurant properties are Olive Garden properties.
Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends. The maximum U.S. federal income tax rate applicable to income from “qualified dividends” payable by non-REIT “C” corporations to certain non-corporate U.S. stockholders is currently 23.8% (taking into account the 3.8% Medicare tax applicable to net investment income).
The maximum U.S. federal income tax rate applicable to income from “qualified dividends” payable by non-REIT “C” corporations to certain non-corporate U.S. stockholders is currently 23.8% (taking into account the 3.8% Medicare tax applicable to net investment income). Dividends payable by REITs, however, generally are not qualified dividends.
Our charter provides for restrictions on ownership and transfer of our shares of stock, including restrictions on such ownership or transfer that would cause the rents received or accrued by us from Darden to be treated as non-qualifying rent for purposes of the REIT gross income requirements. 26 Nevertheless, there can be no assurance that such restrictions will be effective in ensuring that rents received or accrued by us from Darden will not be treated as qualifying rent for purposes of REIT qualification requirements.
Our charter provides for restrictions on ownership and transfer of our shares of stock, including restrictions on such ownership or transfer that would cause the rents received or accrued by us from Darden to be treated as non-qualifying rent for purposes of the REIT gross income requirements.
In 2023, we acquired 92 properties and ground leasehold interests for a total investment of $341.1 million , including capitalized transaction costs, which were added to our leasing portfolio.
In 2024, we acquired 87 properties and ground leasehold interests for a total investment of $273.0 million, including capitalized transaction costs, which were added to our leasing portfolio.
If financing is not available when needed, or is available on unfavorable terms, we may be unable to complete acquisitions or otherwise take advantage of business opportunities or respond to competitive pressures, any of which could materially and adversely affect our business, financial condition and results of operations.
If financing is not available when needed, or is available on unfavorable terms, we may be unable to complete acquisitions or otherwise take advantage of business opportunities or respond to competitive pressures, any of which could materially and adversely affect our business, financial condition and results of operations. 17 Covenants in our debt agreements may limit our operational flexibility, and a covenant breach or default could materially and adversely affect our business, financial position or results of operations.
Accordingly, we could be materially and adversely affected if Darden or Brinker does not operate their respective businesses successfully. 14 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 and make distributions to our stockholders.
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 and make distributions to our stockholders.
The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the Treasury Department. Changes to the tax laws, with or without retroactive application, could adversely affect our investors or us. We cannot predict how changes in the tax laws might affect our investors or us.
Legislative or other actions affecting REITs could have a negative effect on us. The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the Treasury Department. Changes to the tax laws, with or without retroactive application, could adversely affect our investors or us.
Increased future debt service obligations may limit our operational flexibility, including our ability to acquire assets, finance or refinance our assets, contribute assets to joint ventures or sell assets as needed. 22 Moreover, our ability to obtain additional financing and satisfy our financial obligations under our indebtedness outstanding from time to time will depend upon our future operating performance, which is subject to then prevailing general economic and credit market conditions, including interest rate levels and the availability of credit generally, and financial, business and other factors, many of which are beyond our control.
Moreover, our ability to obtain additional financing and satisfy our financial obligations under our indebtedness outstanding from time to time will depend upon our future operating performance, which is subject to then prevailing general economic and credit market conditions, including interest rate levels and the availability of credit generally, and financial, business and other factors, many of which are beyond our control.
The market price of our common stock may be volatile in the future. In addition, the trading volume in our common shares may fluctuate and cause significant price variations to occur. It is not possible to accurately predict how investors in our common stock will behave.
The market price of our common stock may be volatile in the future. In addition, the trading volume in our common shares may fluctuate and cause significant price variations to occur.
In no event will the annual dividend be less than 90% of our REIT taxable income on an annual basis, determined without regard to the dividends paid deduction and excluding any net capital gains. Our ability to pay dividends may be adversely affected by a number of factors, including the risk factors described in this Annual Report on Form 10-K.
We may pay a portion of our dividends in common stock. In no event will the annual dividend be less than 90% of our REIT taxable income on an annual basis, determined without regard to the dividends paid deduction and excluding any net capital gains.
Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. Risk factors summary An investment in our securities involves various risks. Such risks, including those set forth in the summary of material risks in this Item 1A, should be carefully considered before purchasing our securities.
Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. Risk factors summary An investment in our securities involves various risks.
As of December 31, 2023, $446 million was outstanding under such agreement, and we may borrow an additional $234 million on the revolving credit facility or incur additional variable rate debt in the future, including through the exercise of the accordion feature pursuant to the Loan Agreement.
We may borrow additional amounts on the revolving credit facility under the Amended Loan Agreement or incur additional variable rate debt in the future, including through the exercise of the accordion feature pursuant to the Amended Loan Agreement.
We also could be liable for the costs of remediating contamination at third party sites, e.g., landfills, where we send waste for disposal without regard to whether we comply with environmental laws in doing so. 18 The presence of contamination or the failure to remediate contamination may adversely affect our ability to sell, develop or lease the real estate or to borrow using the real estate as collateral.
We also could be liable for the costs of remediating contamination at third party sites, e.g., landfills, where we send waste for disposal without regard to whether we comply with environmental laws in doing so.
An increase in market interest rates would increase our interest costs on existing and future debt and could adversely affect our stock price, as well as our ability to refinance existing debt and conduct acquisition activity. As of December 31, 2023, our $680 million Loan Agreement bore interest at a variable rate on any amount drawn and outstanding.
An increase in market interest rates would increase our interest costs on existing and future debt and could adversely affect our stock price, as well as our ability to refinance existing debt and conduct acquisition activity.
We have entered into the Loan Agreement (as defined below) that provides for borrowings of up to $680 million and consists of (1) a revolving credit facility in an aggregate principal amount of $250 million and (2) a term loan facility in an aggregate principal amount of $430 million comprised of (i) a $150 million term credit facility with a maturity date of November 9, 2025, (ii) a $100 million term credit facility with a maturity date of November 9, 2026, (iii) a $90 million term credit facility with a maturity date of January 9, 2027, and (iv) a $90 million term credit facility with a maturity date of January 9, 2028.
The Amended Loan Agreement provides for borrowings of up to $940 million and consists of (1) a revolving credit facility in an aggregate principal amount of $350 million and (2) a term loan facility in an aggregate principal amount of $590 million comprised of (i) a $100 million term credit facility with a maturity date of November 9, 2026, (ii) a $90 million term credit facility with a maturity date of February 1, 2027, (iii) a $85 million term credit facility with a maturity date of March 14, 2027, (iv) a $90 million term credit facility with a maturity date of February 1, 2028, and (v) a $225 million term credit facility with a maturity date of February 1, 2029.
We intend to continue to pursue acquisitions of additional properties and seek other strategic opportunities, which may result in the use of a significant amount of management resources or significant costs, including the cost of accessing debt or equity markets, and we may not fully realize the potential benefits of such transactions.
An economic downturn or other adverse events or conditions such as natural disasters in these areas, or any other area where we may have significant concentration in the future, could result in a material reduction of our cash flows or material losses to our company. 11 We intend to continue to pursue acquisitions of additional properties and seek other strategic opportunities, which may result in the use of a significant amount of management resources or significant costs, including the cost of accessing debt or equity markets, and we may not fully realize the potential benefits of such transactions.
We or our tenants may experience uninsured or underinsured losses, which could result in a significant loss of the capital we have invested in a property, decrease anticipated future revenues or cause us to incur unanticipated expense. 17 Our current lease agreements generally require, and new lease agreements that we enter into are expected to require, that the tenant maintain comprehensive insurance and hazard insurance or self-insure its obligations.
We or our tenants may experience uninsured or underinsured losses, which could result in a significant loss of the capital we have invested in a property, decrease anticipated future revenues or cause us to incur unanticipated expense.
Any disposition by a significant stockholder of our common stock, or the perception in the market that such dispositions could occur, may cause the price of our common stock to fall. Any such decline could impair our ability to raise capital through future sales of our common stock.
It is not possible to accurately predict how investors in our common stock will behave. 19 Any disposition by a significant stockholder of our common stock, or the perception in the market that such dispositions could occur, may cause the price of our common stock to fall.
Furthermore, our common stock may not qualify for investment indices, including indices specific to REITs, and any such failure may discourage new investors from investing in our common stock. If and when additional funds are raised through the issuance of equity securities, including our common stock, our stockholders may experience significant dilution.
Any such decline could impair our ability to raise capital through future sales of our common stock. Furthermore, our common stock may not qualify for investment indices, including indices specific to REITs, and any such failure may discourage new investors from investing in our common stock.
We cannot assure shareholders of our ability to pay dividends in the future. Our current dividend rate is $1.3650 per share per annum. We may pay a portion of our dividends in common stock.
If and when additional funds are raised through the issuance of equity securities, including our common stock, our stockholders may experience significant dilution. We cannot assure shareholders of our ability to pay dividends in the future. Our current dividend rate is $0.355 per share per quarter and $1.3900 per share over the last four quarters.
Covenants in our debt agreements may limit our operational flexibility, and a covenant breach or default could materially and adversely affect our business, financial position or results of operations. The agreements governing our indebtedness contain customary covenants that may limit our operational flexibility.
The agreements governing our indebtedness contain customary covenants that may limit our operational flexibility.
In addition, regulations in response to climate change could result in increased compliance and energy costs.
The presence of contamination or the failure to remediate contamination may adversely affect our ability to sell, develop or lease the real estate or to borrow using the real estate as collateral. In addition, regulations in response to climate change could result in increased compliance and energy costs.
Removed
An economic downturn or other adverse events or conditions such as natural disasters in these areas, or any other area where we may have significant concentration in the future, could result in a material reduction of our cash flows or material losses to our company.
Added
Accordingly, we could be materially and adversely affected if Darden or Brinker does not operate their respective businesses successfully.
Removed
If we want to sell a property, we cannot assure you that we will be able to dispose of it in the desired time period, or at all, or that the sale price of a property will exceed the cost of our investment in that property.
Added
Our current lease agreements generally require, and new lease agreements that we enter into are expected to require, that the tenant maintain comprehensive insurance and hazard insurance or self-insure its obligations.
Removed
Our tax protection agreement could limit our ability to sell or otherwise dispose of certain properties. In connection with the acquisition of four properties from U.S. Restaurant Properties, Inc. (“USRP”) in January 2017, in exchange for FCPT OP units, we entered into a tax protection agreement with affiliates of USRP.
Added
As of the date of this report, we have entered into a Fourth Amended and Restated Revolving Credit and Term Loan Agreement (the "Amended Loan Agreement"), which amended and restated the Loan Agreement (as defined below).
Removed
The tax protection agreement provides that, if we dispose of any of those four properties in a taxable transaction through January 2024, we will indemnify the USRP partners for their tax liabilities attributable to the built-in gain that existed with respect to those properties as of the time of the acquisition of those properties in January 2017 (and tax liabilities incurred as a result of the reimbursement payment).
Added
Increased future debt service obligations may limit our operational flexibility, including our ability to acquire assets, finance or refinance our assets, contribute assets to joint ventures or sell assets as needed.
Removed
Consequently, although it otherwise may be in our best interest to sell one of those properties, these obligations may make it prohibitive for us to do so. Legislative or other actions affecting REITs could have a negative effect on us.
Added
As of December 31, 2024, our $765 million Loan Agreement bore interest at a variable rate on any amount drawn and outstanding, and borrowings under the Amended Loan Agreement bear interest at a variable rate. As of December 31, 2024, $520 million was outstanding under the Loan Agreement.
Added
Risks Related to Our Organizational Structure Our charter restricts the ownership and transfer of our outstanding stock, which may have the effect of delaying, deferring or preventing a transaction or change of control of our company.
Added
Our ability to pay dividends may be adversely affected by a number of factors, including the risk factors described in this Annual Report on Form 10-K.
Added
Nevertheless, there can be no assurance that such restrictions will be effective in ensuring that rents received or accrued by us from Darden will not be treated as qualifying rent for purposes of REIT qualification requirements. Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Chief Accounting Officer also works in tandem with an external cybersecurity consultant that has experience in cybersecurity assessment, response, and mitigation. 30 Our management team stays informed about and monitors efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel, threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us, and alerts and reports produced by security tools deployed in the IT environment.
Biggest changeOur management team stays informed about and monitors efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel, threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us, and alerts and reports produced by security tools deployed in the IT environment. 23 Item 2.
See “Risk Factors - We may be vulnerable to security breaches or cyber-attacks which could disrupt our operations and have a material adverse effect on our financial performance and operating results.” Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit and Risk Committee (Committee) oversight of cybersecurity and other information technology risks.
See “Risk Factors - We may be vulnerable to security breaches or cyber-attacks which could disrupt our operations and have a material adverse effect on our financial performance and operating results.” Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit and Risk Committee (the "Committee") oversight of cybersecurity and other information technology risks.
Removed
Item 2. Properties. Please refer to “Item 1. Business.”
Added
Our Chief Accounting Officer also works in tandem with an external cybersecurity consultant that has experience in cybersecurity assessment, response, and mitigation.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Added
Mine Safety Disclosures. Not applicable. 24 PAR T II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePerformance Graph The following performance graph compares the cumulative total shareholder return on the Company’s common stock over the last five years, based on the market price of the common stock and assuming reinvestments of dividends, with (i) the cumulative total return of the S&P 500 Index, (ii) the cumulative total return of the MSCI US REIT Index (“RMZ”) and (iii) the cumulative total return of Dow Jones Industrial Average.
Biggest changeAlso, see Item 12—“Security Ownership of Certain Owners and Management and Related Stockholder Matters.” Equity Compensation Plan For information about our equity compensation plan, please see Note 11 of our consolidated financial statements, included in Part II, Item 8 of this Annual Report on Form 10-K. 25 Performance Graph The following performance graph compares the cumulative total shareholder return on the Company’s common stock over the last five years, based on the market price of the common stock and assuming reinvestments of dividends, with (i) the cumulative total return of the S&P 500 Index, (ii) the cumulative total return of the MSCI US REIT Index (“RMZ”) and (iii) the cumulative total return of Dow Jones Industrial Average.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information for Common Stock Our common stock has been listed on the New York Stock Exchange under the ticker symbol “FCPT” since November 10, 2015.
Item 5. Ma rket for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information for Common Stock Our common stock has been listed on the New York Stock Exchange under the ticker symbol “FCPT” since November 10, 2015.
Dividends The following table presents the characterizations for tax purposes of such common stock dividends for the year ended December 31, 2023.
Dividends The following table presents the characterizations for tax purposes of such common stock dividends for the year ended December 31, 2024.
Record Date Payment Date Total Distribution ($ per share) Form 1099 Box 1a Ordinary Taxable Dividend ($ per share) Form 1099 Box 1b Qualified Taxable Dividend ($ per share) Form 1099 Box 3 Return of Capital ($ per share) Form 1099 Box 5 Section 199A Dividends ($ per share) 12/30/2022 1/13/2023 $ 0.3400 $ 0.3020 $ — $ 0.0380 $ 0.3020 3/31/2023 4/14/2023 0.3400 0.3020 — 0.0380 0.3020 6/30/2023 7/14/2023 0.3400 0.3020 — 0.0380 0.3020 9/29/2023 10/13/2023 0.3400 0.3020 — 0.0380 0.3020 Totals $ 1.3600 $ 1.2080 $ — $ 0.1520 $ 1.2080 We intend to pay regular quarterly dividends to our stockholders, although future distributions will be declared and paid at the discretion of the Board of Directors and will depend upon cash generated by operating activities, our financial condition, capital requirements, annual distribution requirements under the REIT provision of the Code and such other factors as the Board of Directors deems relevant.
Record Date Payment Date Total Distribution ($ per share) Form 1099 Box 1a Ordinary Taxable Dividend ($ per share) Form 1099 Box 1b Qualified Taxable Dividend ($ per share) Form 1099 Box 3 Return of Capital ($ per share) Form 1099 Box 5 Section 199A Dividends ($ per share) 12/29/2023 1/12/2024 $ 0.3450 $ 0.3174 $ — $ 0.0276 $ 0.3174 3/28/2024 4/15/2024 0.3450 0.3174 — 0.0276 0.3174 6/28/2024 7/15/2024 0.3450 0.3174 — 0.0276 0.3174 9/30/2024 10/15/2024 0.3450 0.3174 — 0.0276 0.3174 Totals $ 1.3800 $ 1.2696 $ — $ 0.1104 $ 1.2696 We intend to pay regular quarterly dividends to our stockholders, although future distributions will be declared and paid at the discretion of the Board of Directors and will depend upon cash generated by operating activities, our financial condition, capital requirements, annual distribution requirements under the REIT provision of the Code and such other factors as the Board of Directors deems relevant.
Holders As of February 15, 2024, there were approximately 5,335 registered holders of record of our common stock. Sales of Unregistered Securities None. 31 Purchases of Equity Securities by the Company and Affiliated Purchasers None.
Holders As of February 13, 2025, there were approximately 5,124 registered holders of record of our common stock. Sales of Unregistered Securities None. Purchases of Equity Securities by the Company and Affiliated Purchasers None.
Removed
Also, see Item 12—“Security Ownership of Certain Owners and Management and Related Stockholder Matters.” Equity Compensation Plan For information about our equity compensation plan, please see Note 11 of our consolidated financial statements, included in Part II, Item 8 of this Annual Report on Form 10-K.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

58 edited+11 added−12 removed58 unchanged
Biggest changeNotional Amount ($ in thousands) Effective Date Maturity Date Fixed Rate to Pay Variable Rate to Receive 150,000 11/9/2022 11/9/2024 1.88 % Daily Simple SOFR + 10 bps 50,000 10/25/2022 11/9/2025 0.44 % Daily Simple SOFR + 10 bps 25,000 11/9/2022 11/9/2025 2.70 % Daily Simple SOFR + 10 bps 25,000 3/9/2023 11/9/2026 4.12 % Daily Simple SOFR + 10 bps 50,000 11/9/2023 11/9/2025 0.82 % Daily Simple SOFR + 10 bps 25,000 11/9/2023 11/9/2026 3.65 % Daily Simple SOFR + 10 bps 25,000 11/9/2023 11/9/2028 4.25 % Daily Simple SOFR + 10 bps 25,000 11/13/2023 11/9/2028 4.42 % Daily Simple SOFR + 10 bps 50,000 11/10/2025 11/9/2027 1.48 % Daily Simple SOFR + 10 bps 50,000 11/10/2025 11/9/2027 1.54 % Daily Simple SOFR + 10 bps 25,000 11/10/2025 11/9/2028 2.25 % 1m Term SOFR 50,000 11/10/2025 11/9/2028 1.49 % Daily Simple SOFR + 10 bps 50,000 11/10/2025 11/9/2028 2.02 % Daily Simple SOFR + 10 bps During the year ended December 31, 2023, we entered into three interest rate swaps to hedge the interest rate variability associated with the term loan portion of our revolving credit facility.
Biggest changeProduct Notional Amount ($ in thousands) Effective Date Maturity Date Fixed Rate to Pay Swap 50,000 10/25/2022 11/9/2025 0.44% Swap 25,000 11/9/2022 11/9/2025 2.70% Swap 25,000 3/9/2023 11/9/2026 4.12% Swap 50,000 11/9/2023 11/9/2025 0.82% Swap 25,000 11/9/2023 11/9/2026 3.65% Swap 25,000 11/9/2023 11/9/2028 4.25% Swap 25,000 11/13/2023 11/9/2028 4.42% Swap (1) 25,000 4/9/2024 4/9/2029 4.04% Swap (1) 30,000 4/9/2024 4/9/2029 3.91% Swap (1) 30,000 4/9/2024 4/9/2029 3.88% Swap (1) 25,000 11/9/2024 11/9/2029 3.97% Swap (1) 25,000 1/31/2025 1/31/2030 3.81% Swap (1) 25,000 1/31/2025 1/31/2030 3.80% Swap (1) 25,000 1/31/2025 1/31/2030 3.09% Swap 50,000 11/10/2025 11/9/2027 1.48% Swap 50,000 11/10/2025 11/9/2027 1.54% Swap 25,000 11/10/2025 11/9/2028 2.25% Swap 50,000 11/10/2025 11/9/2028 1.49% Swap 50,000 11/10/2025 11/9/2028 2.02% (1) During 2024, we entered into these interest rate swaps to hedge the interest rate variability associated with the term loan portion of our credit facility The Company enters into forward-starting interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance date of long-term debt.
(2) Assumes the issuance of common shares for OP units held by non-controlling interests. Non-GAAP Definitions The certain non-GAAP financial measures included above management believes are helpful in understanding our business, as further described below. Our definition and calculation of non-GAAP financial measures may differ from those of other REITs and therefore may not be comparable.
(2) Assumes the issuance of common shares for OP units held by non-controlling interests. Non-GAAP Definitions The certain non-GAAP financial measures included above management believes are helpful in understanding our business, as further described below. Our definition and calculation of non-GAAP financial measures may differ from those of other REITs and 34 therefore may not be comparable.
Management believes the following critical accounting policies, among others, affect its more significant estimates and assumptions used in the preparation of our consolidated financial statements. Real Estate Investments, Net Real estate investments, net are recorded at cost less accumulated depreciation. Building components are depreciated over estimated useful lives using the straight-line method.
Management believes the following critical accounting policies, among others, affect its more significant estimates and assumptions used in the preparation of our consolidated financial statements. 29 Real Estate Investments, Net Real estate investments, net are recorded at cost less accumulated depreciation. Building components are depreciated over estimated useful lives using the straight-line method.
FFO is a non-GAAP measure and should not be considered a measure of liquidity including our ability to pay dividends or make distributions. In 42 addition, our calculations of FFO are not necessarily comparable to FFO as calculated by other REITs that do not use the same definition or implementation guidelines or interpret the standards differently from us.
FFO is a non-GAAP measure and should not be considered a measure of liquidity including our ability to pay dividends or make distributions. In addition, our calculations of FFO are not necessarily comparable to FFO as calculated by other REITs that do not use the same definition or implementation guidelines or interpret the standards differently from us.
Additionally, the Company has not acquired a substantive process used to generate outputs. As substantially all of the fair value of the gross assets acquired are concentrated in a single identifiable asset and there were no processes acquired, the acquisitions do not 36 qualify as businesses and are accounted for as asset acquisitions.
Additionally, the Company has not acquired a substantive process used to generate outputs. As substantially all of the fair value of the gross assets acquired are concentrated in a single identifiable asset and there were no processes acquired, the acquisitions do not qualify as businesses and are accounted for as asset acquisitions.
Debt Instruments At December 31, 2023, our debt consisted of $430 million of non-amortizing term loans, $16 million in outstanding borrowings under the revolving credit facility, and $675 million aggregate principal amount of senior unsecured fixed rate notes issued by FCPT OP.
At December 31, 2023, our debt consisted of $430 million of non-amortizing term loans, $16 million in outstanding borrowings under the revolving credit facility, and $675 million aggregate principal amount of senior unsecured fixed rate notes issued by FCPT OP.
Income tax expense on real estate operations consists of state and local income taxes incurred by 35 FCPT on its lease portfolio. As FCPT acquires additional properties in states subject to state income taxes, income tax expense will continue to increase.
Income tax expense on real estate operations consists of state and local income taxes incurred by FCPT on its lease portfolio. As FCPT acquires additional properties in states subject to state income taxes, income tax expense will continue to increase.
Maturity Interest Outstanding Balance (Dollars in thousands) Date Rate December 31, 2023 Notes Payable: Senior unsecured fixed rate note, issued June 2017 Jun 2024 4.68 % $ 50,000 Senior unsecured fixed rate note, issued December 2018 Dec 2026 4.63 % 50,000 Senior unsecured fixed rate note, issued June 2017 Jun 2027 4.93 % 75,000 Senior unsecured fixed rate note, issued December 2018 Dec 2028 4.76 % 50,000 Senior unsecured fixed rate note, issued April 2021 Apr 2029 2.74 % 50,000 Senior unsecured fixed rate note, issued March 2020 Jun 2029 3.15 % 50,000 Senior unsecured fixed rate note, issued March 2020 Apr 2030 3.20 % 75,000 Senior unsecured fixed rate note, issued March 2022 Mar 2031 3.09 % 50,000 Senior unsecured fixed rate note, issued April 2021 Apr 2031 2.99 % 50,000 Senior unsecured fixed rate note, issued March 2022 Mar 2032 3.11 % 75,000 Senior unsecured fixed rate note, issued July 2023 Jul 2033 6.44 % 100,000 Total Notes $ 675,000 Capital Resources and Financing Strategy On a short-term basis, our principal demands for funds will be for operating expenses, distributions to shareholders and interest and principal on current and any future debt financings.
Outstanding Balance (Dollars in thousands) Maturity Date Interest Rate December 31, 2024 Notes Payable: Senior unsecured fixed rate note, issued December 2018 Dec 2026 4.63 % $ 50,000 Senior unsecured fixed rate note, issued June 2017 Jun 2027 4.93 % 75,000 Senior unsecured fixed rate note, issued December 2018 Dec 2028 4.76 % 50,000 Senior unsecured fixed rate note, issued April 2021 Apr 2029 2.74 % 50,000 Senior unsecured fixed rate note, issued March 2020 Jun 2029 3.15 % 50,000 Senior unsecured fixed rate note, issued March 2020 Apr 2030 3.20 % 75,000 Senior unsecured fixed rate note, issued March 2022 Mar 2031 3.09 % 50,000 Senior unsecured fixed rate note, issued April 2021 Apr 2031 2.99 % 50,000 Senior unsecured fixed rate note, issued March 2022 Mar 2032 3.11 % 75,000 Senior unsecured fixed rate note, issued July 2023 Jul 2033 6.44 % 100,000 Total Notes $ 625,000 Capital Resources and Financing Strategy On a short-term basis, our principal demands for funds will be for operating expenses, distributions to shareholders and interest and principal on current and any future debt financings.
Estimates and assumptions include, among other things, subjective judgments regarding the fair values and useful lives of our properties for depreciation and lease classification purposes, and asset impairment analysis. A summary of FCPT’s accounting policies and procedures are included in Note 2 of our consolidated financial statements, included in Part II, Item 8 of this Annual Report on Form 10-K.
Estimates and assumptions include, among other things, subjective judgments regarding the fair values and useful lives of our properties for depreciation and lease classification purposes, and asset impairment analysis. A summary of FCPT’s accounting policies and procedures is included in Note 2 of our consolidated financial statements, included in Part II, Item 8 of this Annual Report on Form 10-K.
Term Loan and Revolving Credit Facility The Third Amended and Restated Revolving Credit and Term Loan Agreement, dated as of October 25, 2022, as amended (the “Loan Agreement”), by and among the Company, FCPT OP, the Agent, the Lenders and the other agents party thereto, provides for a revolving credit facility in an aggregate principal amount of $250 million and a term loan facility in an aggregate principal amount of $430 million.
Term Loan and Revolving Credit Facility The Third Amended and Restated Revolving Credit and Term Loan Agreement, dated as of October 25, 2022, as amended (the “Loan Agreement”), by and among the Company, FCPT OP, the Agent, the Lenders and the other agents party thereto, provided for a revolving credit facility in an aggregate principal amount of $250 million and a term loan facility in an aggregate principal amount of $430 million.
We have entered into the following interest rate swaps to hedge the interest rate variability associated with the Loan Agreement as of December 31, 2023. These hedging agreements were entered into to mitigate the interest rate risk inherent in FCPT OP’s variable rate debt and not for trading purposes.
We have entered into the following interest rate swaps to hedge the interest rate variability associated with the Loan Agreement as of December 31, 2024. These hedging agreements were entered into to mitigate the interest rate risk inherent in FCPT OP’s variable rate debt and not for trading purposes.
For a discussion of the year ended December 31, 2022 compared to the year ended December 31, 2021, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2022.
For a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2023.
We believe that we have operated in conformity with the requirements for qualification and taxation as a REIT for the taxable year ended December 31, 2023, and we intend to continue to operate in a manner that will enable us to maintain our qualification as a REIT.
We believe that we have operated in conformity with the requirements for qualification and taxation as a REIT for the taxable year ended December 31, 2024, and we intend to continue to operate in a manner that will enable us to maintain our qualification as a REIT.
These swaps are accounted for as cash flow hedges with all interest income and expense recorded as a component of net income and other valuation changes recorded as a component of other comprehensive income. The following table presents the swaps held as of December 31, 2023.
These swaps are accounted for as cash flow hedges with all interest income and expense recorded as a component of net income and other valuation changes recorded as a component of other comprehensive income. The following table presents the swaps held as of December 31, 2024.
The Loan Agreement has an accordion feature allowing the facility to be increased by an additional aggregate amount not to exceed $350 million subject to obtaining lender commitments and other customary conditions.
The Loan Agreement had an accordion feature allowing the facility to be increased by an additional aggregate amount not to exceed $350 million subject to obtaining lender commitments and other customary conditions.
AFFO is a widely reported measure by other REITs; however, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to other REITs. 43
AFFO is a widely reported measure by other REITs; however, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to other REITs. 35
In this section, we discuss the results of our operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.
In this section, we discuss the results of our operations for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Depreciation and Amortization Expense Depreciation and amortization expense represents the depreciation on real estate investments and equipment that have estimated liv es ranging from 2 to 55 years.
Depreciation and Amortization Expense Depreciation and amortization expense represents the depreciation on real estate investments and equipment that have estimated lives ranging from 2 to 55 years.
Overview We are a Maryland corporation and a real estate investment trust (“REIT”) which owns, acquires and leases properties for use in the restaurant and food-service related industries.
Overview We are a Maryland corporation and a real estate investment trust (“REIT”) which owns, acquires and leases properties for use in the restaurant and retail industries.
Real Estate Operations Rental Revenue Rental revenue increased $26.3 million during the year ended December 31, 2023 compared to the year ended December 31, 2022. This increase is due to recognizing a full year of revenue in 2023 from the 112 properties acquired in 2022, and the acquisition of 92 properties and ground leaseholds in 2023.
Real Estate Operations Rental Revenue Rental revenue increased $17.3 million during the year ended December 31, 2024 compared to the year ended December 31, 2023. This increase is due to recognizing a full year of revenue in 2024 from the 92 properties acquired in 2023, and the acquisition of 87 properties and ground leaseholds in 2024.
As of December 31, 2023, our lease portfolio had the following characteristics: • 1,111 properties located in 47 states and representing an aggregate leasable area of 7.5 million square feet; • 99.8% occupancy (based on leasable square footage); • An average remaining lease term of 7.8 years (weighted by annualized base rent); • An average annual rent escalation of 1.4% through December 31, 2028 ( weighted by annualized base rent); and • 99.9% of the contractual base rent collected for the year ended December 31, 2023. 33 Results of Operations The results of operations for the accompanying consolidated financial statements discussed below are derived from our consolidated statements of comprehensive income (“Comprehensive Income Statement”) found elsewhere in this Annual Report on Form 10-K.
As of December 31, 2024, our lease portfolio had the following characteristics: • 1,198 properties located in 47 states and representing an aggregate leasable area of 8.0 million square feet; • 99.6% occupancy (based on leasable square footage); • An average remaining lease term of 7.3 years (weighted by annualized base rent); • An average annual rent escalation of 1.4% through December 31, 2029 (weighted by annualized base rent); and • 99.8% of the contractual base rent collected for the year ended December 31, 2024. 27 The results of operations for the accompanying consolidated financial statements discussed below are derived from our consolidated statements of comprehensive income (“Comprehensive Income Statement”) found elsewhere in this Annual Report on Form 10-K.
The judgments we make related to the expected useful lives of long-lived assets and our ability to realize undiscounted cash flows in excess of the carrying amounts of these assets are affected by factors such as the ongoing maintenance and improvements of the assets, changes in economic conditions, changes in usage or operating performance, desirability of the restaurant sites and other factors, such as our ability to sell our assets held for sale.
Fair value is generally determined by appraisals or sales prices of comparable assets. 30 The judgments we make related to the expected useful lives of long-lived assets and our ability to realize undiscounted cash flows in excess of the carrying amounts of these assets are affected by factors such as the ongoing maintenance and improvements of the assets, changes in economic conditions, changes in usage or operating performance, desirability of the restaurant sites and other factors, such as our ability to sell our assets held for sale.
Interest expense, excluding deferred financing costs, on the $430 million of term loans and the interest rate swaps we entered into to hedge the variability associated with the term loans was $15.7 million and $13.0 million for the years ended December 31, 2023 and 2022, respectively. This interest expense includes the reclassification of other comprehensive income into interest expense.
Interest expense, excluding deferred financing costs, on the $515 million of term loans and the interest rate swaps we entered into to hedge the variability associated with the term loans was $19.1 million and $15.7 million for the years ended December 31, 2024 and 2023, respectively. This interest expense includes the reclassification of other comprehensive income into interest expense.
Interest expense and fees on our revolving credit facility was $2.1 million and $0.7 million for the years ended December 31, 2023 and 2022, respectively. Amortization of the term loan and revolving credit facility deferred financing costs was $1.6 million and $1.5 million for the years ended December 31, 2023 and 2022, respectively.
Interest expense and fees on our revolving credit facility was $1.6 million and $2.1 million for the years ended December 31, 2024 and 2023, respectively. Amortization of the term loan and revolving credit facility deferred financing costs was $1.9 million and $1.6 million for the years ended December 31, 2024 and 2023, respectively.
At December 31, 2023 there were outstanding borrowings of $16 million 38 under the revolving credit facility and no outstanding letters of credit. At December 31, 2022, there were no outstanding borrowings under the revolving credit facility and no outstanding letters of credit.
At December 31, 2024 there were outstanding borrowings of $5 million under the revolving credit facility and no outstanding letters of credit. At December 31, 2023, there were outstanding borrowings of $16 million under the revolving credit facility and no outstanding letters of credit.
As of December 31, 2023, there was $243.8 million available for issuance under the current ATM program. On a long-term basis, our principal demands for funds include payment of dividends, financing of property acquisitions, and scheduled debt maturities.
As of December 31, 2024, there was $413.9 million available for issuance under the ATM program. On a long-term basis, our principal demands for funds include payment of dividends, financing of property acquisitions, and scheduled debt maturities.
If these assets are determined to be impaired, the amount of impairment recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. Fair value is generally determined by appraisals or sales prices of comparable assets.
If these assets are determined to be impaired, the amount of impairment recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Item 7. Ma nagement’s Discussion and Analysis of Financial Condition and Results of Operations.
During the year ended December 31, 2022, the Company sold eight properties with a combined net book value of $16.3 million for a realized gain on sale of $8.1 million . Income Taxes During the years ended December 31, 2023 and 2022, income tax expense on real estate operations was $227 thousand and $206 thousand, respectively.
During the year ended December 31, 2023, the Company sold seven properties with a combined net book value of $23.7 million for a realized gain on sale of $2.3 million. Income Taxes During the years ended December 31, 2024 and 2023, income tax expense on real estate operations was $308 thousand and $227 thousand, respectively.
Year Ended December 31, (In thousands, except share and per share data) 2023 2022 2021 Net income $ 95,462 $ 97,908 $ 85,745 Depreciation and amortization 50,592 41,342 34,715 Realized gain on sales of real estate (2,341) (8,139) (431) Funds from Operations (FFO) (as defined by NAREIT) 143,713 131,111 120,029 Straight-line rent adjustment (5,523) (6,372) (7,583) Deferred income tax benefit (1) (259) (125) (864) Stock-based compensation expense 6,271 4,978 3,948 Non-cash amortization of deferred financing costs 2,311 2,104 2,368 Non-real estate investment depreciation 139 129 111 Amortization of above and below market leases, net 2,061 2,151 2,119 Adjusted Funds from Operations (AFFO) $ 148,713 $ 133,976 $ 120,128 Fully diluted shares outstanding (2) 88,861,587 81,921,624 76,986,538 FFO per diluted share $ 1.62 $ 1.60 $ 1.56 AFFO per diluted share $ 1.67 $ 1.64 $ 1.56 (1) Amount represents non-cash deferred income tax benefit recognized at Kerrow Restaurant Operating Business.
Year Ended December 31, (In thousands, except share and per share data) 2024 2023 2022 Net income $ 100,595 $ 95,462 $ 97,908 Depreciation and amortization 54,372 50,592 41,342 Realized gain on sales of real estate — (2,341 ) (8,139 ) Funds from Operations (FFO) (as defined by NAREIT) $ 154,967 $ 143,713 $ 131,111 Straight-line rent adjustment (3,810 ) (5,523 ) (6,372 ) Deferred income tax benefit (1) (200 ) (259 ) (125 ) Stock-based compensation expense 6,987 6,271 4,978 Non-cash amortization of deferred financing costs 2,597 2,311 2,104 Non-real estate investment depreciation 142 139 129 Amortization of above and below market leases, net 2,072 2,061 2,151 Adjusted Funds from Operations (AFFO) $ 162,755 $ 148,713 $ 133,976 Fully diluted shares outstanding (2) 94,179,057 88,861,587 81,921,624 FFO per diluted share $ 1.65 $ 1.62 $ 1.60 AFFO per diluted share $ 1.73 $ 1.67 $ 1.64 (1) Amount represents non-cash deferred income tax benefit recognized at Kerrow Restaurant Operating Business.
General and administrative expense increased $2.6 million in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to a $2.7 million increase in cash compensation-related expenses and non-cash stock compensation expenses stemming from a higher head count and benefits costs, offset by $0.1 million decrease in professional services.
General and administrative expense increased $1.1 million in the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to a $0.8 million increase in cash compensation-related expenses and non-cash stock compensation expenses stemming from a higher head count and benefits costs, as well as increased professional fees.
During the year ended December 31, 2023, we recognized costs paid by the lessor and reimbursed by the lessees within rental revenue of $9.4 million, compared to $6.6 million during the year ended December 31, 2022 due to the increase in the number of mall outparcel and multi-tenant property acquisitions. These amounts are also recognized in property expenses.
During the year ended December 31, 2024, we recognized costs paid by the lessor and reimbursed by the lessees within rental revenue of $9.5 million, compared to $9.4 million during the year ended December 31, 2023. These amounts are also recognized in property expenses.
Lease incentives are included in Intangible real estate assets, net, on our Consolidated Balance Sheets. We assess the collectability of our lease receivables, including deferred rents receivable, on several factors, including payment history, the financial strength of the tenant and any guarantors, historical operations and operating trends of the property, and current economic conditions.
We assess the collectability of our lease receivables, including deferred rents receivable, on several factors, including payment history, the financial strength of the tenant and any guarantors, historical operations and operating trends of the property, and current economic conditions.
Liquidity and Financial Condition At December 31, 2023, we had $16.3 million of cash and cash equivalents and $234 million of borrowing capacity under our revolving credit facility. The revolving credit facility provides for a letter of credit sub-limit of $25 million. As of February 15, 2024, we had $215 million of borrowing capacity under the revolving credit facility.
Liquidity and Financial Condition At December 31, 2024, we had $4.1 million of cash and cash equivalents and $245.0 million of borrowing capacity under our revolving credit facility. The revolving credit facility provides for a letter of credit sub-limit of $25 million. As of February 13, 2025, we had $350 million of borrowing capacity under the revolving credit facility.
However, subject to certain exceptions, we may also elect, in our sole 40 discretion, to cash settle or net share settle all or any portion of our obligations under any forward sale agreement, in which case we may not receive any proceeds (in the case of cash settlement) or will not receive any proceeds (in the case of net share settlement), and we may owe cash (in the case of cash settlement) or shares of our common stock (in the case of net share settlement) to the relevant forward purchaser.
However, subject to certain exceptions, we may also elect, in our sole discretion, to cash settle or net share settle all or any portion of our obligations under any forward sale agreement, in which case we may not receive any proceeds (in the case of cash settlement) or will not receive any proceeds (in the case of net share settlement), and we may owe cash (in the case of cash settlement) or shares of our common stock (in the case of net share settlement) to the relevant forward purchaser. 33 During 2024, the Company had the following activity under its ATM programs, the net proceeds of which were employed to fund acquisitions and for general corporate purposes.
Year Ended December 31, (In thousands) 2023 2022 2021 Revenues: Rental $ 219,881 $ 193,611 $ 172,812 Restaurant 30,725 29,583 26,566 Total revenues 250,606 223,194 199,378 Operating expenses: General and administrative 22,680 20,043 17,650 Depreciation and amortization 50,731 41,471 34,826 Property 11,550 7,989 5,040 Restaurant 28,707 27,822 24,563 Total operating expenses 113,668 97,325 82,079 Interest expense (44,606) (36,405) (32,555) Other income, net 919 542 36 Realized gain on sale, net 2,341 8,139 431 Income tax benefit (expense) (130) (237) 534 Net income 95,462 97,908 85,745 Net income attributable to noncontrolling interest (122) (136) (164) Net Income Available to Common Shareholders $ 95,340 $ 97,772 $ 85,581 Analysis of Results of Operations We operate in two segments, real estate operations and restaurant operations.
Year Ended December 31, (In thousands) 2024 2023 2022 Revenues: Rental $ 237,134 $ 219,881 $ 193,611 Restaurant 30,939 30,725 29,583 Total revenues 268,073 250,606 223,194 Operating expenses: General and administrative 23,789 22,680 20,043 Depreciation and amortization 54,514 50,731 41,471 Property 11,575 11,550 7,989 Restaurant 29,024 28,707 27,822 Total operating expenses 118,902 113,668 97,325 Interest expense (49,231 ) (44,606 ) (36,405 ) Other income, net 963 919 542 Realized gain on sale, net — 2,341 8,139 Income tax benefit (expense) (308 ) (130 ) (237 ) Net income 100,595 95,462 97,908 Net income attributable to noncontrolling interest (122 ) (122 ) (136 ) Net Income Available to Common Shareholders $ 100,473 $ 95,340 $ 97,772 Analysis of Results of Operations We operate in two segments, real estate operations and restaurant operations.
Amortization of the senior unsecured notes deferred financing costs was $0.7 million and $0.6 million for the years ended December 31, 2023 and 2022, respectively. For additional information on the Company’s debt instruments, see “Liquidity and Financial Condition” below.
Amortization of the senior unsecured notes deferred financing costs was $0.7 million and $0.7 million for the years ended December 31, 2024 and 2023, respectively. For additional information on the Company’s debt instruments, see “Liquidity and Financial Condition” below. Realized Gain on Sale, Net During the year ended December 31, 2024, the Company did not sell any properties.
At December 31, 2022, our debt consisted of $430 million of non-amortizing term loans, no outstanding borrowings under the revolving credit facility, and $575 million aggregate principal amount of senior unsecured fixed rate notes issued by FCPT OP.
See Term Loan and Revolving Credit Facility below for additional information. Debt Instruments At December 31, 2024, our debt consisted of $515 million of non-amortizing term loans, $5 million in outstanding borrowings under the revolving credit facility, and $625 million aggregate principal amount of senior unsecured fixed rate notes issued by FCPT OP.
Interest rates and other factors, such as occupancy, rental rate and the financial condition of our tenants, influence our performance more so than does inflation. Changes in interest rates do not necessarily correlate with inflation rates or changes in inflation rates.
Interest rates and other factors, such as occupancy, rental rate and the financial condition of our tenants, influence our performance more so than does inflation. Changes in interest rates do not necessarily correlate with inflation rates or changes in inflation rates. As described above, we currently offer leases that provide for payments of base rent with scheduled annual fixed increases.
The swaps were terminated on May 25, 2023 for approximately a $8.1 million gain which will be amortized over the 10 years of the unsecured note as a reduction to interest expense. 39 The Company has issued the following $675 million of senior unsecured fixed rate notes (together, the “Notes”) in private placements pursuant to note purchase agreements with the various purchasers.
The swaps were terminated on December 10, 2024, with the corresponding asset of $243 thousand which will be amortized over the next 10 years as an increase to interest expense. The Company has issued the following $625 million of senior unsecured fixed rate notes (together, the “Notes”) in private placements pursuant to note purchase agreements with the various purchasers.
Recognizing rental income on a 37 straight-line basis generally results in recognized revenues during the first half of a lease term exceeding the cash amounts contractually due from our tenants, creating a deferred rent receivable.
Recognizing rental income on a straight-line basis generally results in recognized revenues during the first half of a lease term exceeding the cash amounts contractually due from our tenants, creating a deferred rent receivable. In certain circumstances, the Company may offer tenant allowance funds in exchange for increasing rent, extending the term, and including annual sales reporting among other items.
D epreciation and amortization expense increased by approximately $9.2 million for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to the acquisition of 92 properties in 2023, and the depreciation on 112 properties acquired in 2022 that incurred a full year of depreciation.
Depreciation and amortization expense increased by approximately $3.8 million for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to the acquisition of 87 properties in 2024, and the depreciation on 92 properties acquired in 2023 that incurred a full year of depreciation. 28 Property Expense We record all tenant expenses, both reimbursed and non-reimbursed, to property expense.
The current ATM program replaces the Company’s prior $350 million ATM program, which was established on February 24, 2021 (the “prior ATM program” and together with the current ATM program, the “ATM programs”), under which the Company had sold shares of its common stock having an aggregate gross sales price of $256.7 million through November 7, 2022.
The ATM program replaces the Company's previous $450.0 million ATM program (the "prior ATM program" and, together with the ATM program, the "ATM programs"), which was established in November 2022, under which the Company had sold shares of its common stock having an aggregate gross sales price of $404.8 million through September 17, 2024.
Critical Accounting Policies and Estimates The preparation of FCPT’s consolidated financial statements in conformance with accounting principles generally accepted in the United States of America requires management to make estimates on assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as other disclosures in the financial statements.
During the year ended December 31, 2024, the Company recorded an income tax benefit of $1 thousand at the Kerrow Restaurant Operating Business, compared to an income tax expense of $97 thousand for the year ended December 31, 2023, primarily due to return to provision adjustments Critical Accounting Policies and Estimates The preparation of FCPT’s consolidated financial statements in conformance with accounting principles generally accepted in the United States of America requires management to make estimates on assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as other disclosures in the financial statements.
Interest Expense We incur interest expense on our $430 million of term loans, any outstanding borrowings on our revolving credit facility, interest rate swaps, and our $675 million of senior unsecured fixed rate notes. Interest expense increased by approximately $8.2 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
During the year ended December 31, 2023, we recorded property expenses of $11.6 million, of which $9.4 million was reimbursed by tenants. Interest Expense We incur interest expense on our $515 million of term loans, any outstanding borrowings on our revolving credit facility, interest rate swaps, and our $625 million of senior unsecured fixed rate notes.
Property Expense We record all tenant expenses, both reimbursed and non-reimbursed, to property expense. We also record initial direct costs (lease negotiation and other previously capitalizable transaction expenses) as property expenses. Other property expenses consist of expenses incurred on vacant properties, abandoned deal costs, lease transaction costs, property-level expenses and franchise taxes.
We also record initial direct costs (lease negotiation and other previously capitalizable transaction expenses) as property expenses. Other property expenses consist of expenses incurred on vacant properties, abandoned deal costs, lease transaction costs, property-level expenses and franchise taxes. During the year ended December 31, 2024, we recorded property expenses of $11.6 million, of which $9.5 million was reimbursed by tenants.
During the year ended December 31, 2023, amortization of above and below market rents, and lease incentives decreased rental revenue by $2.1 million, as compared to $2.2 million for the year ended December 31, 2022. 34 General and Administrative Expense General and administrative expense is comprised of costs associated with personnel, office rent, legal, accounting, information technology and other professional and administrative services in association with our real estate operations, our REIT structure and public company reporting requirements.
General and Administrative Expense General and administrative expense is comprised of costs associated with personnel, office rent, legal, accounting, information technology and other professional and administrative services in association with our real estate operations, our REIT structure and public company reporting requirements.
Additionally, the amendment to the Loan Agreement converted the revolving credit facility from LIBOR to SOFR-based borrowings, and the Company and counterparties converted the related interest rate swaps concurrently.
Additionally, the amendment to the Loan Agreement converted the revolving credit facility from LIBOR to SOFR-based borrowings, and the Company and counterparties converted the related interest rate swaps concurrently. 31 The Loan Agreement provided that $150 million would mature on November 9, 2025, $100 million would mature on November 9, 2026, $90 million would mature on January 9, 2027, $85 million would mature on March 14, 2027 and $90 million would mature on January 9, 2028.
Total restaurant expenses increased approximately $0.9 million in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to an increase in costs of good sold and labor costs.
Total restaurant expenses increased approximately $0.3 million in the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to improved staffing and a reduction in overtime hours.
We recognize rental income on a straight-line basis to include the effect of base rent escalators, and free rent periods, if any.
We recognize rental income on a straight-line basis to include the effect of base rent escalators, and free rent periods, if any. During the year ended December 31, 2024, amortization of above and below market rents, and lease incentives decreased rental revenue by $2.1 million, compared to $2.1 million for the year ended December 31, 2023.
During the year ended December 31, 2023, the Company terminated four cash flow hedges in connection with the $100 million senior unsecured note offering that was entered into on June 5, 2023 and funded on July 12, 2023.
During the year ended December 31, 2024, the Company terminated one cash flow hedge in connection with the $85 million Term Loan that was entered into on March 11, 2024 and funded on March 14, 2024.
The Company intends to exercise the extension option or refinance prior to maturity. At December 31, 2023 and 2022, the weighted average interest rate on the term loans, after consideration of the interest rate hedges, was 3.69% and 3.42%, respectively.
The Term Loan had a maturity date in March 2027 with one twelve month extension exercisable at the Company’s option, subject to certain conditions. At December 31, 2024 and 2023, the weighted average interest rate on the term loans, after consideration of the interest rate hedges, was 3.84% and 3.69%, respectively.
These cash flow hedges had a total notional value of $100 million and were entered into at various dates ranging from February 2022 through April 2023 to hedge the interest rate on the offering.
The cash flow hedges had a total notional value of $50 million and were entered into in June 2024 and August 2024 32 to hedge the interest rate on a future offering or term loan.
In 2023, FCPT engaged in various real estate transactions for a total investment of $341.1 million, including capitalized transaction costs. Pursuant to these transactions, we acquired 92 properties and ground leaseholds, aggregating 757 thousand square feet, and representing 41 brands, including Aspen Dental, Cheddar’s, Oak Street Health, Take 5 Car Wash, Tire Discounters, W.W. Williams, and WellNow Urgent Care.
In 2024, FCPT engaged in various real estate transactions for a total investment of $273.0 million, including capitalized transaction costs. Pursuant to these transactions, we acquired 87 properties and ground leaseholds, aggregating 546.6 thousand square feet, and representing 31 brands, including AFC Urgent Care, Baptist Medical, Christian Brothers, MercyOne, and P.F. Chang's.
As described above, we currently offer leases that provide for payments of base rent with scheduled annual fixed increases. 41 Supplemental Financial Measures The following table presents a reconciliation of GAAP net income to Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”) for the years ended December 31, 2023, 2022, and 2021.
Supplemental Financial Measures The following table presents a reconciliation of GAAP net income to Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”).
In certain circumstances, the Company may offer tenant allowance funds in exchange for increasing rent, extending the term, and including annual sales reporting among other items. These tenant allowance funds are classified as lease incentives upon payment and are amortized as a reduction to revenue over the lease term.
These tenant allowance funds are classified as lease incentives upon payment and are amortized as a reduction to revenue over the lease term. Lease incentives are included in Intangible real estate assets, net, on our Consolidated Balance Sheets.
Restaurant Operations Restaurant revenues increased approximately $1.1 million in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to higher net pricing and continued emphasis on customer service.
Restaurant Operations Restaurant revenues increased approximately $0.2 million in the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to higher net pricing, partially offset by less foot traffic as a result of city construction projects outside two locations.
This w as primarily due to the issuance of $125 million of senior fixed notes in March 2022, the issuance of $100 million of senior fixed notes in July 2023, an increase of $30 million of our term loan facility as part of the loan agreement in October 2022, and a higher effective interest rate on the unhedged portion of our term loan facility.
This was primarily due to the issuance of the additional $85 million term loan in March 2024, which was offset by a reduction of interest expense due to the repayment of the $50 million senior unsecured fixed rate note and higher interest rates.
Removed
During the year ended December 31, 2023, we recorded property expenses of $11.6 million, of which $9.4 million was reimbursed by tenants. During the year ended December 31, 2022, we recorded property expenses of $8.0 million, of which $6.6 million was reimbursed by tenants.
Added
Interest expense increased by approximately $4.6 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Removed
The increase in non-reimbursed property expenses are primarily due to increases in abandoned deal costs and property-level expenses that were the responsibility of the Company rather than the tenant.
Added
The revolving credit facility portion had a maturity date of November 9, 2025 with one six-month extension option. On March 14, 2024, FCPT entered into an Incremental Amendment to the Third Amended and Restated Revolving Credit and Term Loan Agreement with a group of existing lenders (the “Credit Agreement”).
Removed
Realized Gain on Sale, Net During the year ended December 31, 2023, the Company sold seven properties with a combined net book value of $23.7 million for a realized gain on sale of $2.3 million .
Added
The Company utilized the accordion feature of the Loan Agreement to enter into a new $85 million term loan (the “Term Loan”), the proceeds from which were used to repay the $50 million of senior unsecured notes payable due in June 2024.
Removed
During the year ended December 31, 2023, the Company recorded an income tax benefit of $97 thousand at the Kerrow Restaurant Operating Business, compared to an income tax expense of $31 thousand primarily due to return to provision adjustments for the year ended December 31, 2022.
Added
On January 31, 2025, the Company and FCPT OP entered into the Amended Loan Agreement, which amended and restated the Loan Agreement in its entirety.
Removed
The Loan Agreement provides that $150 million will mature on November 9, 2025, $100 million will mature on November 9, 2026, $90 million will mature on January 9, 2027, and $90 million will mature on January 9, 2028. The revolving credit facility portion will mature on November 9, 2025 with one six-month extension option.
Added
The Amended Loan Agreement provides for a revolving credit facility in an aggregate principal amount of $350 million and a term loan facility in an aggregate principal amount of $590 million, comprised of (i) a $225 million term credit facility with a maturity date of February 1, 2029, (ii) a $100 million term credit facility with a maturity date of November 9, 2026, (iii) a $90 million term credit facility with a maturity date of February 1, 2027, (iv) a $90 million term credit facility with a maturity date of February 1, 2028 and (v) a $85 million term credit facility with a maturity date of March 14, 2027.
Removed
The Company enters into forward-starting interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance date of long-term debt.
Added
The Amended Loan Agreement has an accordion feature to increase the revolving commitments or add one or more tranches of term loans up to an additional aggregate amount not to exceed $450 million, subject to certain conditions, including one or more new or existing lenders agreeing to provide commitments for such increased amount.
Removed
The following table presents the Notes outstanding as of December 31, 2023.
Added
This cash flow hedge had a total notional value of $25 million and was entered into in August 2023 to hedge the interest rate on a future offering or term loan.
Removed
On November 7, 2022, the Company established a new at-the-market equity program (the “current ATM program”) pursuant to which the Company is able to sell from time to time shares of our common stock having an aggregate sales price of up to $450 million.
Added
The swap was terminated on February 28, 2024, with the corresponding asset of $211 thousand which will be amortized over the next 10 years as an increase to interest expense. The Company also terminated two cash flow hedges in connection with the $225 million Amended Term Loan. See Note 15 - Subsequent Events - Capital Resources.
Removed
The ATM programs contemplate that, in addition to the issuance and sale by the Company of shares of common stock to or through the agents, the Company may enter into separate forward sale agreements with one of the agents or one of their respective affiliates (in such capacity, each, a “forward purchaser” and, collectively, the “forward purchasers”).
Added
On September 17, 2024, the Company terminated the prior ATM program (as defined below) and entered into a new ATM program (the "ATM program"), pursuant to which shares of the Company’s common stock having an aggregate gross sales price of up to $500.0 million may be offered and sold (1) by the Company to, or through, a consortium of banks acting as its sales agents or (2) by a consortium of banks acting as forward sellers on behalf of any forward purchasers contemplated thereunder, in each case by means of ordinary brokers’ transactions on the NYSE or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices, by privately negotiated transactions (including block sales) or by any other methods permitted by applicable law.
Removed
When the Company enters into a forward sale agreement with any forward purchaser, we expect that such forward purchaser will attempt to borrow from third parties and sell, through the relevant agent, acting as sales agent for such forward purchaser, shares of our common stock to hedge such forward purchaser's exposure under such forward sale agreement.
Added
In connection with the Company’s ATM program, the Company may enter into forward sale agreements with certain financial institutions acting as forward purchasers whereby, at the Company's discretion, the forward purchasers may borrow and sell shares of common stock.
Removed
The Company will not initially receive any proceeds from any sale of shares of our common stock borrowed by a forward purchaser and sold through a forward seller.
Added
December 31, 2024 Shares Gross Wtd Avg Sales Price Net Wtd Avg Sales Price Net Proceeds (1) ($ in thousands) Executed forward sale agreements 7,796,898 $ 27.88 n/a Physically settled forward sale agreements 4,266,323 $ 27.56 $ 27.14 $ 115,800 Total shares sold and issued under the ATM programs 8,068,155 $ 27.10 $ 26.63 $ 214,900 (1) net proceeds, after sales commissions and offering expenses At December 31, 2024, the Company had outstanding forward sale agreement to sell 3,530,575 shares of common stock at a weighted average sales price of $28.27 before sales commission and offering expenses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeRisk Factors - Risks Related to Our Business - Hedging transactions could have a negative effect on our results of operations.” Due to the fixed rate nature of $1.05 billion of our indebtedness and the hedging transactions described above, a hypothetical one percentage point decline in interest rates would not have materially affected our consolidated financial position, results of operations or cash flows as of December 31, 2023. 44 Item 8.
Biggest changeRisk Factors - Risks Related to Our Business - Hedging transactions could have a negative effect on our results of operations.” Due to the fixed rate nature of $1.06 billion of our indebtedness and the hedging transactions described above, a hypothetical one percentage point decline in interest rates would not have materially affected our consolidated financial position, results of operations or cash flows as of December 31, 2024.
Financial Statements and Supplementary Data. Financial Statements and Supplementary Data consist of financial statements as indexed on page F-1. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures. None.
Item 8. Financial Statements and Supplementary Data. Financial Statements and Supplementary Data consist of financial statements as indexed on page F-1. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures. None.
As of December 31, 2023, our assets were primarily long-term, fixed-rate leases (though most have scheduled rental increases during the terms of the leases). As of December 31, 2023, $675 million of our total indebtedness consisted of senior unsecured fixed rated notes.
As of December 31, 2024, our assets were primarily long-term, fixed-rate leases (though most have scheduled rental increases during the terms of the leases). As of December 31, 2024, $625 million of our total indebtedness consisted of senior unsecured fixed rated notes.
The remaining $446 million of our total indebtedness consisted of three to five-year variable-rate obligations for which we have entered into swaps that effectively fix $375 million through November 2024, and outstanding borrowings on the revolving credit facility.
The remaining $520 million of our total indebtedness consisted of three to five-year variable-rate obligations for which we have entered into swaps that effectively fix $435 million through November 2025, and outstanding borrowings on the revolving credit facility.

Other FCPT 10-K year-over-year comparisons