UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition
period from to
Commission File Number: 1-37538
FOUR CORNERS PROPERTY TRUST, INC.
(Exact name of Registrant as specified in its charter)
Maryland
47-4456296
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
591 Redwood Highway, Suite 3215, Mill Valley, CA 94941
(Address of principal executive offices)
Registrant’s telephone number, including area code: (415) 965-8030
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, $0.0001 par value per share
FCPT
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark if the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☒
Non-accelerated filer ☐
Emerging growth company ☐
Accelerated filer ☐
Smaller reporting company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting
under Section 404(b) of the Sarbanes-Oxley Act (15 USC. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of
an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of Common Stock held by non-affiliates of the Registrant, computed by reference to the closing sales price of such shares on the New York Stock
Exchange as of the last business day of the Registrant’s most recently completed second fiscal quarter was approximately: $2,230,681,629.
Number of shares of Common Stock, par value $0.0001, outstanding as of February 13, 2025: 99,970,872
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Definitive Proxy Statement for its Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission no later than April 30, 2025
are incorporated by reference into Part III of this Report.
2
FOUR CORNERS PROPERTY TRUST, INC.
FORM 10 - K
YEAR ENDED DECEMBER 31, 2024
TABLE OF CONTENTS
Page
Part 1
Item 1.
Business
3
Item 1A.
Risk Factors
8
Item 1B.
Unresolved Staff Comments
23
Item 1C.
Cybersecurity
23
Item 2.
Properties
24
Item 3.
Legal Proceedings
24
Item 4.
Mine Safety Disclosure
24
Part II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
25
Item 6.
Reserved
26
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
27
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
36
Item 8.
Financial Statements and Supplementary Data
36
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
36
Item 9A.
Controls and Procedures
36
Item 9B.
Other Information
37
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
37
Part III
Item 10.
Directors, Executive Officers and Corporate Governance
38
Item 11.
Executive Compensation
38
Item 12.
Security Ownership of Certain Owners and Management and Related Stockholder Matters
38
Item 13.
Certain Relationships and Related Transactions, and Director Independence
38
Item 14.
Principal Accounting Fees and Services
38
Part IV
Item 15.
Exhibits, Financial Statement Schedules
39
Item 16.
Form 10-K Summary
39
Signatures
E-4
3
PART I
Forward-Looking Statements
Statements contained in this Annual Report on Form 10-K, including the documents that are incorporated by reference, that are not historical facts are
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”). Also, when Four Corners Property Trust, Inc. uses any of the words “anticipate,” “assume,”
“believe,” “estimate,” “expect,” “intend,” or similar expressions, Four Corners Property Trust, Inc. is making forward-looking statements. Although
management believes that the expectations reflected in such forward-looking statements are based upon present expectations and reasonable assumptions, actual
results could differ materially from those set forth in the forward-looking statements. Certain factors that could cause actual results or events to differ materially
from those anticipated or projected are described in “Item 1A. Risk Factors.” of this Annual Report on Form 10-K.
Given these uncertainties, readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this Annual Report on
Form 10-K or any document incorporated herein by reference. Four Corners Property Trust, Inc. undertakes no obligation to publicly release any revisions to
these forward-looking statements that may be made to reflect events or circumstances after the date of this Annual Report on Form 10-K.
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. (together with its
consolidated subsidiaries “Darden”), for the purpose of owning, acquiring and leasing properties on a net basis, for use in the restaurant and related food service
industries. On November 9, 2015, Darden completed a spin-off of FCPT pursuant to which Darden contributed to us (i) 100% of the equity interest in entities
that owned 418 properties in which Darden operates Olive Garden, LongHorn Steakhouse and other branded restaurants (the “Properties” or “Property”) and (ii)
six LongHorn Steakhouse restaurants, including the properties or interests associated with such restaurants, located in the San Antonio, Texas area (the “Kerrow
Restaurant Operating Business”). In exchange, we issued to Darden all of our common stock and paid to Darden $315.0 million in cash. Subsequently, Darden
distributed all of our outstanding shares of common stock pro rata to holders of Darden common stock whereby each Darden shareholder received one share of
our common stock for every three shares of Darden common stock held at the close of business on the record date as well as cash in lieu of any fractional shares
of our common stock which they would have otherwise received (the “Spin-Off”).
Business 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. Substantially all of our business is conducted through Four Corners Operating Partnership, LP (“FCPT OP”), a Delaware limited partnership of which
we are a majority limited partner and our wholly owned subsidiary, Four Corners GP, LLC (“FCPT GP”), is its sole general partner. 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.
Our revenues are primarily generated by leasing properties to tenants through net lease arrangements under which the tenants are primarily responsible for
ongoing costs relating to the properties, including utilities, property taxes, insurance, common area maintenance charges, and maintenance and repair costs. We
focus on income producing properties leased to high quality tenants in major markets across the United States. We also generate revenues by operating the
Kerrow Restaurant Operating Business pursuant to franchise agreements with Darden.
In addition to managing our existing properties, our strategy includes investing in additional restaurant and retail properties to grow and diversify our
existing portfolio. 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 seek to improve the probability of successful tenant renewal at the end of initial lease terms by acquiring
properties that have high levels of operator profitability compared to rent payments and have absolute rent levels that generally reflect market rates.
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 rental properties and ground leasehold interests, aggregating 546.6 thousand square feet.
4
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).
Segments
We operate in two segments, real estate operations and restaurant operations. Our segments are based on our organizational and management structure,
which aligns with how our results are monitored and performance is assessed.
Our real estate operations segment consists of rental revenues primarily generated by leasing restaurant and retail properties to tenants through net lease
arrangements under which the tenant is primarily responsible for ongoing costs relating to the properties. Our real estate operations segment also includes
expenses associated with continuing efforts to invest in additional restaurant and retail properties and our corporate operating expenses.
Our restaurant operations segment is conducted through a taxable REIT subsidiary (“TRS”) and consists of our Kerrow Restaurant Operating Business.
The associated sales revenues, restaurant expenses and overhead on Kerrow Restaurant Operating Business’s seven buildings and equipment comprise our
restaurant operations.
Our shares of common stock are listed on the New York Stock Exchange under the ticker symbol “FCPT”.
Our executive offices are located at 591 Redwood Highway, Suite 3215, Mill Valley, California 94941, and our telephone number is (415) 965-8030.
Our Business Objectives and Strategy
Our primary goal is to create long-term shareholder value by executing our investment objectives to maximize the value of our assets, to acquire assets
with growth and diversification opportunities due to favorable lease structures and attractive submarket demographics, to actively manage our existing portfolio,
and to provide attractive and growing quarterly cash dividends. We do not currently have a fixed schedule of the number of acquisitions we intend to make over
a particular time period, but rather, we intend to pursue those acquisitions that meet our investing and financing objectives where we can earn a return above our
weighted-average cost of capital adjusted to reflect counterparty risk.
The key components of our business strategy, beyond managing our properties in accordance with our leases, include:
Investment Strategy
Acquire Additional Restaurant and Retail Properties: Our investment strategy is primarily to acquire restaurant and retail properties that are
occupied at well-located sites by nationally recognized brands with quality operators subject to long-term net leases. These acquisitions may
take many forms including, sale-leaseback transactions, one-off acquisitions or acquisitions of portfolios of properties from other REITs, and
other public and private real estate owners, and acquisitions of outparcel properties from mall and shopping center companies. 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. 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. 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.
Operating Strategy
Long-Term, Net Lease Structure: We intend to hold our properties for long-term investment. 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. Under the
leases, the tenant is typically responsible for maintaining the properties in accordance with prudent industry practice and in compliance with all
federal and state standards. The maintenance responsibilities include, among others, maintaining the building, building systems including
roofing systems and other improvements. In addition to maintenance requirements, the tenant is also generally responsible for insurance
5
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. At the option of the tenant,
the leases will generally allow extensions for a certain number of multi-year renewal terms beyond the initial term and the tenant can elect
which of the properties then subject to the leases to renew. The number and duration of the renewal terms for any given property may vary,
however, based on the initial term of the relevant lease and other factors.
Re-lease Properties: Over time we will face re-tenanting risk and opportunity. If our tenants elect to cease operations at any of our properties,
we will need to find a replacement tenant at the end of the lease term or earlier if a tenant abandons one of our properties prior to the end of the
lease term. We plan to use leasing expertise and relationships developed through our national operations to replace tenants under any expiring
or abandoned leases.
Operate the Kerrow Restaurant Operating Business: We operate the Kerrow Restaurant Operating Business through Kerrow Holdings, LLC
(“Kerrow”). Although we intend to derive the majority of our revenue from leasing properties on a net basis to restaurant and retail operators,
the Kerrow Restaurant Operating Business will provide us with a diversified revenue stream and equip us with the expertise to better analyze
other restaurant properties that could serve as expansion opportunities.
Financing Strategy
Maintain Balance Sheet Strength and Liquidity: We intend to maintain a capital structure that provides the resources and financial flexibility to
support the growth of our business. 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. Through disciplined capital spending and working capital management, we intend to
maximize our cash flows and maintain our targeted balance sheet and leverage ratios.
Investment and Financing Policies
Our investment objectives are to increase cash flow, provide quarterly cash dividends, maximize the value of our assets and acquire assets with cash flow
growth potential. We intend to continue to invest in both restaurant properties and, increasingly over time, other retail property types beyond the restaurant
industry.
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 investment and financing policies and objectives are subject to change periodically at the discretion
of our Board of Directors without a vote of shareholders. We also have an effective shelf registration statement on file with the SEC under which we may issue
equity financing through the instruments and on the terms most attractive to us at such time. 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. 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. It is
managed by FCPT GP, which accordingly controls the management and decisions of FCPT OP. Conducting business through FCPT OP allows us flexibility in
the manner in which we structure and acquire properties. In particular, an UPREIT structure enables us to acquire additional properties from sellers in exchange
for limited partnership units in FCPT OP. 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. 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”). Two of these restaurants are subject to ground leases to third parties.
6
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
$(000s)
% Total
Cash
Base
Rent
Avg. Rent
Per Square
Foot ($)
Tenant
EBITDAR
Coverage
Lease
Term
Remaining
(Yrs)
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.
(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.
The 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. Darden also entered into guaranties, pursuant to which it guaranteed the obligations of the tenants under
substantially all of the leases entered into in respect of the Properties. The Properties are leased to one or more of Darden’s operating subsidiaries pursuant to the
leases, which are net leases. 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. At the option of Darden, the leases
will generally allow extensions for a certain number of renewal terms of five years each beyond the initial term and Darden can elect which of our properties
then subject to the leases to renew. The number and duration of the renewal terms for any given Property may vary, however, based on the initial term of the
relevant lease and other factors.
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. There can be no assurance that Darden will have sufficient assets, income and access to financing to enable it to
satisfy its obligations under its leases with us, and any inability or unwillingness on its part to do so would have a material adverse effect on our business,
financial condition, results of operations and liquidity, on our ability to service our indebtedness and other obligations and on our ability to pay dividends to our
shareholders. We also cannot assure you that Darden will elect to renew the lease arrangements with us upon expiration of the initial base terms or any renewal
terms thereof or, if such leases are not renewed, that we can re-market the affected properties on the same or better terms. 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.”
(1)
(2)
(3)
7
Franchise Agreements
Pursuant to the Franchise Agreements, Darden grants the right and license to our subsidiary, Kerrow, to operate the Kerrow Restaurant Operating Business.
The Franchise Agreements include, among other things, a license to display trademarks, utilize trade secrets and purchase proprietary products from Darden.
Other services to be included pursuant to the Franchise Agreements are marketing services, training and access to certain LongHorn operating procedures. The
Franchise Agreements also contain provisions under which Darden may provide certain technical support for the Kerrow Restaurant Operating Business. The
fees and conditions of these franchising services are on terms comparable to similar franchising services negotiated on an arm’s length basis and consistent with
industry standard provisions.
Competition
We operate in a highly competitive market and face competition from other REITs, investment companies, private equity and hedge fund investors,
sovereign funds, restaurant and retail operators, lenders and other investors, some of whom are significantly larger and have greater resources and lower costs of
capital. These institutions may accept greater risk or lower returns, allowing them to offer more attractive terms to prospective tenants or for the acquisition of
restaurant and other retail properties. The Kerrow Restaurant Operating Business also faces active competition with national and regional chains and locally-
owned restaurants for guests, management and hourly personnel.
Governmental Regulations Affecting Properties
Property Environmental Considerations
As an owner and operator of real property, we are subject to various federal, state and local environmental, health and safety laws and regulations.
Although we do not operate or manage most of our properties, we may be held primarily or jointly and severally liable for costs relating to the investigation and
clean-up of any of our current or former properties at or from which there has been a release or threatened release of hazardous material, as well as other affected
properties, regardless of whether we knew of or caused the contamination.
In addition to these costs, which are typically not limited by law or regulation and could exceed the property’s value, we or our tenants could be subject to
other liabilities, including governmental penalties for violation of environmental, health and safety laws, liabilities for injuries to persons for exposure to
hazardous materials, and damages to property or natural resources. Furthermore, some environmental laws can create a lien on the contaminated site in favor of
the government for damages and the costs the government incurs in connection with such contamination or can restrict the manner in which a property may be
used because of contamination. 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.
Although the leases require our tenants to indemnify us for environmental liabilities, and although we intend to require our operators and tenants to
undertake to indemnify us for certain environmental liabilities, including environmental liabilities they cause, the amount of such liabilities could exceed the
financial ability of our operators and tenants to indemnify us. 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.
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.
Americans with Disabilities Act of 1990
The properties, as commercial facilities, are required to comply with Title III of the Americans with Disabilities Act of 1990 and similar state and local
laws and regulations (collectively the “ADA”). Investigation of a property may reveal non-compliance with the ADA. The tenant has the primary responsibility
for complying with the ADA, but we may incur costs if the tenant does not comply. 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. The tenant has the primary responsibility for complying with
regulations but failure to comply could result in fines by governmental authorities, awards of damages to private litigants, or restrictions to conduct business on
such properties.
Insurance
Our current lease agreements generally require, and new lease agreements that we enter are expected to require, that our tenants maintain all customary
lines of insurance on our properties and their operations, including comprehensive insurance and hazard insurance. 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
8
tenants are customary for similarly situated companies in our industry. However, we cannot make any assurances that Darden or any other tenants in the future
will maintain the required insurance coverages, and the failure by any of them to do so could have a material adverse effect on us.
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. Several of our human capital development initiatives include the following:
Diversity, Equity and Inclusion
In alignment with our values, we believe people are our greatest asset and we embrace a recruitment process that strives to attract top-tier, diverse talent.
We provide equal employment opportunities to all individuals and seek to cultivate an inclusive culture that respects and appreciates diversity of experience,
ideas and opinions. The basis for recruitment, hiring, development, training, compensation and advancement at the Company is qualifications, performance,
skills and experience.
We endeavor to maintain a workplace that is free from discrimination or harassment on the basis of color, race, sex, national origin, ethnicity, religion, age,
disability, sexual orientation, gender identification or expression or any other status protected by applicable law. We conduct annual training to prevent
harassment and discrimination and monitor employee conduct year-round, including by providing employees with access to an anonymous whistleblower
hotline to report any violations.
Training and Development
We support the continual development of our employees through various training and education programs throughout their tenure at the Company. We aim
to develop our employees by providing internal training, leadership coaching programs and providing tuition assistance and course reimbursement for career-
enhancing education and licensure requirements. We encourage both formal and informal mentorship to provide employees with critical developmental
feedback, including by conducting annual performance and professional development planning opportunities.
Compensation and Benefits
Our compensation program is designed to, among other things, attract, retain and incentivize talented and experienced individuals. We use a mix of
competitive salaries and other benefits to attract and retain these individuals. We offer competitive compensation and benefits, including, but not limited to,
retirement savings plans and medical, dental and vision coverage. We have generous policies to encourage work/life balance, including paid holiday, vacation
and sick time, parental leave, subsidized gym memberships, and fitness programs as well as an employee assistance program that offers confidential assistance
24 hours a day, 365 days a year to assist with personal and work-related problems.
We continually assess and strive to enhance employee satisfaction and engagement. 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.
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. 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.
Item 1A. Risk Factors.
Various risks and uncertainties could affect our business. Any of the risks described below or elsewhere in this report or our other filings with the SEC
could have a material impact on our business, financial condition or results of operations. It is not possible to predict or identify all risk factors. 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.
9
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. Therefore, we are subject to risks associated with having a highly
concentrated property brand base.
•
We are dependent on the restaurant industry and may be susceptible to the risks associated with it.
•
Our portfolio has some geographic concentration, which makes us more susceptible to adverse events in these areas.
•
Our pursuit of investments in, and acquisitions or development of, additional properties may be unsuccessful or fail to meet our expectations and may
result in the use of a significant amount of management resources or significant costs.
•
Inflation may materially and adversely affect us and our tenants.
•
An increase in market interest rates would increase our tenant’s interest costs on existing and future debt, and could impact our tenant’s ability to
refinance existing debt and operate their businesses.
•
Our tenants’ businesses and our business through the operation of Kerrow are subject to government regulations and changes in current or future laws
or regulations could restrict their ability to operate both their and our business in the manner currently contemplated.
•
Our relationship with Darden may adversely affect our ability to do business with third-party restaurant operators and other tenants.
•
Real estate investments are relatively illiquid and provisions in our lease agreements may adversely impact our ability to sell properties and could
adversely impact the price at which we can sell the properties.
•
Our active management and operation of a restaurant business may expose us to potential liabilities beyond those traditionally associated with REITs.
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 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. Additionally, Maryland law and provisions in our charter and bylaws may delay or prevent takeover attempts by
third parties and therefore inhibit our stockholders from realizing a premium on their stock.
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.
•
We cannot assure shareholders of our ability to pay dividends in the future.
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.
10
We attempt to mitigate the foregoing risks. However, if we are unable to effectively manage the impact of these and other risks, our ability to meet our
investment objectives would be substantially impaired and any of the foregoing risks could materially adversely affect our financial condition, results of
operations, and cash flows, our ability to make distributions to our stockholders, or the market price of our common stock.
Risks Related to Our Business
Risks related to real estate ownership could reduce the value of our properties, which could materially and adversely affect us.
Our core business is the ownership of real estate that is leased to tenants on a net basis. Accordingly, our performance is subject to risks inherent to the
ownership of real estate, including:
•
inability to collect rent from tenants due to financial hardship, including bankruptcy;
•
changes in consumer trends and preferences that reduce demand for the products or services of our tenants;
•
inability to lease at or above the current rental rates, or at all, or sell properties upon expiration or termination of existing leases;
•
capital expenditures to renovate vacant properties;
•
environmental risks related to the presence of hazardous or toxic substances or materials on our properties;
•
subjectivity of real estate valuations and changes in such valuations over time;
•
illiquid nature of real estate compared to most other financial assets;
•
changes in laws and regulations, including those governing real estate usage and zoning;
•
changes in interest rates and the availability of financing; and
•
changes in the general economic and business climate.
The occurrence of any of the risks described above may cause the value of our real estate to decline, which could materially and adversely affect us.
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.
Currently, Darden is our primary lessee in our lease portfolio and, therefore, is the primary source of our revenues. Additionally, because Darden’s leases
with us are net leases, we depend on Darden to pay all insurance, taxes, utilities, common area maintenance charges, maintenance and repair expenses and to
indemnify, defend and hold us harmless from and against various claims, litigation and liabilities arising in connection with its business, including any
environmental liabilities. There can be no assurance that Darden will have sufficient assets, income and access to financing to enable it to satisfy its payment
obligations to us under its leases. The inability or unwillingness of Darden to meet its rent obligations to us under any of its leases could materially adversely
affect our business, financial position or results of operations, including our ability to pay dividends to our stockholders as required to maintain our status as a
REIT. The inability of Darden to satisfy its other obligations under its leases with us, such as the payment of insurance, taxes and utilities could materially and
adversely affect the condition of our properties.
Since Darden Restaurants, Inc. is a holding company, it is dependent to an extent on distributions from its direct and indirect subsidiaries in order to satisfy
the payment obligations under its leases with us, and the ability of Darden to make such distributions may be adversely impacted in the event of the insolvency
or bankruptcy of such entities or by covenants in its debt agreements or otherwise that restrict the amount of the distributions that may be made by such entities.
For these reasons, if Darden were to experience a material and adverse effect on its business, financial position or results of operations, our business, financial
position or results of operations could also be materially and adversely affected.
Due to our dependence on rental payments from Darden, we may be limited in our ability to enforce our rights under, or to terminate, our leases with
Darden. Failure by Darden to comply with the terms of its leases with us could require us to find other lessees for some or all of the properties and there could be
a decrease or cessation of rental payments by Darden.
There is no assurance that we would be able to lease any of our properties to other lessees on substantially equivalent or better terms than any of our leases
with Darden, or at all, successfully reposition our properties for other uses or sell our properties on terms that are favorable to us. It may be more difficult to find
a replacement tenant for a restaurant or retail property than it would be to find a replacement tenant for a general commercial property due to the specialized
nature of the business.
In addition, our operation of the Kerrow Restaurant Operating Business depends on the provision of services to us by Darden pursuant to the Franchise
Agreements. The Franchise Agreements provide that Darden agrees to provide certain franchising services to our subsidiary, Kerrow. 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
11
procedures. The Franchise Agreements also contain provisions under which Darden may provide certain technical support for the Kerrow Restaurant Operating
Business.
Additional information about Darden can be found in Darden’s public filings with the SEC. Darden’s filings with the SEC can be found on the SEC’s
Internet website at www.sec.gov. Reference to Darden’s filings with the SEC is solely for the information of investors. We do not intend the SEC’s website to be
an active link or to otherwise incorporate the information contained on its website (including Darden’s filings with the SEC) into this report or other filings with
the SEC.
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. As a result, we are dependent on Darden and Brinker successfully operating their businesses and fulfilling their obligations to us. Their
ability to do so depends, in part, on their overall performance and profitability, which are based on many factors, many of which are beyond Darden’s or
Brinker’s control. Accordingly, we could be materially and adversely affected if Darden or Brinker does not operate their respective businesses successfully.
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.
Epidemics, pandemics or other public health crises that impact economic and market conditions, particularly in markets where our properties are located,
and preventative measures taken to alleviate any public health crises, particularly any measures that limit our tenants’ ability to engage in in-person interactions
with their customers, may have a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, liquidity and ability to
access capital markets and satisfy our debt service obligations, and make distributions to our stockholders, and may affect our ability as a net- lease real estate
investment trust to acquire properties or lease properties to our tenants, who may be unable, as a result of any economic downturn or longer-term changes in
consumer demand occasioned by public health crises, to make rental payments when due. Any preventative measures taken to alleviate any public health crises
may remain in place for an extended period of time, and, accordingly, we may experience reductions in rents from our tenants. Although we expect to be
actively engaged in rent collection efforts related to any uncollected rent, as well as working with certain tenants who request rent deferrals or other lease-related
relief, we can provide no assurance that our efforts will be successful. Moreover, to the extent any of these risks and uncertainties adversely impact us in the
ways described above or otherwise, they may also have the effect of heightening many of the other risks described under this section “Item 1A. Risk Factors”.
A significant portion of our restaurant properties are Olive Garden properties. 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. We believe that building brand value is critical to
increasing demand and building customer loyalty. Consequently, if market recognition or the positive perception of the Olive Garden or other Darden brands is
reduced or compromised, the value associated with Olive Garden or other Darden-branded properties in our portfolio may be adversely affected.
We are dependent on the restaurant industry and may be susceptible to the risks associated with it, which could materially adversely affect our business,
financial position or results of operations.
As the owner of properties serving the restaurant industry, we are impacted by the risks associated with the restaurant industry. Therefore, our success is to
some degree dependent on the restaurant industry, which could be adversely affected by economic conditions in general, changes in consumer trends and
preferences and other factors over which we and any of our tenants in the restaurant industry have no control. As we are subject to risks inherent in substantial
investments in a single industry, a decrease in the restaurant business would likely have a greater adverse effect on our revenues than if we owned a more
diversified real estate portfolio.
The restaurant industry is characterized by a high degree of competition among a large number of participants. Competition is intense between national and
regional restaurant chains and locally-owned restaurants in most of the markets where our properties are located. As competing properties are constructed, the
lease rates we assess for our properties may be negatively impacted upon renewal or new tenant pricing events.
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. 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.
12
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.
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. 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. In addition, from time to time, we may engage
in discussions that may result in one or more transactions. Although there is uncertainty that any of these discussions will result in definitive agreements or the
completion of any transaction, we may devote a significant amount of our management resources to such a transaction, which could negatively impact our
operations. We may incur significant costs in connection with seeking acquisitions or other strategic opportunities regardless of whether the transaction is
completed and in combining our operations if such a transaction is completed. In addition, properties we acquire may be leased to unrated tenants, and the tools
we use to measure credit quality may not be accurate. In the event that we consummate an acquisition or strategic alternative in the future, there is no assurance
that we would fully realize the potential benefits of such a transaction.
We operate in a highly competitive market and face competition from other REITs, investment companies, private equity and hedge fund investors,
sovereign funds, restaurant and retail operators, lenders and other investors, some of whom are significantly larger and have greater resources and lower costs of
capital. Increased competition will make it more challenging to identify and successfully capitalize on acquisition opportunities that meet our investment
objectives. Our Board of Directors may change our investment objectives at any time without stockholder approval. If we cannot identify and purchase a
sufficient quantity of suitable properties at favorable prices or if we are unable to finance acquisitions on commercially favorable terms, our business, financial
position or results of operations could be materially and adversely affected. Additionally, the fact that we must distribute 90% of our REIT taxable income in
order to maintain our qualification as a REIT may limit our ability to rely upon rental payments from our leased properties or subsequently acquired properties in
order to finance acquisitions and other strategic opportunities. In addition, to pursue acquisitions we may have to access debt or equity markets and if financing
is not available on acceptable terms, our ability to pursue further acquisitions might be limited or curtailed.
Our pursuit of investments in, and acquisitions or development of, additional properties may be unsuccessful or fail to meet our expectations.
Investments in and acquisitions of restaurant, retail and other properties we might seek to acquire entail risks associated with real estate investments
generally, including that the investment’s performance will fail to meet expectations, that the cost estimates for necessary property improvements will prove
inaccurate or that the tenant, operator or manager will underperform or become insolvent. In addition, we continue to seek to diversify our portfolio by acquiring
retail and other properties outside the restaurant industry, which further exposes us to these and other risks given our limited experience with investments in
acquisitions of properties in these industries. 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.
Inflation may materially and adversely affect us and our tenants.
A sustained or further increase in inflation could have a negative impact on variable-rate debt we and our tenants currently have or that we or our tenants
may incur in the future. 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. In addition, the effect of
inflation on interest rates could increase our financing costs over time, either through near-term borrowings on our floating-rate line of credit or refinancing of
our existing borrowings that may incur higher interest expenses related to the issuance of new debt. 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. However, increased operating expenses at vacant properties and the limited number of properties that are not subject to full triple-net leases could
cause us to incur additional operating expenses, which could increase our exposure to inflation. Increased costs may also have an adverse impact on our tenants
if increases in their operating expenses exceed increases in revenue, which may adversely affect the tenants’ ability to pay rent owed to us.
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. 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. As a result, during
inflationary periods in which the
13
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.
In addition, historically, during periods of increasing interest rates, real estate valuations have generally decreased as a result of rising capitalization rates,
which tend to be positively correlated with interest rates. Consequently, prolonged periods of higher interest rates may negatively impact the valuation of our
portfolio and result in the decline of the quoted trading price of our securities and market capitalization, as well as lower sales proceeds from future dispositions.
If we are not able to hire, or if we lose, key management personnel, we may not be able to successfully manage our business and achieve our objectives.
Our success depends in large part upon the leadership and performance of our executive management team, particularly William H. Lenehan, our President
and Chief Executive Officer, and other key employees and our ability to attract other key personnel to our business. If we are unable to hire, or if we lose the
services of, our executive management team or we are not able to hire or we lose other key employees, we may not be able to successfully manage our business
or achieve our business objectives.
Failure by our tenants to make rental payments to us, because of a deterioration of their financial condition or otherwise, would have a material adverse
effect on us.
We derive substantially all of our revenue from tenants who lease space from us at our properties. Therefore, our ability to generate cash from operations is
dependent on the rents that we are able to charge and collect from our tenants. At any time, our tenants may experience a downturn in their respective businesses
that may significantly weaken their financial condition, particularly during periods of economic uncertainty. As a result, our tenants may delay lease
commencements, decline to extend or renew leases upon expiration, fail to make rental payments when due, close a number of restaurants or declare bankruptcy.
Any of these actions could result in the loss of rental income attributable to the terminated leases and write-downs of certain of our assets. In that event, we may
be unable to re-lease the vacated space at attractive rents or at all. The occurrence of any of the situations described above would have a material adverse effect
on our results of operations and our financial condition.
Bankruptcy laws will limit our remedies if a tenant becomes bankrupt and rejects its leases.
If a tenant becomes bankrupt or insolvent, that could diminish the income we receive from that tenant’s leases. We may not be able to evict a tenant solely
because of its bankruptcy. On the other hand, a bankruptcy court might authorize the tenant to terminate its leasehold with us. If that happens, our claim against
the bankrupt tenant for unpaid future rent would be an unsecured pre-petition claim subject to statutory limitations, and therefore any amounts received in
bankruptcy are likely to be substantially less valuable than the remaining rent we otherwise were owed under the leases. In addition, any claim we have for
unpaid past rent could be substantially less than the amount owed.
The failure of any of our tenants to fulfill their maintenance obligations may have a materially adverse effect on our ability to operate and grow our
business.
The failure of any of our tenants to fulfill its maintenance obligations may cause us to incur significant and unexpected expenses to remediate any resulting
damage to the property. Furthermore, the failure by Darden, any other tenant or any future tenant to adequately maintain a leased property could adversely affect
our ability to timely re-lease the property to a new tenant or otherwise monetize our investment in the property if we are forced to make significant repairs or
changes to the property as a result of the tenant’s neglect. If we incur significant additional expenses or are delayed in being able to pursue returns on our real
estate investments, it may have a materially adverse effect on our ability to operate and grow our business and our ability to achieve our strategic objectives.
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.
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. However, we cannot be assured that we will continue to require the same levels of
insurance coverage under our lease agreements, that such insurance will be available at a reasonable cost in the future or that the insurance coverage provided
will fully cover all losses on our properties upon the occurrence of a catastrophic event, nor can we assure you of the future financial viability of the insurers.
Certain types of losses, generally of a catastrophic nature, such as earthquakes, hurricanes and floods, may be uninsurable or not economically insurable by us or
by our tenants. Insurance coverage may not be sufficient to pay the full current market value or current replacement cost of a loss. Inflation, changes in building
codes and ordinances, environmental considerations and other factors might also make it unfeasible to use insurance proceeds to replace the property after such
property has been damaged or destroyed. Under such circumstances, the insurance proceeds received might not be adequate to restore the economic position
with respect to such property. 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.
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
14
as well as the anticipated future cash flows from the property. If the damaged property is subject to recourse indebtedness, we could continue to be liable for the
indebtedness even if the property is irreparably damaged.
In addition, even if damage to our properties is covered by insurance, a disruption of business caused by a casualty event may result in loss of revenue for
our tenants or us. Any business interruption insurance may not fully compensate them or us for such loss of revenue. If one of our tenants experiences such a
loss, it may be unable to satisfy its payment obligations to us under its lease with us.
Our tenants’ businesses and our business through the operation of Kerrow are subject to government regulations and changes in current or future laws or
regulations could restrict their ability to operate both their and our business in the manner currently contemplated.
The restaurant industry is subject to extensive federal, state and local and international laws and regulations. The development and operation of restaurants
depend to a significant extent on the selection and acquisition of suitable sites, which are subject to building, zoning, land use, environmental, traffic and other
regulations and requirements. Our tenants and Kerrow are subject to licensing and regulation by state and local authorities relating to wages and hours, health
care, health, sanitation, safety and fire standards, the sale of alcoholic beverages, and information security. Our tenants and Kerrow are also subject to, among
other laws and regulations, laws and regulations relating to the preparation and sale of food, including regulations regarding product safety, nutritional content
and menu labeling. The impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional requirements and the
consequences of litigation relating to current or future laws and regulations, or an insufficient or ineffective response to significant regulatory or public policy
issues, could have an adverse effect on our tenants’ results of operations, which could also adversely affect our business, results of operations or financial
condition as we depend on our tenants for almost the entirety of our revenue.
Environmental compliance costs and liabilities associated with real estate properties owned by us may materially impair the value of those investments.
As an owner and operator of real property, we are subject to various federal, state and local environmental, health and safety laws and regulations. We may
be held primarily or jointly and severally liable for costs relating to the investigation and clean-up of any of our current or former properties at or from which
there has been a release or threatened release of hazardous materials as well as other affected properties, regardless of whether we knew of or caused the
contamination.
In addition to these costs, which are typically not limited by law or regulation and could exceed the property’s value, we or our tenants could be subject to
other liabilities, including governmental penalties for violation of environmental, health and safety laws, liabilities for injuries to persons for exposure to
hazardous materials, and damages to property or natural resources. Furthermore, some environmental laws can create a lien on the contaminated site in favor of
the government for damages and the costs the government incurs in connection with such contamination or can restrict the manner in which a property may be
used because of contamination. 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.
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.
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.
Our relationship with Darden may adversely affect our ability to do business with third-party restaurant operators and other tenants.
Darden is our primary tenant in our lease portfolio, and a majority of our revenues consist of rental payments from Darden. We may be viewed by third-
party restaurant operators and other potential tenants or parties to sale-leaseback transactions as being closely affiliated with Darden. As these third-party
restaurant operators and other potential transaction parties may compete with Darden within the restaurant industry, our perceived affiliation with Darden could
make it difficult for us to attract tenants and other transaction partners beyond Darden, particularly in the restaurant industry. If we are unable to diversify our
tenant and transaction partner base further beyond Darden, it may have a materially adverse effect on our ability to operate and grow our business and our ability
to achieve our strategic objectives.
Real estate investments are relatively illiquid and provisions in our lease agreements may adversely impact our ability to sell properties and could adversely
impact the price at which we can sell the properties.
Properties in our leasing portfolio and the properties leased to Kerrow represent a substantial portion of our total consolidated assets, and these investments
are relatively illiquid. As a result, our ability to sell one or more of our properties or other investments in real estate we may make in response to any changes in
economic or other conditions may be limited. 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.
15
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. The
existence of these provisions in our leases with Darden, which survive for the full term of the relevant lease, could adversely impact our ability to sell any of the
properties and could adversely impact our ability to obtain the highest possible price for any of the properties. If we seek to sell any of our properties, we would
not be able to offer the properties to potential purchasers through a competitive bid process or in a similar manner designed to maximize the value obtained
without first offering to sell to Darden and we would be restricted in the potential purchasers who could buy the properties, which may adversely impact our
ability to sell any of the properties in a timely manner, or at all, or adversely impact the price we can obtain from such sale.
We may be subject to liabilities and costs associated with the impacts of climate change.
The potential physical impacts of climate change on our properties or operations are highly uncertain and would be particular to the geographic
circumstances in areas in which we operate, including Florida, Georgia and Texas. Such impacts may result from increased frequency of natural disasters,
changes in rainfall and storm patterns and intensities, water shortages, changing sea levels, rising energy and environmental costs, and changing temperatures.
These impacts may adversely impact our business, results of operations and financial condition, including our or our tenants’ ability to obtain property insurance
on acceptable terms.
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, laws
and regulations targeting climate change could result in stricter energy efficiency standards and increased capital expenditures in order to comply with such
regulations, as well as increased operating costs that we may not be able to pass on to our 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.
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.
All of our properties are required to comply with Title III of the Americans with Disabilities Act, or the ADA. While the tenants to whom we lease
properties are obligated by law to comply with the ADA provisions, under the law we are also legally responsible for our properties’ ADA compliance. State and
local laws may also require modifications to our properties related to access by disabled persons. In addition, we are required to operate our properties in
compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and
become applicable to our properties. If required changes involve greater expenditures than anticipated, or if the changes must be made on a more accelerated
basis than anticipated, the ability of our tenants to cover costs could be adversely affected and we could be required to expend our own funds to comply with
those requirements, which could have a material adverse effect on our cash flow and ability to make distributions to our security holders. 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.
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. Managing and operating the Kerrow Restaurant Operating Business requires us to
employ significantly more people than a REIT that does not operate a business of such type and scale. In addition, managing and operating an active restaurant
business exposes us to potential liabilities associated with the operation of restaurants. Such potential liabilities are not typically associated with REITs and
include potential liabilities for wage and hour violations, guest discrimination, food safety issues including poor food quality, food-borne illness, food tampering,
food contamination, workplace injury, cyber-attacks, and violation of “dram shop” laws (providing an injured party with recourse against an establishment that
serves alcoholic beverages to an intoxicated party who then causes injury to himself or a third party). In the event that one or more of the potential liabilities
associated with managing and operating an active restaurant business materializes, such liabilities could damage the reputation of the Kerrow Restaurant
Operating Business as well as the reputation of FCPT, and could adversely affect our financial position and results of operations, possibly to a material degree.
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.
Security breaches, cyber-attacks, or disruption, of our physical or information technology infrastructure, networks and related management systems could
result in, among other things, a breach of our networks and information technology infrastructure, the misappropriation of our or our tenants’ proprietary or
confidential information, interruptions or malfunctions in our or our tenants’ operations, delays or interruptions to our ability to meet tenant needs, breach of our
legal, regulatory or contractual obligations, inability to access or rely upon critical business records, unauthorized access to our facilities or other disruptions in
our operations. Numerous sources can cause these types of incidents, including: physical or electronic security breaches; viruses, ransomware or other malware;
16
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. Our exposure to cybersecurity threats and negative consequences of cybersecurity breaches will likely increase as
we store increasing amounts of tenant data.
The Audit and Risk Committee of our Board of Directors oversees our risk management processes related to cybersecurity. As we recognize the increasing
volume of cyber attacks, the Audit and Risk Committee meets frequently with our IT personnel and senior management to discuss recent trends in cyber risks
and our strategy to defend our IT networks, business and building systems and information against cyber attacks and intrusions. Under the oversight of the Audit
and Risk Committee, we employ commercially practical efforts to provide reasonable assurance such attacks are appropriately mitigated. We may be required to
expend significant financial resources to protect against or respond to such breaches. Techniques used to breach security change frequently, and are generally
not recognized until launched against a target, so we may not be able to promptly detect that a security breach or unauthorized access has occurred. 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. As we provide assurances to our tenants that we provide a high level of security, if an actual or perceived security breach
occurs, the market’s perception of our security measures could be harmed and we could lose current and potential tenants, and such a breach could be harmful to
our brand and reputation. Any breaches that may occur could expose us to increased risk of lawsuits, material monetary damages, potential violations of
applicable privacy and other laws, penalties and fines, harm to our reputation and increases in our security and insurance costs, which could have a material
adverse effect on our business, financial condition and results of operations. In the event of a breach resulting in loss of data, such as personally identifiable
information or other such data protected by data privacy or other laws, we may be liable for damages, fines and penalties for such losses under applicable
regulatory frameworks despite not handling the data. We cannot guarantee that any backup systems, regular data backups, security protocols, network protection
mechanisms and other procedures currently in place, or that may be in place in the future, will be adequate to prevent network and service interruption, system
failure, damage to one or more of our systems or data loss in the event of a security breach or attack. Further, while we carry cyber liability insurance, such
insurance may not be adequate to cover all losses related to such events.
In addition, the regulatory framework around data custody, data privacy and breaches varies by jurisdiction and is an evolving area of law with increasingly
complex and rigorous regulatory standards enacted to protect business and personal data in the United States. We may not be able to limit our liability or
damages in the event of such a loss. Data protection legislation is becoming increasingly common in the United States at both the federal and state level and may
require us to further modify our data processing practices and policies. For example, the California Consumer Privacy Act of 2018, which took effect on January
1, 2020, provides California residents with increased privacy rights and protections with respect to their personal information. Compliance with existing,
proposed and recently enacted laws and regulations can be costly; any failure to comply with these regulatory standards could subject us to legal and
reputational risks. Misuse of or failure to secure personal information could also result in violation of data privacy laws and regulations, proceedings against the
Company by governmental entities or others, fines and penalties, damage to our reputation and credibility and could have a negative impact on our business and
results of operations.
Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could materially and
adversely affect our business and the market price of our common stock.
Under the Sarbanes-Oxley Act, we must maintain effective disclosure controls and procedures and internal control over financial reporting, which requires
significant resources and management oversight. Internal control over financial reporting is complex and may be revised over time to adapt to changes in our
business, or changes in applicable accounting rules. We cannot assure you that our internal control over financial reporting will be effective in the future or that
a material weakness will not be discovered with respect to a prior period for which we had previously believed that internal controls were effective. Matters
impacting our internal controls may cause us to be unable to report our financial data on a timely basis, or may cause us to restate previously issued financial
data, and thereby subject us to adverse regulatory consequences, including sanctions or investigations by the SEC, or violations of applicable stock exchange
listing rules. There could also be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial
statements. Confidence in the reliability of our financial statements is also likely to suffer if we or our independent registered public accounting firm reports a
material weakness in our internal control over financial reporting. This could materially adversely affect us by, for example, leading to a decline in the market
price for our common stock and impairing our ability to raise capital.
If our reputation or our tenants’ reputation are damaged, our business and operating results may be harmed.
Our reputation and our tenants’ reputations are important to our business. Our reputation affects our ability to access capital, acquire additional properties
and recruit and retain talented employees. Our tenants’ reputations affect their ability to continue to operate profitably and make payments under their lease
agreements with us on time. There are numerous ways our reputation or our tenants’ reputation could be damaged. These include unethical behavior or
misconduct, workplace safety incidents, environmental impact, corporate governance issues, data breaches or human rights records. We or our tenants may
experience backlash from customers, government entities, advocacy groups, employees, and other stakeholders that disagree with our operating decisions or
public policy positions. The proliferation of social media may increase the likelihood, speed, and magnitude of negative events. 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.
17
Third-party expectations relating to environmental, social and governance factors may impose additional costs and expose us to new risks.
There is an increasing focus from certain investors and other stakeholders concerning corporate responsibility, specifically related to environmental, social
and governance factors. Some investors may use these factors to guide their investment strategies and, in some cases, may choose not to invest in our securities
if they believe our policies relating to corporate responsibility are inadequate. Third-party providers of corporate responsibility ratings and reports on companies
have increased in number, resulting in varied and in some cases inconsistent standards. In addition, the criteria by which companies’ corporate responsibility
practices are assessed are evolving, which could result in greater expectations of us and cause us to undertake costly initiatives to satisfy such new criteria.
Alternatively, if we elect not to or are unable to satisfy such new criteria or do not meet the criteria of a specific third-party provider, some investors may
conclude that our policies with respect to corporate responsibility are inadequate. We may face reputational damage in the event that our corporate responsibility
procedures or standards do not meet the standards set by various constituencies. Furthermore, if our competitors’ corporate responsibility performance is
perceived to be greater than ours, potential or current investors may elect to invest with our competitors instead. In addition, in the event that we communicate
certain initiatives and goals regarding environmental, social and governance matters, we could fail, or be perceived to fail, in our achievement of such initiatives
or goals, or we could be criticized for the scope of such initiatives or goals. If we fail to satisfy the expectations of investors, tenants and other stakeholders or
our initiatives are not executed as planned, our reputation and financial results could be adversely affected.
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.
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). 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. 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. In
addition, we have issued $625 million of senior unsecured fixed rate notes (the “Notes”). 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 may incur additional indebtedness in the
future to refinance our existing indebtedness, to finance newly-acquired assets or for other purposes. Our governing documents do not contain any limitations on
the amount of debt we may incur and we do not have a formal policy limiting the amount of debt we may incur in the future. Subject to the restrictions, if any,
set forth in our debt agreements, our Board of Directors may establish and change our leverage policy at any time without stockholder approval. Any significant
additional indebtedness could require a substantial portion of our cash flow to make interest and principal payments due on our indebtedness. Greater demands
on our cash resources may reduce funds available to us to pay dividends, make capital expenditures and acquisitions, or carry out other aspects of our business
strategy. Increased indebtedness can also limit our ability to adjust rapidly to changing market conditions, make us more vulnerable to general adverse economic
and industry conditions and create competitive disadvantages for us compared to other companies with relatively lower debt levels. 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.
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. A worsening of credit market conditions,
including rising interest rates, could materially and adversely affect our ability to obtain financing on favorable terms, if at all.
We also may be unable to obtain additional financing or financing on favorable terms or our operating cash flow may be insufficient to satisfy our financial
obligations under our indebtedness outstanding from time to time. Among other things, although we received an investment grade credit rating of BBB from
Fitch Ratings in March 2022 and an investment grade credit rating of Baa3 from Moody’s Investor Service in May 2022, any credit rating downgrade could
increase our financing costs and could limit our access to financing sources. 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.
18
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 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.
In addition, we are required to comply with the following financial covenants: (1) total indebtedness to consolidated capitalization value not to exceed
60%; (2) mortgage-secured leverage ratio not to exceed 40%; (3) minimum fixed charge coverage ratio of 1.50 to 1.00; (4) maximum unencumbered leverage
ratio not to exceed 60%; and (5) minimum unencumbered interest coverage ratio of 1.75 to 1.00. As of December 31, 2024, we are in compliance with our
existing financial covenants.
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. Breaches of certain covenants may result in defaults and cross-defaults under certain of our
other indebtedness, even if we satisfy our payment obligations to the respective obligee.
Covenants that limit our operational flexibility, as well as covenant breaches or defaults under our debt instruments, could materially and adversely affect
our business, financial position or results of operations, or our ability to incur additional indebtedness or refinance existing indebtedness.
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, 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. 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. Interest rates are highly sensitive to many factors that are beyond our
control, including general economic conditions and policies of various governmental and regulatory agencies and, in particular, the Federal Reserve Board. If the
Federal Reserve Board increases the federal funds rate, overall interest rates will likely rise. 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. Rising interest rates could limit our ability to refinance existing debt when it matures or cause us to pay
higher interest rates upon refinancing. In addition, an increase in interest rates could decrease the access third parties have to credit, thereby decreasing the
amount they are willing to pay to lease our assets and consequently limiting our ability to reposition our portfolio promptly in response to changes in economic
or other conditions. 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. In addition, decreases in interest rates may lead to additional competition for the acquisition of real estate
due to a reduction in desirable alternative income-producing investments. Increased competition for the acquisition of real estate may lead to a decrease in the
yields on real estate we have targeted for acquisition. In such circumstances, if we are not able to offset the decrease in yields by obtaining lower interest costs
on our borrowings, our results of operations will be adversely affected.
Hedging transactions could have a negative effect on our results of operations.
We have entered into hedging transactions with respect to interest rate exposure on our term loan and we may enter into other hedging transactions, with
respect to one or more of our assets or other liabilities. The use of hedging transactions involves certain risks, including: (1) the possibility that the market will
move in a manner or direction that would have resulted in a gain for us had a hedging transaction not been used, in which case our performance would have been
better had we not engaged in the hedging transaction; (2) the risk of an imperfect correlation between the risk sought to be hedged and the hedging transaction
used; (3) the potential illiquidity for the hedging instrument used, which may make it difficult for us to close out or unwind a hedging transaction; (4) the
possibility that our counterparty fails to honor its obligations; and (5) the possibility that we may have to post collateral to enter into hedging transactions, which
we may lose if we are unable to honor our obligations. Our election to be subject to tax as a REIT also limits our income sources, and the hedging strategies
available to us are more limited than those available to companies that are not REITs.
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.
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
19
be subject to tax and qualify as a REIT. Additionally, at least 100 persons must beneficially own our stock during at least 335 days of a taxable year (other than
the first taxable year for which we elect to be subject to tax and qualify as a REIT). Our charter, with certain exceptions, authorizes our Board of Directors to
take such actions as are necessary or advisable to preserve our qualification as a REIT. Our charter also provides that, unless exempted by the Board of
Directors, no person may own more than 9.8% in value or in number, whichever is more restrictive, of the outstanding shares of our common stock or more than
9.8% in value of the aggregate of the outstanding shares of all classes and series of our stock. The constructive ownership rules are complex and may cause
shares of stock owned directly or constructively by a group of related individuals or entities to be constructively owned by one individual or entity. These
ownership limits could delay or prevent a transaction or a change in control of us that might involve a premium price for shares of our stock or otherwise be in
the best interests of our stockholders. The acquisition of less than 9.8% of our outstanding stock by an individual or entity could cause that individual or entity to
own constructively in excess of 9.8% in value of our outstanding stock, and thus violate our charter’s ownership limit. Our charter also prohibits any person
from owning shares of our stock that would result in our being “closely held” under Section 856(h) of the Internal Revenue Code of 1986, as amended (the
“Code”) or otherwise cause us to fail to qualify as a REIT. In addition, our charter provides that (i) no person shall beneficially own shares of stock to the extent
such beneficial ownership of stock would result in us failing to qualify as a “domestically controlled qualified investment entity” within the meaning of Section
897(h) of the Code, and (ii) no person shall beneficially or constructively own shares of stock to the extent such beneficial or constructive ownership would
cause us to own, beneficially or constructively, more than a 9.9% interest (as set forth in Section 856(d)(2)(B) of the Code) in a tenant of our real property.
Subject to certain exceptions, rents received or accrued by us from a tenant 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 the tenant’s stock entitled to vote or 10% or more of the total value of all classes of the tenant’s stock. Any attempt to own or
transfer shares of our stock in violation of these restrictions may result in the transfer being automatically void. Our charter also provides that shares of our
capital stock acquired or held in excess of the ownership limit will be transferred to a trust for the benefit of a charitable beneficiary that we designate, and that
any person who acquires shares of our capital stock in violation of the ownership limit will not be entitled to any dividends on the shares or be entitled to vote
the shares or receive any proceeds from the subsequent sale of the shares in excess of the lesser of the market price on the day the shares were transferred to the
trust or the amount realized from the sale. 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. Our 9.8% ownership limitation may have the effect of
delaying, deferring or preventing a change in control, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of
our assets) that might provide a premium price for our stockholders.
Maryland law and provisions in our charter and bylaws may delay or prevent takeover attempts by third parties and therefore inhibit our stockholders from
realizing a premium on their stock.
Our charter and bylaws contain, and Maryland law contains, provisions that may deter coercive takeover practices and inadequate takeover bids and
encourage prospective acquirors to negotiate with our Board of Directors, rather than to attempt a hostile takeover. Our charter and bylaws, among other things,
(1) contain transfer and ownership restrictions on the percentage by number and value of outstanding shares of our stock that may be owned or acquired by any
stockholders; (2) permit the Board of Directors, without further action of the stockholders, to increase or decrease the authorized number of shares, issue
additional shares, classify or reclassify unissued shares, and issue and fix the terms of one or more classes or series of preferred stock, which may have rights
senior to those of the common stock; (3) establish certain advance notice procedures for stockholder proposals and director nominations; and (4) provide that
special meetings of stockholders may only be called by the company or upon written request of ten percent in voting power of our outstanding common stock.
Under Maryland law, any written consent of our stockholders must be unanimous. In addition, Maryland law allows a Maryland corporation with a class of
equity securities registered under the Exchange Act to amend its charter without stockholder approval to effect a reverse stock split at a ratio of not more than
ten shares of stock into one share of stock in any twelve-month period.
The ownership by our executive officers and directors of common stock, options or other equity awards of Darden may create, or may create the appearance
of, conflicts of interest.
As a result of his former positions with Darden, Mr. Lenehan owns common stock, including restricted stock, in both Darden and FCPT. In addition, there
is no restriction on our executive officers and directors acquiring Darden common stock in the future, and, therefore, this ownership of common stock of both
Darden and FCPT may be significant. Equity interests in Darden may create, or appear to create, conflicts of interest when any such director or executive officer
is faced with decisions that could benefit or affect the equity holders of Darden in ways that do not benefit or affect us in the same manner. 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 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.
20
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. 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.
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. 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. 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. Dividends will be authorized by our Board of Directors and declared by us based upon a number of
factors, including actual results of operations, restrictions under Maryland law or applicable debt covenants, our financial condition, our taxable income, the
annual distribution requirements under the REIT provisions of the Code, our operating expenses and other factors our directors deem relevant. 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.
Furthermore, while we are required to pay dividends in order to maintain our REIT status (as described below in the risk factor “REIT distribution
requirements could adversely affect our ability to execute our business plan”), we may elect not to maintain our REIT status, in which case we would no longer
be required to pay such dividends. Moreover, even if we do elect to maintain our REIT status, after completing various procedural steps, we may elect to comply
with the applicable distribution requirements by distributing, under certain circumstances, a portion of the required amount in the form of shares of our common
stock in lieu of cash. If we elect not to maintain our REIT status or to satisfy any required distributions in shares of common stock in lieu of cash, such action
could negatively affect our business and financial condition as well as the market price of our common stock. No assurance can be given that we will pay any
dividends on shares of our common stock in the future.
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 believe that we were organized and have operated and we intend to continue to operate in a manner that will enable us to qualify as a REIT for U.S.
federal income tax purposes commencing with our taxable year ended December 31, 2016. Qualification as a REIT involves the application of highly technical
and complex provisions of the Code, for which only limited judicial and administrative authorities exist. Even a technical or inadvertent violation could
jeopardize our REIT qualification. The determination of various factual matters and circumstances not entirely within our control may affect our ability to
qualify as a REIT. Our qualification as a REIT depends on our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other
requirements on a continuing basis. Our ability to satisfy the asset requirements depends upon our analysis of the fair market values of our assets, some of which
are not susceptible to a precise determination, and for which we do not obtain independent appraisals. Our compliance with the REIT income and asset
requirements also depends upon our ability to successfully manage the composition of our income and assets on an ongoing basis. Moreover, the proper
classification of one or more of our investments may be uncertain in some circumstances, which could affect the application of the REIT qualification
requirements. In addition, our ability to satisfy the requirements to qualify as a REIT may depend in part on the actions of third parties over which we have no
control or only limited influence. Accordingly, there can be no assurance that the Internal Revenue Service (the “IRS”) will not contend that our investments
violate the REIT requirements.
If we were to fail to qualify as a REIT in any taxable year, we would be subject to U.S. federal income tax on our taxable income at the regular corporate
rate, and distributions to stockholders would not be deductible by us in computing our taxable income. Any such corporate tax liability could be substantial and
would reduce the amount of cash available for distribution to our stockholders, which in turn could have an adverse impact on the value of, and trading prices
for, our common stock. Unless entitled to relief under certain provisions of the Code, we also would be disqualified from taxation as a REIT for the four taxable
years following the year during which we initially ceased to qualify as a REIT.
We could fail to qualify as a REIT if income we receive from Darden and other tenants is not treated as qualifying income.
Under applicable provisions of the Code, we will not be treated as a REIT unless we satisfy various requirements, including requirements relating to the
sources of our gross income. Rents received or accrued by us from Darden and other tenants will not be treated as qualifying rent for purposes of these
requirements if our leases are not respected as true leases for U.S. federal income tax purposes and are instead treated as service contracts, joint ventures or
other types of arrangements. If our leases are not respected as true leases for U.S. federal income tax purposes, we may fail to qualify as a REIT.
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
21
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. 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.
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.
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. 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). For non-corporate U.S.
stockholders in the top marginal tax bracket of 37%, the deduction for REIT dividends yields an effective U.S. federal income tax rate of 29.6% on REIT
dividends, which is higher than the 20% tax rate on qualified dividend income paid by “C” corporations. This does not adversely affect the taxation of REITs;
however, the more favorable rates applicable to regular corporate qualified dividends could cause certain non-corporate investors to perceive investments in
REITs to be relatively less attractive than investments in the stocks of non-REIT “C” corporations that pay dividends, which could adversely affect the value of
the shares of REITs, including our common stock.
REIT distribution requirements could adversely affect our ability to execute our business plan.
We generally must distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding
any net capital gains, in order for us to qualify as a REIT (assuming that certain other requirements are also satisfied). To the extent that we satisfy this
distribution requirement and qualify for taxation as a REIT but distribute less than 100% of our REIT taxable income, determined without regard to the
dividends paid deduction and including any net capital gains, we will be subject to U.S. federal corporate income tax on our undistributed net taxable income. In
addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we distribute to our stockholders in a calendar year is less than a
minimum amount specified under U.S. federal tax laws. We intend to continue to make distributions to our stockholders to comply with the REIT requirements
of the Code.
Currently our funds from operations are generated primarily by rents paid under our lease agreements. From time to time, we may generate taxable income
greater than our cash flow as a result of differences in timing between the recognition of taxable income and the actual receipt of cash or the effect of
nondeductible capital expenditures, the creation of reserves or required debt or amortization payments. Further, income must be accrued for U.S. federal income
tax purposes no later than when such income is taken into account as revenue in our financial statements, subject to certain exceptions, which could also create
mismatches between REIT taxable income and the receipt of cash attributable to such income. If we do not have other funds available in these situations, we
could be required to borrow funds on unfavorable terms, sell assets at disadvantageous prices or distribute amounts that would otherwise be invested in future
acquisitions to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distributions requirement and to avoid U.S.
federal corporate income tax and the 4% excise tax in a particular year. These alternatives could increase our costs or reduce our equity or adversely impact our
ability to raise short and long-term debt. Furthermore, the REIT distribution requirements may increase the financing needed to fund capital expenditures,
further growth and expansion initiatives. Thus, compliance with the REIT requirements may hinder our ability to grow, which could adversely affect the value
of our common stock.
Even if we qualify as a REIT, we may face other tax liabilities that reduce our cash flow.
Even if we qualify for taxation as a REIT, we may be subject to certain U.S. federal, state, and local taxes on our income and assets, including taxes on any
undistributed income and state or local income, property and transfer taxes. Moreover, if we have net income from “prohibited transactions,” that income will be
subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property held primarily for sale to customers in the ordinary course of
business. The determination as to whether a particular sale is a prohibited transaction depends on the facts and circumstances related to that sale. While we will
undertake sales of assets if those assets become inconsistent with our long-term strategic or return objectives, we do not believe that those sales should be
considered prohibited transactions, but there can be no assurance that the IRS would not contend otherwise. The need to avoid prohibited transactions could
cause us to forego or defer sales of properties that might otherwise be in our best interest to sell. 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.
Complying with the REIT requirements may cause us to forego otherwise attractive acquisition and business opportunities or liquidate otherwise attractive
investments.
To qualify as a REIT for U.S. federal income tax purposes, we must ensure that, at the end of each calendar quarter, at least 75% of the value of our assets
consists of cash, cash items, government securities and “real estate assets” (as defined in the Code). The remainder of our investments (other than government
securities, qualified real estate assets and securities issued by a TRS) generally
22
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. In addition, in general, no more than 5% of the value of our total assets (other than government securities, qualified real estate assets and securities issued
by a TRS) can consist of the securities of any one issuer, no more than 20% of the value of our total assets can be represented by securities of one or more TRSs
and no more than 25% of the value of our assets can be represented by certain debt instruments issued by “publicly offered REITs.” If we fail to comply with
these requirements at the end of any calendar quarter, we must correct the failure within thirty days after the end of the calendar quarter or qualify for certain
statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate or forego
otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders.
In addition to the asset tests set forth above, to qualify as a REIT we must continually satisfy tests concerning, among other things, the sources of our
income, the amounts we distribute to our stockholders and the ownership of our stock. We may be unable to pursue investments that would be otherwise
advantageous to us in order to satisfy the source-of-income or asset- diversification requirements for qualifying as a REIT. Thus, compliance with the REIT
requirements may hinder our ability to make certain attractive investments.
We may acquire properties or portfolios of properties through tax deferred contribution transactions, which could result in stockholder dilution and limit
our ability to sell or refinance such assets.
We have in the past and may in the future acquire properties or portfolios of properties through tax deferred contribution transactions in exchange for
partnership units in an operating partnership, which could result in stockholder dilution through the issuance of operating partnership units that, under certain
circumstances, may be exchanged for shares of our common stock. This acquisition structure may have the effect of, among other things, reducing the amount of
tax depreciation we could deduct over the tax life of the acquired properties, and may require that we agree to restrictions on our ability to dispose of, or
refinance the debt on, the acquired properties in order to protect the contributors’ ability to defer recognition of taxable gain. Similarly, we may be required to
incur or maintain debt we would otherwise not incur so we can allocate the debt to the contributors to maintain their tax bases. These restrictions could limit our
ability to sell or refinance an asset at a time, or on terms, that would be favorable absent such restrictions. See “Our tax protection agreement could limit our
ability to sell or otherwise dispose of certain properties.”
We may pay dividends on our common stock in common stock and/or cash. Our stockholders may sell shares of our common stock to pay tax on such
dividends, placing downward pressure on the market price of our common stock.
In connection with our qualification as a REIT, we are required to annually distribute to its stockholders at least 90% of our REIT taxable income,
determined without regard to the deduction for dividends paid and excluding net capital gain. Although we do not currently intend to do so, in order to satisfy
this requirement, we are permitted, subject to certain conditions and limitations, to make distributions that are in part payable in shares of our common stock.
Taxable stockholders receiving such distributions will be required to report dividend income as a result of such distribution for both the cash and stock
components of the distribution and even though we distributed no cash or only nominal amounts of cash to such shareholder.
If we make any taxable dividend payable in cash and common stock, taxable stockholders receiving such dividends will be required to include the full
amount of the dividend as ordinary income to the extent of our current and accumulated earnings and profits, as determined for U.S. federal income tax
purposes. As a result, stockholders may be required to pay income tax with respect to such dividends in excess of the cash dividends received. If a U.S.
stockholder sells shares of our stock that it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income
with respect to the dividend, depending on the market price of the stock at the time of the sale. 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. If, in any taxable dividend payable in cash and stock, a significant number of our stockholders determine to sell shares of our stock in order to pay
taxes owed on dividends, it may be viewed as economically equivalent to a dividend reduction and put downward pressure on the market price of our stock.
The ability of our Board of Directors to revoke our REIT election without stockholder approval may cause adverse consequences to our stockholders.
Our charter provides our Board of Directors with the power, under certain circumstances, to revoke or otherwise terminate our REIT election and cause us
to be taxed as a regular corporation, without the approval of our stockholders. If we cease to qualify as a REIT, we would become subject to U.S. federal income
tax on our net taxable income and we generally would no longer be required to distribute any of our net taxable income to our stockholders, which may have
adverse consequences on our total return to our stockholders.
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. 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. Also, the law relating
23
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.
Item 1C. Cybersecurity.
Cybersecurity Risk Management and Strategy
We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our
critical systems and information.
We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF). This does not
imply that we meet any particular technical standards, specifications, or requirements, only that we use the NIST CSF as a guide to help us identify, assess, and
manage cybersecurity risks relevant to our business.
Our cybersecurity risk management program is integrated into our overall enterprise risk management program, and shares common methodologies,
reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and
financial risk areas.
Key elements of our cybersecurity risk management program include but are not limited to the following:
•
risk assessments designed to help identify material cybersecurity risks to our critical systems and information;
•
a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to
cybersecurity incidents;
•
the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes;
•
cybersecurity awareness training of our employees, incident response personnel, and senior management;
•
a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and
•
a third-party risk management process for service providers and vendors based on their criticality and risk profile.
There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully
implemented, complied with or effective in protecting our systems and information.
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us,
including our operations, business strategy, results of operations, or financial condition. We face certain ongoing risks from cybersecurity risks that, if realized,
are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. 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. The Committee oversees management’s implementation of our cybersecurity risk
management program.
The Committee receives quarterly reports from management on our cybersecurity risks. In addition, management updates the Committee, as necessary,
regarding any significant cybersecurity incidents.
The Committee reports to the full Board regarding its activities, including those related to cybersecurity. The full Board also receives briefings from
management on our cyber risk management program. Board members receive presentations on cybersecurity topics from our Chief Accounting Officer.
Our management team, including our Chief Accounting Officer, is responsible for assessing and managing our material risks from cybersecurity threats.
The team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our
retained external cybersecurity consultants. Our management team’s experience includes over ten years of overseeing IT risk management and compliance, day-
to-day IT operations, and coordinating with external IT security experts. Our Chief Accounting Officer also works in tandem with an external cybersecurity
consultant that has experience in cybersecurity assessment, response, and mitigation.
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.
24
Item 2. Properties.
Please refer to “Item 1. Business.”
Item 3. Legal Proceedings.
In the ordinary course of our business, we are party to various claims and legal proceedings that management believes are routine in nature and incidental
to the operation of our business. Management believes that the outcome of these proceedings will not have a material adverse effect upon our operations,
financial condition or liquidity.
Item 4. Mine Safety Disclosures.
Not applicable.
25
PART II
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.
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)
12/29/2023
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 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. 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.
26
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 6. Reserved
27
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Statements contained in this Annual Report on Form 10-K, including the documents that are incorporated by reference, that are not historical facts are
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). Also, when Four Corners Property Trust, Inc. uses any of the words “anticipate,” “assume,”
“believe,” “estimate,” “expect,” “intend,” or similar expressions, Four Corners Property Trust, Inc. is making forward-looking statements. Although
management believes that the expectations reflected in such forward-looking statements are based upon present expectations and reasonable assumptions,
actual results could differ materially from those set forth in the forward-looking statements. Certain factors that could cause actual results or events to differ
materially from those anticipated or projected are described in the section entitled “Risk Factors”. These factors may be updated from time to time in our
periodic filings with the Securities and Exchange Commission.
Given these uncertainties, readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this Annual Report on
Form 10-K or any document incorporated herein by reference. Four Corners Property Trust, Inc. undertakes no obligation to publicly release any revisions to
these forward-looking statements that may be made to reflect events or circumstances after the date of this Annual Report on Form 10-K. Any references to
“FCPT,” “the Company,” “we,” “us,” or “our” refer to Four Corners Property Trust, Inc. as an independent, publicly traded, self-administered company.
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. Substantially all of our business is conducted through Four Corners Operating Partnership, LP (“FCPT OP”), a Delaware limited partnership of which
we are a majority limited partner and our wholly owned subsidiary, Four Corners GP, LLC (“FCPT GP”), is its sole general partner. 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.
Our revenues are primarily generated by leasing properties to tenants through net lease arrangements under which the tenants are primarily responsible for
ongoing costs relating to the properties, including utilities, property taxes, insurance, common area maintenance charges, and maintenance and repair costs. We
focus on income producing properties leased to high quality tenants in major markets across the United States. We also generate revenues by operating seven
LongHorn Steakhouse restaurants located in the San Antonio, Texas area (the “Kerrow Restaurant Operating Business”) pursuant to franchise agreements with
Darden.
In addition to managing our existing properties, our strategy includes investing in additional restaurant and retail properties to grow and diversify our
existing portfolio. We expect this acquisition strategy will decrease our reliance on Darden 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 seek to
improve the probability of successful tenant renewal at the end of initial lease terms by acquiring properties that have high levels of operator profitability
compared to rent payments and have absolute rent levels that generally reflect market rates.
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 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.
28
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 following discussion includes the
results of our continuing operations as summarized in the table below.
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. Our real estate operations generate rental income from leases primarily with
restaurant brands, which we recognize on a straight-line basis to include the effect of base rent escalators. Our restaurant operations generate restaurant revenue
from operating seven LongHorn Steakhouse restaurants.
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. 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.
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. 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.
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.
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 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.
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. 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.
29
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. 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, 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.
Interest expense increased by approximately $4.6 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. 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.
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 $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. 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. 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.
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.
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.
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.
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. On an ongoing basis, management evaluates its estimates and assumptions; however, actual results may differ from these estimates
and assumptions, which in turn could have a material impact on our financial statements. 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. 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.
30
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. Leasehold improvements, which are reflected on our Consolidated Balance Sheets as a component of buildings, within land, buildings and
equipment, net, are amortized over the lesser of the non-cancelable lease term or the estimated useful lives of the related assets using the straight-line method.
Equipment is depreciated over estimated useful lives also using the straight-line method. Real estate development and construction costs for newly constructed
restaurants are capitalized in the period in which they are incurred. Gains and losses on the disposal of land, buildings and equipment are included in our
accompanying consolidated statements of income (“Income Statement”).
Our accounting policies regarding land, buildings and equipment, including leasehold improvements, include our judgments regarding the estimated useful
lives of these assets, the residual values to which the assets are depreciated or amortized, the determination of what constitutes a reasonably assured lease term,
and the determination as to what constitutes enhancing the value of or increasing the life of existing assets. These judgments and estimates may produce
materially different amounts of reported depreciation and amortization expense if different assumptions were used. As discussed further below, these judgments
may also impact our need to recognize an impairment charge on the carrying amount of these assets as the cash flows associated with the assets are realized, or
as our expectations of estimated future cash flows change.
Acquisition of Real Estate
The Company evaluates acquisitions to determine whether transactions should be accounted for as asset acquisitions or business combinations in
accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2017-01. The Company has determined the land,
building, site improvements, and in-places leases (if any) of assets acquired were each single assets as the building and property improvements are attached to
the land and cannot be physically removed and used separately from the land without incurring significant costs or reducing their fair value. 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. Related
transaction costs are generally capitalized and amortized over the useful lives of the acquired assets.
The Company allocates the purchase price (including acquisition and closing costs) of real estate acquisitions to land, building, and improvements based on
their relative fair values, as-if-vacant, and lease intangibles (if any). In making estimates of fair values for this purpose, the Company uses a third-party specialist
that obtains various information about each property, as well as the pre-acquisition due diligence of the Company and prior leasing activities at the site.
Lease Intangibles
Lease intangibles, if any, acquired in conjunction with the purchase of real estate represent the value of in-place leases and above- or below-market leases.
For real estate acquired subject to existing lease agreements, acquired lease intangibles are valued based on the Company’s estimates of costs related to tenant
acquisition and the asset carrying costs, including lost revenue, that would be incurred during the time it would take to locate a tenant if the property were
vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. Above-market and below-market lease
intangibles are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to the leases at the time of acquisition
of the real estate and the Company’s estimate of current market lease rates for the property, measured over a period equal to the remaining initial term of the
lease.
In-place lease intangibles are amortized on a straight-line basis over the remaining initial term of the related lease and included in depreciation and
amortization expense. Above-market lease intangibles are amortized over the remaining initial terms of the respective leases as a decrease in rental revenue.
Below-market lease intangibles are generally amortized as an increase to rental revenue over the remaining initial term of the respective leases, but may be
amortized over the renewal periods if the Company believes it is likely the tenant will exercise the renewal option. Should a lease terminate early, the
unamortized portion of any related lease intangible is immediately recognized as an impairment loss included in depreciation and amortization expense. To date,
the Company has not had significant early terminations.
Impairment of Long-Lived Assets
Land, buildings and equipment and certain other assets, including definite-lived intangible assets, are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. Such events and changes may include macroeconomic conditions which
may result in property operational disruption and indicate that the carrying amount may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of the assets to the future undiscounted net cash flows expected to be generated by the assets. Identifiable cash
flows are measured at the lowest level for which they are largely independent of the cash flows of other groups of assets and liabilities, generally at the
restaurant level. 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.
31
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. As we assess the ongoing
expected cash flows and carrying amounts of our long-lived assets, significant adverse changes in these factors could cause us to realize a material impairment
loss.
Exit or disposal activities include the cost of disposing of the assets and are generally expensed as incurred. Upon disposal of the assets, any gain or loss is
recorded in the same caption within our Consolidated Income Statements as the original impairment. Provisions for impairment are included in depreciation and
amortization expense in the accompanying Consolidated Income Statements.
Rental Revenue
For those net leases that provide for periodic and determinable increases in base rent, base rental revenue is recognized on a straight-line basis over the
applicable lease term when collectability is reasonably assured. 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. 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.
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. If our evaluation of these
factors indicates it is not probable that we will be able to recover substantially all of the receivable, we derecognize the deferred rent receivable asset and record
that amount as a reduction in rental revenue. If we determine the lease receivable will not be collected due to a credit concern, we reduce the recorded revenue
for the period and related accounts receivable.
For those leases that provide for periodic increases in base rent only if certain revenue parameters or other substantive contingencies are met, the increased
rental revenue is recognized as the related parameters or contingencies are met, rather than on a straight-line basis over the applicable lease term. Costs paid by
the Company and reimbursed by the lessees are included in variable lease payments and presented on a gross basis within rental revenue. Sales taxes collected
from lessees and remitted to governmental authorities are presented on a net basis within rental revenue.
New Accounting Standards
A discussion of new accounting standards and the possible effects of these standards on our Consolidated Financial Statements is included in Note 2 of our
consolidated financial statements, included in Part II, Item 8 of this Annual Report on Form 10-K.
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. 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. 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.
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. 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.
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.
32
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. 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”). 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. 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. 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.
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. 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. 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 $450 million, subject to certain conditions, including one or more new or existing lenders agreeing to provide commitments for such increased
amount.
We have entered into the following interest rate swaps to hedge the interest rate variability associated with the Loan Agreement as of December 31, 2024.
These hedging agreements were entered into to mitigate the interest rate risk inherent in FCPT OP’s variable rate debt and not for trading purposes. These swaps
are accounted for as cash flow hedges with all interest income and expense recorded as a component of net income and other valuation changes recorded as a
component of other comprehensive income. The following table presents the swaps held as of December 31, 2024.
Product
Notional Amount
($ 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
25,000
4/9/2024
4/9/2029
4.04%
Swap
30,000
4/9/2024
4/9/2029
3.91%
Swap
30,000
4/9/2024
4/9/2029
3.88%
Swap
25,000
11/9/2024
11/9/2029
3.97%
Swap
25,000
1/31/2025
1/31/2030
3.81%
Swap
25,000
1/31/2025
1/31/2030
3.80%
Swap
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. 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. 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. 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. The cash flow hedges had a total notional value of $50 million and were entered into in June 2024 and August 2024
(1)
(1)
(1)
(1)
(1)
(1)
(1)
33
to hedge the interest rate on a future offering or term loan. 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.
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. We expect to fund our operating expenses and other short-term liquidity requirements, capital expenditures, payment of principal
and interest on our outstanding indebtedness, property improvements, re-leasing costs and cash distributions to common shareholders, primarily through cash
provided by operating activities. We expect to fund acquisitions, investments, and other capital expenditures, from borrowings under our $250 million revolving
credit facility and equity securities. At times the Company may evaluate opportunities to sell certain assets and redeploy the capital into new properties.
We have an effective shelf registration statement on file with the SEC under which we may issue equity financing through the instruments and on the terms
most attractive to us at such time. 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. 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 $404.8 million through September 17, 2024. In connection with the Company’s ATM program, the
Company may enter into forward sale agreements with certain financial institutions acting as forward purchasers whereby, at the Company's discretion, the
forward purchasers may borrow and sell shares of common stock. The use of forward sale agreements allows the Company to lock in a share price on the sale of
shares of common stock at the time the respective forward sale agreements are executed but defer settling the forward sale agreements and receiving the
proceeds from the sale of shares until a later date.
We currently expect to fully physically settle any future forward sale agreement with the relevant forward purchaser on one or more dates specified by us
on or prior to the maturity date of such forward sale agreement, in which case we expect to receive aggregate net cash proceeds at settlement equal to the number
of shares specified in such forward sale agreement multiplied by the relevant forward price per share. However, subject to certain exceptions, we may also elect,
in our sole discretion, to cash settle or net share settle all or any portion of our obligations under any forward sale agreement, in which case we may not receive
any proceeds (in the case of cash settlement) or will not receive any proceeds (in the case of net share settlement), and we may owe cash (in the case of cash
settlement) or shares of our common stock (in the case of net share settlement) to the relevant forward purchaser.
34
During 2024, the Company had the following activity under its ATM programs, the net proceeds of which were employed to fund acquisitions and for
general corporate purposes.
December 31, 2024
Shares
Gross Wtd Avg
Sales Price
Net Wtd Avg
Sales Price
Net Proceeds
($ 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.
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. We
plan to meet our long-term capital needs by issuing debt or equity securities or by obtaining asset level financing, subject to market conditions. In addition, we
may issue common stock to permanently finance properties that were financed on an intermediate basis by our revolving credit facility or other indebtedness. In
the future, we may also acquire properties by issuing partnership interests of FCPT OP in exchange for property owned by third parties. Our common
partnership interests would be redeemable for cash or shares of our common stock, at FCPT’s election.
We continually evaluate alternative financing and believe that we can obtain financing on reasonable terms. However, we cannot be assured that we will
have access to the capital markets at times and at terms that are acceptable to us. We expect that our primary uses of capital will be for property and other asset
acquisitions and the funding of tenant improvements and other capital expenditures, and debt refinancing.
Because the properties in our portfolio are generally leased to tenants under net leases, where the tenant is responsible for property operating costs and
expenses, our exposure to rising property operating costs due to inflation is mitigated. 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.
Supplemental Financial Measures
The following table presents a reconciliation of GAAP net income to Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”).
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
(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
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.
(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
(1)
(1)
(2)
35
therefore may not be comparable. The non-GAAP measures should not be considered an alternative to net income as an indicator of our performance and should
be considered only a supplement to net income, and to cash flows from operating, investing or financing activities as a measure of profitability and/or liquidity,
computed in accordance with U.S. GAAP.
FFO is a supplemental measure of our performance which should be considered along with, but not as an alternative to, net income and cash provided by
operating activities as a measure of operating performance and liquidity. We calculate FFO in accordance with the standards established by the NAREIT. FFO
represents net income (loss) computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of property and undepreciated land and
impairment write-downs of depreciable real estate, plus real estate related depreciation and amortization (excluding amortization of deferred financing costs) and
after adjustments for unconsolidated partnerships and joint ventures. We also omit the tax impact of non-FFO producing activities from FFO determined in
accordance with the NAREIT definition.
Our management uses FFO as a supplemental performance measure because, in excluding real estate related depreciation and amortization and gains and
losses from property dispositions, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and
operating costs. We offer this measure because we recognize that FFO will be used by investors as a basis to compare our operating performance with that of
other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use
or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our
properties, all of which have real economic effect and could materially impact our financial condition and results from operations, the utility of FFO as a
measure of our performance is limited. 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. Investors in our securities should not rely on these measures as a substitute
for any U.S. GAAP measure, including net income.
Adjusted Funds from Operations is a non-U.S. GAAP measure that is used as a supplemental operating measure specifically for comparing year-over-year
ability to fund dividend distribution from operating activities. AFFO is used by us as a basis to address our ability to fund our dividend payments. We calculate
AFFO by adding to or subtracting from FFO:
1.
Transaction costs incurred in connection with business combinations
2.
Straight-line rent revenue adjustment
3.
Stock-based compensation expense
4.
Non-cash amortization of deferred financing costs
5.
Other non-cash interest expense (income)
6.
Non-real estate investment depreciation
7.
Merger, restructuring and other related costs
8.
Impairment charges
9.
Other non-cash revenue adjustments, including amortization of above and below market leases and lease incentives
10.
Amortization of capitalized leasing costs
11.
Debt extinguishment gains and losses
12.
Non-cash expense (income) adjustments related to deferred tax benefits
AFFO is not intended to represent cash flow from operations for the period, and is only intended to provide an additional measure of performance by
adjusting the effect of certain items noted above included in FFO. 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.
36
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to financial market risks, especially interest rate risk. Interest rates are highly sensitive to many factors, including governmental
monetary policies, domestic and global economic and political conditions, and other factors which are beyond our control. Our operating results will
depend heavily on the difference between the revenue from our assets and the interest expense incurred on our borrowings. We may incur additional
variable rate debt in the future, including amounts that we may borrow under our revolving credit facility. We consider certain risks associated with the
use of variable rate debt, including those described under “Item 1A. Risk Factors - Risks Related to Our Business - An increase in market interest rates
could increase our interest costs on existing and future debt and could adversely affect our stock price, and a decrease in market interest rates could lead to
additional competition for the acquisition of real estate, which could adversely affect our results of operations.” The objective of our interest rate risk
management policy is to match fund fixed-rate assets with fixed-rate liabilities and variable-rate assets with variable-rate liabilities. 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 $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. We intend to continue our practice of employing interest rate derivative
contracts, such as interest rate swaps and futures, to reduce our exposure, on specific transactions or on a portfolio basis, to changes in cash flows as a
result of interest rate changes. We do not intend to enter into derivative contracts for speculative or trading purposes. We generally intend to utilize
derivative instruments to hedge interest rate risk on our liabilities and not use derivatives for other purposes, such as hedging asset-related risks. We
consider certain risks associated with the use of derivative instruments, including those described under “Item 1A. Risk 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.
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.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We have established and maintain disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Exchange Act, that are designed
to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and
communicated to management, including our principal executive and principal financial officers as appropriate, to allow timely decisions regarding required
disclosure.
Our management, with participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls
and procedures as of December 31, 2024. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure
controls and procedures were effective at the reasonable assurance level as of December 31, 2024.
Management Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system is designed
to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements. All
internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and presentation.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In making this assessment, it used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) in Internal Control-Integrated Framework.
Based on its assessment and those criteria, our management concluded that, as of December 31, 2024 our internal control over financial reporting is effective.
37
KPMG LLP, an independent registered public accounting firm, has audited the consolidated financial statements included in this annual report on Form 10-
K and, as part of their audit, has issued a report, included herein, on the effectiveness of the Company's internal control over financial reporting.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the
three months ended December 31, 2024 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial
reporting.
Item 9B. Other Information.
During the fiscal quarter ended December 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or a
“non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408 of Regulation S-K).
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
38
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The information required by Item 10 is incorporated herein by reference to the definitive Proxy Statement to be filed with the SEC pursuant to Regulation
14A within 120 days after the end of the fiscal year covered by this Annual Report on Form 10- K.
We have, and have since inception, adopted insider trading policies and procedures governing the purchase, sale, and other dispositions of securities of
FCPT by directors, officers, and employees that we believe are reasonably designed to promote compliance with insider trading laws, rules and regulations, and
applicable NYSE listing standards. Our insider trading policy states, among other things, that our directors, officers, and employees are prohibited from trading
in such securities while in possession of material, nonpublic information. The foregoing summary of our insider trading policies and procedures does not purport
to be complete and is qualified by reference to our Insider Trading Compliance Policy filed as an exhibit to this Annual Report on Form 10-K.
Item 11. Executive Compensation.
The information required by Item 11 is incorporated herein by reference to the definitive Proxy Statement to be filed with the SEC pursuant to Regulation
14A within 120 days after the end of the fiscal year covered by this Annual Report on Form 10- K.
Item 12. Security Ownership of Certain Owners and Management and Related Stockholder Matters.
The information required by Item 12 is incorporated herein by reference to the definitive Proxy Statement to be filed with the SEC pursuant to Regulation
14A within 120 days after the end of the fiscal year covered by this Annual Report on Form 10- K.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by Item 13 is incorporated herein by reference to the definitive Proxy Statement to be filed with the SEC pursuant to Regulation
14A within 120 days after the end of the fiscal year covered by this Annual Report on Form 10- K.
Item 14. Principal Accounting Fees and Services.
The information required by Item 14 is incorporated herein by reference to the definitive Proxy Statement to be filed with the SEC pursuant to Regulation
14A within 120 days after the end of the fiscal year covered by this Annual Report on Form 10- K.
39
PART IV
Item 15. Exhibits, Financial Statement Schedules.
(a)
For Financial Statements, see Index to Financial Statements on page F-1.
(b)
For Exhibits, see Index to Exhibits on page E-1.
Item 16. Form 10-K Summary.
None.
F-1
FOUR CORNERS PROPERTY TRUST, INC.
INDEX TO FINANCIAL STATEMENTS
Audited Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm (Auditor Firm ID: 185)
F-2
Consolidated Balance Sheets as of December 31, 2024 and 2023
F-5
Consolidated Statements of Income for the Years Ended December 31, 2024, 2023, and 2022
F-6
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2024, 2023, and 2022
F-7
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2024, 2023, and 2022
F-8
Consolidated Statements of Cash Flows for the Years Ended December 31, 2024, 2023, and 2022
F-9
Notes to Consolidated Financial Statements
F-10
F-2
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Four Corners Property Trust, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Four Corners Property Trust, Inc. and subsidiaries (the Company) as of December 31, 2024
and 2023, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period
ended December 31, 2024, and the related notes and financial statement schedule III - schedule of real estate assets and accumulated depreciation (collectively,
the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the
Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December
31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal
control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 13, 2025 expressed an unqualified opinion on the
effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing
procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or
required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and
(2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on
the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.
Assessment of impairment of long-lived assets
As discussed in Note 2 to the consolidated financial statements, the Company is required to test their long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The Company’s long-lived assets primarily
consist of its real estate investment and the related intangible real estate assets, net of accumulated depreciation and amortization, which had a balance
of $2.5 billion as of December 31, 2024.
We identified the assessment of events or changes in circumstances that indicate the carrying amount of long-lived assets may not be recoverable as a
critical audit matter. Specifically, a higher degree of auditor judgment was required in identifying and evaluating the estimated hold period over
which the Company expects to own the long-lived assets. Significant changes in the estimated hold period over which the Company expects to own
the long-lived asset could indicate that the carrying amount of long- lived assets may not be recoverable.
F-3
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating
effectiveness of an internal control over the Company’s impairment process, which included the identification and evaluation of the period over
which the Company expects to own long-lived assets. We obtained written representations from management regarding the status of potential plans to
dispose of long-lived assets. We also read board of directors meeting minutes, inspected other internal documentation such as strategic plans and
property marketing information, and inquired of members of management involved in the identification and approval of long- lived asset sales to
assess the estimated hold period the Company expects to own the long-lived assets.
/s/ KPMG LLP
We have served as the Company’s auditor since 2015.
San Francisco, California
February 13, 2025
F-4
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Four Corners Property Trust, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Four Corners Property Trust, Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2024, based on
criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In
our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance
sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in equity, and cash
flows for each of the years in the three-year period ended December 31, 2024, and the related notes and financial statement schedule III - schedule of real estate
assets and accumulated depreciation (collectively, the consolidated financial statements), and our report dated February 13, 2025 expressed an unqualified
opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying Management Report on Internal Control Over Financial Reporting. Our responsibility is
to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
/s/ KPMG LLP
San Francisco, California
February 13, 2025
F-5
FOUR CORNERS PROPERTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
December 31,
2024
2023
ASSETS
Real estate investments:
Land
$
1,360,772 $
1,240,865
Buildings, equipment and improvements
1,837,872
1,708,556
Total real estate investments
3,198,644
2,949,421
Less: Accumulated depreciation
(775,505 )
(738,946 )
Real estate investments, net
2,423,139
2,210,475
Intangible real estate assets, net
123,613
118,027
Total real estate investments and intangible real estate assets, net
2,546,752
2,328,502
Cash and cash equivalents
4,081
16,322
Straight-line rent adjustment
68,562
64,752
Derivative assets
20,733
20,952
Deferred tax assets
1,448
1,248
Other assets
11,450
19,858
Total Assets
$
2,653,026 $
2,451,634
LIABILITIES AND EQUITY
Liabilities:
Term loan and revolving credit facility, net of deferred financing costs
$
516,250 $
441,745
Senior unsecured notes, net of deferred financing costs
621,639
670,944
Dividends payable
35,358
31,539
Rent received in advance
6,738
14,309
Derivative liabilities
473
2,968
Other liabilities
21,778
30,266
Total liabilities
1,202,236
1,191,771
Equity:
Preferred stock, par value $0.0001 per share, 25,000,000 authorized, zero shares issued and outstanding. $
— $
—
Common stock, par value $0.0001 per share; 500,000,000 shares authorized, 99,825,119 and
91,617,477 shares issued and outstanding, respectively
10
9
Additional paid-in capital
1,482,698
1,261,940
Accumulated deficit
(57,729 )
(26,276 )
Accumulated other comprehensive income
23,633
21,977
Noncontrolling interest
2,178
2,213
Total equity
1,450,790
1,259,863
Total Liabilities and Equity
$
2,653,026 $
2,451,634
The accompanying notes are an integral part of this financial statement.
F-6
FOUR CORNERS PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
Year Ended December 31,
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 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
Basic net income per share:
$
1.07 $
1.08 $
1.20
Diluted net income per share:
$
1.07 $
1.07 $
1.20
Weighted average number of common shares outstanding:
Basic
93,643,129
88,526,343
81,590,124
Diluted
94,064,498
88,747,028
81,807,065
Dividends declared per common share
$
1.3900 $
1.3650 $
1.3375
The accompanying notes are an integral part of this financial statement.
F-7
FOUR CORNERS PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Year Ended December 31,
2024
2023
2022
Net income
$
100,595
$
95,462
$
97,908
Other comprehensive income (loss):
Effective portion of change in fair value of derivative instruments
14,306
1,795
39,396
Reclassification adjustment of derivative instruments included in net income
(12,648 )
(10,773 )
1,430
Other comprehensive income (loss)
1,658
(8,978 )
40,826
Comprehensive income
102,253
86,484
138,734
Less: comprehensive income attributable to noncontrolling interest
Net income attributable to noncontrolling interest
122
122
136
Other comprehensive income (loss) attributable to noncontrolling interest
2
(11 )
58
Comprehensive income attributable to noncontrolling interest
124
111
194
Comprehensive Income Attributable to Common Shareholders
$
102,129 $
86,373 $
138,540
The accompanying notes are an integral part of this financial statement.
F-8
FOUR CORNERS PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands, except share data)
Common Stock
Additional
Paid-in
Retained
Accumulated
Other
Comprehensive
Noncontrolling
Shares
Amount
Capital
Earnings
Income (Loss)
Interest
Total
Balance at December 31, 2021
80,279,217 $
8 $
958,737 $
12,753 $
(9,824 ) $
2,218 $
963,892
Net income
—
—
—
97,772
—
136
97,908
Realized and unrealized gain on derivative
instruments
—
—
—
—
40,768
58
40,826
Dividends paid and declared on common stock
—
—
—
(109,949 )
—
(153 )
(110,102 )
ATM proceeds, net of issuance costs
5,253,257
1
141,825
—
—
—
141,826
Stock-based compensation, net
104,819
—
3,960
—
—
—
3,960
Balance at December 31, 2022
85,637,293
9
1,104,522
576
30,944
2,259
1,138,310
Net income
—
—
—
95,340
—
122
95,462
Realized and unrealized loss on derivative
instruments
—
—
—
—
(8,967 )
(11 )
(8,978 )
Dividends paid and declared on common stock
—
—
—
(122,192 )
—
(157 )
(122,349 )
ATM proceeds, net of issuance costs
5,805,334
—
153,404
—
—
—
153,404
Stock-based compensation, net
174,850
—
4,014
—
—
—
4,014
Balance at December 31, 2023
91,617,477
9
1,261,940
(26,276 )
21,977
2,213
1,259,863
Net income
—
—
—
100,473
—
122
100,595
Realized and unrealized loss on derivative
instruments
—
—
—
—
1,656
2
1,658
Dividends paid and declared on common stock
—
—
—
(131,926 )
—
(159 )
(132,085 )
ATM proceeds, net of issuance costs
8,109,165
1
215,910
—
—
—
215,911
Stock-based compensation, net
98,477
—
4,848
—
—
—
4,848
Balance at December 31, 2024
99,825,119 $
10 $
1,482,698 $
(57,729 ) $
23,633 $
2,178 $
1,450,790
The accompanying notes are an integral part of this financial statement.
F-9
FOUR CORNERS PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
2024
2023
2022
Cash flows - operating activities
Net income
$
100,595 $
95,462 $
97,908
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization
54,514
50,731
41,471
Gain on disposal of land, building, and equipment
—
(2,341 )
(8,139 )
Non-cash revenue adjustments
2,072
2,061
2,151
Amortization of financing costs
2,597
2,311
2,104
Stock-based compensation expense
6,987
6,271
4,978
Deferred income taxes
(200 )
(259 )
(125 )
Changes in assets and liabilities:
Derivative assets and liabilities
(618 )
8,305
633
Straight-line rent adjustment
(3,810 )
(5,523 )
(6,372 )
Rent received in advance
(7,571 )
2,599
399
Intangible assets (lease incentives)
(1,624 )
(1,234 )
72
Other assets and liabilities
(8,837 )
6,722
6,920
Net cash provided by operating activities
144,105
165,105
142,000
Cash flows - investing activities
Purchases of real estate investments
(273,016 )
(341,066 )
(296,270 )
Proceeds from sale of real estate investments
—
27,765
24,986
Change in advance deposits in acquisition of real estate investments
100
508
384
Net cash used in investing activities
(272,916 )
(312,793 )
(270,900 )
Cash flows - financing activities
Net proceeds from ATM equity issuance
215,911
153,404
141,826
Proceeds from issuance of senior notes
—
100,000
125,000
Repayment of senior notes
(50,000 )
—
—
Proceeds from term loan borrowing
85,000
—
30,000
Payment of deferred financing costs
(1,397 )
(1,098 )
(3,219 )
Proceeds from revolving credit facility
217,000
145,000
28,000
Repayment of revolving credit facility
(228,000 )
(129,000 )
(64,000 )
Payment of dividend to shareholders
(128,107 )
(119,717 )
(107,540 )
Distribution to non-controlling interests
(159 )
(157 )
(153 )
Redemption of non-controlling interests
—
—
—
Shares withheld for taxes upon vesting
(2,139 )
(2,257 )
(1,018 )
Net cash provided by financing activities
108,109
146,175
148,896
Net (decrease) increase in cash and cash equivalents, including restricted cash
(20,702 )
(1,513 )
19,996
Cash and cash equivalents, including restricted cash, beginning of year
24,783
26,296
6,300
Cash and cash equivalents, including restricted cash, ending of year
$
4,081 $
24,783 $
26,296
Supplemental disclosures:
Interest paid
$
59,148 $
49,489 $
30,696
Taxes paid
$
449 $
369 $
332
Operating lease payments received (lessor)
$
225,418 $
207,333 $
182,806
Operating lease payments remitted (lessee)
$
926 $
905 $
903
Non - cash investing and financing activities:
Dividends declared but not paid
$
35,358 $
31,539 $
29,064
Change in fair value of derivative instruments
$
2,276 $
(17,283 ) $
40,193
The accompanying notes are an integral part of this financial statement.
F-10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION
Four Corners Property Trust, Inc. (together with its subsidiaries, “FCPT”) is an independent, publicly traded, self-administered company, primarily
engaged in the ownership, acquisition and leasing of restaurant properties. Substantially all of our business is conducted through Four Corners Operating
Partnership, LP (“FCPT OP”), a Delaware limited partnership of which we are the initial and substantial limited partner. Our wholly owned subsidiary, Four
Corners GP, LLC (“FCPT GP”), is its sole general partner.
Any references to “the Company,” “we,” “us,” or “our,” refer to FCPT as an independent, publicly traded, self- administered company.
FCPT was incorporated as a Maryland corporation on July 2, 2015 as a wholly owned indirect subsidiary of Darden Restaurants, Inc., (together with its
consolidated subsidiaries “Darden”), for the purpose of owning, acquiring and leasing properties on a triple-net basis, for use in the restaurant and related food
service industries. On November 9, 2015, Darden completed a spin-off of FCPT whereby Darden contributed to us 100% of the equity interest in entities that
own 418 properties in which Darden operates restaurants, representing five of their brands, and six LongHorn Steakhouse restaurants located in the San Antonio,
Texas area (the “Kerrow Restaurant Operating Business”) along with the underlying properties or interests therein associated with the Kerrow Restaurant
Operating Business. In exchange, we issued to Darden all of our common stock and paid to Darden $315.0 million in cash. Subsequently, Darden distributed all
of our outstanding shares of common stock pro-rata to holders of Darden common stock whereby each Darden shareholder received one share of our common
stock for every three shares of Darden common stock held at the close of business on the record date, which was November 2, 2015, as well as cash in lieu of
any fractional shares of our common stock which they would have otherwise received.
We believe that we have been organized and have operated in conformity with the requirements for qualification and taxation as a real estate investment
trust (a “REIT”) for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2016, and we intend to continue to operate in a
manner that will enable us to maintain our qualification as a REIT. To qualify as a REIT, we must meet a number of organizational and operational
requirements, including a requirement that we distribute at least 90% of our adjusted taxable income to our shareholders, subject to certain adjustments and
excluding any net capital gain. As a REIT, we will not be subject to federal corporate income tax on that portion of net income that is distributed to our
shareholders. However, FCPT’s taxable REIT subsidiaries (“TRS”) will generally be subject to federal, state, and local income taxes. We made our REIT
election upon the filing of our 2016 tax return.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
The accompanying consolidated financial statements (“the Consolidated Financial Statements”) include the accounts of Four Corners Property Trust, Inc.
and its consolidated subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
The Consolidated Financial Statements reflect all adjustments which are, in the opinion of management, necessary to a fair presentation of the results for
the interim periods presented. These adjustments are considered to be of a normal, recurring nature.
Segment Reporting
The Company has two operating segments, real estate operations and restaurant operations. The Company has identified its real estate operations and
restaurant operations as separate reportable segments based on the nature of the operations and its organizational and management structure, which aligns with
how results are monitored and performance is assessed. This is consistent with how the Company’s chief operating decision maker, which is its Chief Executive
Officer, makes decisions when assessing the financial performance of the Company’s portfolio of properties and restaurant operations.
Use of Estimates
The preparation of these Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and expenses
during the reporting period. The estimates and assumptions used in the accompanying Consolidated Financial Statements are based on management’s evaluation
of the relevant facts and circumstances. Actual results may differ from the estimates and assumptions used in preparing the accompanying Consolidated
Financial Statements, and such differences could be material.
Real Estate Investments, Net
Real estate investments, net are recorded at cost less accumulated depreciation. Building components are depreciated over estimated useful lives ranging
from seven to fifty-five years using the straight-line method. Leasehold improvements, which are reflected on our Consolidated Balance Sheets as a component
of buildings, equipment, and improvements, net, are amortized over the lesser of the
F-11
non-cancelable lease term or the estimated useful lives of the related assets using the straight-line method. Equipment is depreciated over estimated useful lives
ranging from two to fifteen years also using the straight-line method. Real estate development and construction costs for newly constructed restaurants are
capitalized in the period in which they are incurred. Gains and losses on the disposal of land, buildings and equipment are included in realized gain on sale, net
in our accompanying Consolidated Statements of Income (“Income Statements”).
Our accounting policies regarding land, buildings, equipment, and improvements, include our judgments regarding the estimated useful lives of these
assets, the residual values to which the assets are depreciated or amortized, the determination of what constitutes a reasonably assured lease term, and the
determination as to what constitutes enhancing the value of or increasing the life of existing assets. These judgments and estimates may produce materially
different amounts of reported depreciation and amortization expense if different assumptions were used. As discussed further below, these judgments may also
impact our need to recognize an impairment charge on the carrying amount of these assets as the cash flows associated with the assets are realized, or as our
expectations of estimated future cash flows change.
Acquisition of Real Estate
The Company evaluates acquisitions to determine whether transactions should be accounted for as asset acquisitions or business combinations in
accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2017-01. The Company has determined the land,
building, site improvements, and in-places leases (if any) of assets acquired were each single assets as the building and property improvements are attached to
the land and cannot be physically removed and used separately from the land without incurring significant costs or reducing their fair value. 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. Related
transaction costs are generally capitalized and amortized over the useful lives of the acquired assets.
The Company allocates the purchase price (including acquisition and closing costs) of real estate acquisitions to land, building, and improvements based on
their relative fair values. The determination of the building fair value is on an ‘as-if- vacant’ basis. Value is allocated to acquired lease intangibles (if any) based
on the costs avoided and revenue recognized by acquiring the property subject to lease and avoiding an otherwise ‘dark period’. In making estimates of fair
values for this purpose, the Company uses a third-party specialist that obtains various information about each property, as well as the pre- acquisition due
diligence of the Company and prior leasing activities at the site.
Lease Intangibles
Lease intangibles, if any, acquired in conjunction with the purchase of real estate represent the value of in-place leases and above- or below-market leases.
For real estate acquired subject to existing lease agreements, acquired lease intangibles are valued based on the Company’s estimates of costs related to tenant
acquisition and the asset carrying costs, including lost revenue, that would be incurred during the time it would take to locate a tenant if the property were
vacant, considering current market conditions and costs to execute similar leases at the time of the acquisition. Above-market and below-market lease
intangibles are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to the leases at the time of acquisition
of the real estate and the Company’s estimate of current market lease rates for the property, measured over a period equal to the remaining initial term of the
lease.
In-place lease intangibles are amortized on a straight-line basis over the remaining initial term of the related lease and included in depreciation and
amortization expense. Above-market lease intangibles are amortized over the remaining initial terms of the respective leases as a decrease in rental revenue.
Below-market lease intangibles are generally amortized as an increase to rental revenue over the remaining initial term of the respective leases, but may be
amortized over the renewal periods if the Company believes it is likely the tenant will exercise the renewal option. Should a lease terminate early, the
unamortized portion of any related lease intangible is immediately recognized as an impairment loss included in depreciation and amortization expense. To date,
the Company has not had significant early terminations.
Finance ground lease assets are also included in intangible real estate assets, net on the Consolidated Balance Sheets. See Leases below for additional
information.
Impairment of Long-Lived Assets
Land, buildings and equipment and certain other assets, including definite-lived intangible assets, are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. Such events and changes may include macroeconomic conditions which
may result in property operational disruption and indicate that the carrying amount may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of the assets to the future undiscounted net cash flows expected to be generated by the assets. Identifiable cash
flows are measured at the lowest level for which they are largely independent of the cash flows of other groups of assets and liabilities, generally at the
restaurant level. 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.
F-12
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. As we assess the ongoing
expected cash flows and carrying amounts of our long-lived assets, significant adverse changes in these factors could cause us to realize a material impairment
loss.
Exit or disposal activities include the cost of disposing of the assets and are generally expensed as incurred. Upon disposal of the assets, any gain or loss is
recorded in the same caption within our Consolidated Income Statements as the original impairment. Provisions for impairment are included in depreciation and
amortization expense in the accompanying Consolidated Income Statements.
During the years ended December 31, 2024, 2023, and 2022 we did not record provisions for impairment.
Real Estate Held for Sale
Real estate is classified as held for sale when the sale is probable, will be completed within one year, purchase agreements are executed, the buyer has a
significant deposit at risk, and no financing contingencies exist which could prevent the transaction from being completed in a timely manner. Restaurant sites
and certain other assets to be disposed of are included in assets held for sale when the likelihood of disposing of these assets within one year is probable. Assets
whose disposal is not probable within one year remain in land, buildings, equipment and improvements until their disposal within one year is probable.
Disposals of assets that have a major effect on our operations and financial results or that represent a strategic shift in our operating businesses meet the
requirements to be reported as discontinued operations. Real estate held for sale is reported at the lower of carrying amount or fair value, less estimated costs to
sell. No properties were held for sale at December 31, 2024 or 2023.
Cash, Cash Equivalents, and Restricted Cash
We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents can
consist of cash and money market accounts. Restricted cash consists of 1031 exchange proceeds and is included in Other assets on our Consolidated Balance
Sheets.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash in our Consolidated Balance Sheets to the total amount shown in
our Consolidated Statements of Cash Flows.
December 31,
(In thousands)
2024
2023
2022
Cash and cash equivalents
$
4,081
$
16,322
$
26,296
Restricted cash (included in Other assets)
—
8,461
—
Total Cash, Cash Equivalents, and Restricted Cash
$
4,081
$
24,783
$
26,296
Debt
The Company’s debt consists of non-amortizing term loans, a revolving credit facility and senior, unsecured, fixed rate notes (collectively referred to as
“Debt”). Debt is carried at unpaid principal balance, net of deferred financing costs. All of our debt is currently unsecured and interest is paid monthly on our
non-amortizing term loans and revolving credit facility and semi-annually on our senior unsecured fixed rate notes.
Deferred Financing Costs
Financing costs related to debt are deferred and amortized over the remaining life of the debt using the effective interest method. These costs are presented
as a direct deduction from their related liabilities on the Consolidated Balance Sheets.
See Note 6 - Debt, Net of Deferred Financing Costs for additional information.
Derivative Instruments and Hedging Activities
We enter into derivative instruments for risk management purposes only, including derivatives designated as hedging instruments as required by FASB
ASC Topic 815, Derivatives and Hedging, and those utilized as economic hedges. Our use of derivative instruments is currently limited to interest rate hedges.
These instruments are generally structured as hedges of the variability of cash flows related to forecasted transactions (cash flow hedges). We do not enter into
derivative instruments for trading or speculative purposes, where changes in the cash flows of the derivative are not expected to offset changes in cash flows of
the hedged item. All derivatives are recognized on the balance sheet at fair value. For those derivative instruments for which we intend to elect hedge
accounting, at the time the derivative contract is entered into, we document all relationships between hedging instruments and hedged items, as well as our risk-
management objective and strategy for undertaking the various hedge transactions. This process includes linking all derivatives designated as cash flow hedges
to specific assets and liabilities on the Consolidated Balance Sheets or to specific forecasted transactions. We also formally assess, both at the hedge’s inception
and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items.
F-13
To the extent our derivatives are effective in offsetting the variability of the hedged cash flows, and otherwise meet the cash flow hedge accounting criteria
in accordance with GAAP, changes in the derivatives’ fair value are not included in current earnings but are included in accumulated other comprehensive
income (loss), net of tax. These changes in fair value will be reclassified into earnings at the time of the forecasted transaction. Ineffectiveness measured in the
hedging relationship is recorded in earnings in the period in which it occurs.
See Note 7 - Derivative Financial Instruments for additional information.
Other Assets and Liabilities
Other assets primarily consist of right of use operating lease assets, pre-acquisition costs, prepaid assets, food and beverage inventories for use by our
Kerrow operating subsidiary, escrow deposits, and accounts receivable. Other liabilities primarily consist of accrued compensation, accrued interest, accrued
operating expenses, intangible real estate liabilities, and operating lease liabilities.
See Note 8 - Supplemental detail for certain components of the Consolidated Balance Sheets
Leases
All significant lease arrangements are generally recognized at lease commencement. For leases where the Company is the lessee, operating or finance lease
right-of-use (“ROU”) assets and lease liabilities are recognized at commencement based on the present value of lease payments over the lease term. ROU assets
represent our right to use an underlying asset during the reasonably certain lease term and lease liabilities represent our obligation to make lease payments
arising from the lease. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease
expense is recognized on a straight-line basis over the lease term.
As part of certain real estate investment transactions, the Company may enter into long-term ground leases as a lessee. The Company recognizes a ground
lease (or right-of-use) asset and related lease liability for each of these ground leases. Ground lease assets and lease liabilities are recognized based on the
present value of the lease payments. The Company uses its estimated incremental borrowing rate, which is the estimated rate at which the Company could
borrow on a collateralized basis with similar payments over a similar term, in determining the present value of the lease payments.
For leases where Company is the lessor, we determine the classification upon commencement. At December 31, 2024, all such leases are classified as
operating leases. These operating leases may contain both lease and non-lease components. The Company accounts for lease and non-lease components as a
single component. The Company expenses certain initial direct costs that are not incremental in obtaining a lease.
See Note 5 - Leases for additional information.
Revenue Recognition
Rental revenue
For those net leases that provide for periodic and determinable increases in base rent, base rental revenue is recognized on a straight-line basis over the
applicable lease term when collectability is reasonably assured. 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. 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. During the years ended December 31, 2024
and 2023, the Company paid lease incentives of $1.6 million and $1.2 million, respectively, to tenants.
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. If our evaluation of these
factors indicates it is not probable that we will be able to recover substantially all of the receivable, we derecognize the deferred rent receivable asset and record
that amount as a reduction in rental revenue. If we determine the lease receivable will not be collected due to a credit concern, we reduce the recorded revenue
for the period and related accounts receivable.
For those leases that provide for periodic increases in base rent only if certain revenue parameters or other substantive contingencies are met, the increased
rental revenue is recognized as the related parameters or contingencies are met, rather than on a straight-line basis over the applicable lease term. Costs paid by
the lessor and reimbursed by the lessees are included in variable lease payments and presented on a gross basis within rental revenue. Sales taxes collected from
lessees and remitted to governmental authorities are presented on a net basis within rental revenue.
F-14
Restaurant revenue
Restaurant revenue represents food, beverage, and other products sold and is presented net of the following discounts: coupons, employee meals, and
complimentary meals. Revenue from restaurant sales, whether received in cash or by credit card, is recognized when food and beverage products are sold. At
December 31, 2024 and 2023, credit card receivables, included in other assets, totaled $239 thousand and $293 thousand, respectively. We recognize sales from
our gift cards when the gift card is redeemed by the customer. Sales taxes collected from customers and remitted to governmental authorities are presented on a
net basis within restaurant revenue on our Income Statements.
Restaurant Expenses
Restaurant expenses include restaurant labor, general and administrative expenses, and food and beverage costs. Food and beverage costs include
inventory, warehousing, related purchasing and distribution costs. Vendor allowances received in connection with the purchase of a vendor’s products are
recognized as a reduction of the related food and beverage costs as earned.
Gain on Sale, Net
The Company recognizes gain (loss) on sale, net of real estate in accordance with FASB ASU No. 2017-05, “Clarifying the Scope of Asset Derecognition
Guidance and Accounting for Partial Sales of Nonfinancial Assets.” The Company evaluates each transaction to determine if control of the asset, as well as other
specified criteria, has been transferred to the buyer to determine proper timing of revenue recognition, as well as transaction price allocation.
Earnings Per Share
Basic earnings per share (“EPS”) are computed by dividing net income allocated to common shareholders by the weighted- average number of common
shares outstanding for the reporting period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock. No effect is shown for any securities that are anti-dilutive. Net income allocated to common shareholders
represents net income less income allocated to participating securities and non-controlling interests. None of the Company’s equity awards are participating
securities.
See Note 10 - Equity for additional information.
Noncontrolling Interest
Noncontrolling interest represents the aggregate limited partnership interests in FCPT OP held by third parties. In accordance with GAAP, the
noncontrolling interest of FCPT OP is shown as a component of equity on our Consolidated Balance Sheets, and the portion of income allocable to third parties
is shown as net income attributable to noncontrolling interests in our Income Statements and consolidated statements of comprehensive income
(“Comprehensive Income Statement”). The Company follows the guidance issued by the FASB regarding the classification and measurement of redeemable
securities. At FCPT OP’s option, it may satisfy this redemption with cash or by exchanging non-registered shares of FCPT common stock on a one-for-one
basis. Accordingly, the Company has determined that the common OP units meet the requirements to be classified as permanent equity. A reconciliation of
equity attributable to noncontrolling interest is disclosed in our Consolidated Statements of Changes in Equity.
See Note 10 - Equity for additional information.
Income Taxes
We believe that we have been organized and have operated in conformity with the requirements for qualification and taxation as a REIT commencing with
our taxable year ended December 31, 2016, and we intend to continue to operate in a manner that will enable us to maintain our qualification as a REIT. So long
as we qualify as a REIT, we generally will not be subject to U.S. federal income tax on our net income. To maintain our qualification as a REIT, we are required
under the Code to distribute at least 90% of our REIT taxable income (without regard to the deduction for dividends paid and excluding net capital gains) to our
shareholders and meet certain other requirements. If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income tax on our taxable
income at regular corporate rates. Even if we qualify as a REIT, we are subject to certain state, local and franchise taxes. Under certain circumstances, U.S.
federal income and excise taxes may be due on our undistributed taxable income.
The Kerrow Restaurant Operating Business is a TRS and is taxed as a C corporation.
We provide for federal and state income taxes currently payable as well as for those deferred because of temporary differences between reporting income
and expenses for financial statement purposes versus tax purposes. Federal income tax credits are recorded as a reduction of income taxes. Deferred tax assets
and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in earnings in the period that includes the enactment date. Interest recognized on reserves for uncertain tax positions is included in interest, net in our
Consolidated Statements of Comprehensive Income. A corresponding liability for accrued interest is included as a
F-15
component of other liabilities on our Consolidated Balance Sheets. Penalties, when incurred, are recognized in general and administrative expenses.
We estimate certain components of our provision for income taxes. These estimates include, among other items, depreciation and amortization expense
allowable for tax purposes, allowable tax credits for items such as taxes paid on reported employee tip income, effective rates for state and local income taxes
and the valuation and tax deductibility of certain other items. We adjust our annual effective income tax rate as additional information on outcomes or events
becomes available.
We base our estimates on the best available information at the time that we prepare the provision. We will generally file our annual income tax returns
several months after our year end. Income tax returns are subject to audit by state and local governments, generally years after the returns are filed. These returns
could be subject to material adjustments or differing interpretations of the tax laws. The major jurisdictions in which we will file income tax returns are the U.S.
federal jurisdiction and all states in the U.S. in which we own properties that have an income tax.
U.S. GAAP requires that a position taken or expected to be taken in a tax return be recognized (or derecognized) in the financial statements when it is more
likely than not (i.e., a likelihood of more than 50 percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is
then measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. We include within our current tax
provision the balance of unrecognized tax benefits related to tax positions for which it is reasonably possible that the total amounts could change during the next
12 months based on the outcome of examinations.
See Note 9 - Income Taxes for additional information.
Stock-Based Compensation
The Company’s stock-based compensation plan provides for the grant of restricted stock awards (“RSAs”), deferred stock units (“DSUs”), performance-
based awards including performance stock units (“PSUs”), dividend equivalents (“DEUs”), restricted stock units (“RSUs”), and other types of awards to eligible
participants. DEUs are earned during the vesting period and received upon vesting of award. Upon forfeiture of an award, DEUs earned during the vesting
period are also forfeited. We classify stock-based payment awards either as equity awards or liability awards based upon cash settlement options. Equity
classified awards are measured based on the fair value on the date of grant. Liability classified awards are remeasured to fair value each reporting period. We
recognize costs resulting from the Company’s stock-based compensation awards on a straight- line basis over their vesting periods, which range between one
and five years. No compensation cost is recognized for awards for which employees do not render the requisite services.
See Note 11 - Stock-based Compensation for additional information.
Fair Value of Financial Instruments
We use a fair value approach to value certain assets and liabilities. Fair value is the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined
based on assumptions that market participants would use in pricing an asset or liability. We use a fair value hierarchy, which distinguishes between assumptions
based on market data (observable inputs) and an entity's own assumptions (unobservable inputs). The hierarchy consists of three levels:
•
Level 1 - Quoted market prices in active markets for identical assets or liabilities;
•
Level 2 - Inputs other than level 1 inputs that are either directly or indirectly observable; and
•
Level 3 - Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions
that a market participant would use.
Application of New Accounting Standards
We consider the applicability and impact of all ASUs issued by the FASB. Other than as disclosed below, ASUs not yet adopted were assessed and
determined to be either not applicable or are expected to have minimal impact on our consolidated result of operations, financial position and cash flows.
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, which expands
reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in the ASU require,
among other things, disclosure of significant segment expenses that are regularly provided to an entity's chief operating decision maker (“CODM”) and a
description of other segment items (the difference between segment revenue less the segment expenses disclosed under the significant expense principle and
each reported measure of segment profit or loss) by reportable segment, as well as disclosure of the title and position of the CODM, and an explanation of how
the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Annual disclosures
are required for fiscal years beginning after December 15, 2023 and interim disclosures are required for periods within fiscal years beginning after December 15,
2024. Retrospective application is required. We adopted this guidance for the annual period ending December 31, 2024 on a retrospective basis. We updated our
segment disclosures to comply with the requirements.
F-16
The adoption of the standard did not have an impact on our financial position, results of operations, or liquidity. See Note 14 - Segments for additional
information.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which modifies the rules on
income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before
income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal,
state and foreign) among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual
financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective
application is permitted. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related
disclosures.
In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures", which
requires, among other things, the following for public business entities: (i) tabular disclosure of amounts for the following categories that are included in each
expense caption within continuing operations on the statement of operations, with each expense caption that includes one of these expense categories deemed a
relevant expense caption: (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization and (e) depreciation,
depletion, and amortization recognized as part of oil-and gas-producing activities; (ii) disclosure of certain amounts that are already required to be disclosed
under current GAAP in the same disclosure as the other disaggregation requirements; (iii) qualitative description of the amount remaining in relevant expense
captions that are not separately disaggregated quantitatively; and (iv) disclosure of the total amount of selling expenses and, in annual reporting periods, an
entity's definition of selling expenses. The provisions of ASU 2024-03 are effective for annual periods beginning after December 15, 2026 and interim periods
within annual reporting periods beginning after December 15, 2027; early adoption is permitted. Entities must apply the updates in ASU 2024-03 prospectively
and are permitted to apply the updates retrospectively. We are currently evaluating the potential impact of adopting this new guidance on our consolidated
financial statements and related disclosures.
NOTE 3 – CONCENTRATION OF CREDIT RISK
Our tenant base and the restaurant brands operating our properties are highly concentrated. With respect to our tenant base, Darden leases represent
approximately 47.7% of the scheduled base rents of the properties we own. As our revenues predominately consist of rental payments, we are dependent on
Darden for a significant portion of our leasing revenues. The audited and unaudited financial statements for Darden are included in its filings with the SEC,
which can be found on the SEC’s internet website at www.sec.gov. Reference to Darden’s filings with the SEC is solely for the information of investors. We do
not intend this website to be an active link or to otherwise incorporate the information contained on such website (including Darden’s filings with the SEC) into
this report or our other filings with the SEC.
We are also subject to concentration risk in terms of restaurant brands that occupy our properties. With 314 locations in our portfolio, Olive Garden
branded restaurants comprise approximately 26.2% of our properties and approximately 34.2% of the revenues received under leases. Our properties, including
the Kerrow Restaurant Operating Business, are located in 47 states. There are no concentrations of 10% or greater of total rental revenue in any one state.
We are exposed to credit risk with respect to cash held at various financial institutions, access to our credit facility, and amounts due or payable under our
derivative contracts. At December 31, 2024, our net exposure to risk related to amounts due to us on our derivative instruments totaling $20.3 million, and the
counterparty to such instruments is an investment grade financial institution. Our credit risk exposure with regard to our cash deposits and the $245.0 million
available capacity under the revolver portion of our credit facility is spread among a diversified group of investment grade financial institutions.
NOTE 4 – REAL ESTATE INVESTMENTS, NET AND INTANGIBLE ASSETS AND LIABILITIES, NET
Real Estate Investments
Real estate investments, net, which consist of land, buildings and improvements leased to others subject to net operating leases and those utilized in the
operations of Kerrow Restaurant Operating Business is summarized as follows:
December 31,
(In thousands)
2024
2023
Land
$
1,360,772 $
1,240,865
Buildings and improvements
1,701,522
1,572,590
Equipment
136,350
135,966
Total gross real estate investments
3,198,644
2,949,421
Less: accumulated depreciation
(775,505 )
(738,946 )
Real estate investments, net
2,423,139
2,210,475
Intangible real estate assets, net
123,613
118,027
Total Real Estate Investments and Intangible Real Estate Assets, Net
$
2,546,752 $
2,328,502
F-17
During the year ended December 31, 2024, the Company invested $273.0 million, including transaction costs, in 87 properties located in twenty-five states,
and allocated the investment as follows: $119.9 million to land, $130.0 million to buildings and improvements, and $23.1 million to intangible assets. There was
no contingent consideration associated with these acquisitions. These properties are 100% occupied under net leases, with a weighted average remaining lease
term of 11.9 years as of December 31, 2024. During the year ended December 31, 2024, no properties were sold.
During the year ended December 31, 2023, the Company invested $341.1 million, including transaction costs, in 92 properties located in twenty-eight
states, and allocated the investment as follows: $127.7 million to land, $180.8 million to buildings and improvements, and $32.6 million to intangible assets.
There was no contingent consideration associated with these acquisitions. These properties were 100% occupied under net leases, with a weighted average
remaining lease term of 11.8 years as of December 31, 2023. 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 of $2.3 million.
During the year ended December 31, 2023, the Company exercised its option to purchase one of the properties where the Company was the lessee under
the ground lease. This lease was previously accounted for as a finance lease. This purchase resulted in an increase in land and a corresponding decrease in
finance lease right-of-use assets of $2.3 million.
Intangible Real Estate Assets and Liabilities, Net
The following tables detail intangible real estate assets and liabilities. Intangible real estate liabilities are included in Other liabilities on our Consolidated
Balance Sheets. Acquired in-place lease intangibles are amortized over the remaining lease term as depreciation and amortization expense. Above-market and
below-market leases are amortized over the initial term of the respective leases as an adjustment to rental revenue.
December 31,
(In thousands)
2024
2023
Acquired in-place lease intangibles
$
159,693 $
136,940
Above-market leases
13,821
13,821
Lease incentives
10,108
8,224
Tenant improvements intangible
3,605
3,605
Finance lease - right of use assets
14,040
14,040
Direct lease cost
702
360
Total
201,969
176,990
Less: accumulated amortization
(78,356 )
(58,963 )
Intangible Real Estate Assets, Net
$
123,613 $
118,027
December 31,
(In thousands)
2024
2023
Below-market leases
$
2,610 $
2,610
Less: accumulated amortization
(1,621 )
(1,414 )
Intangible Real Estate Liabilities, Net
$
989 $
1,196
The value of acquired in-place leases amortized and included in depreciation and amortization expense was $17.1 million, $16.6 million, and $13.3 million
for the years ended December 31, 2024, 2023, and 2022, respectively. The value of above-market and below-market leases amortized as a net adjustment to
revenue was $1.2 million, $1.3 million, and $1.6 million for the years ended December 31, 2024, 2023, and 2022, respectively. The value of lease incentives
amortized as a decrease to revenue was $838 thousand, $694 thousand, and $560 thousand for the years ended December 31, 2024, 2023, and 2022, respectively.
At December 31, 2024, the total weighted average amortization period remaining for our intangible real estate assets and liabilities was 8.8 years, and the
individual weighted average amortization period remaining for acquired in-place lease intangibles, above-market leases, below-market leases, lease incentive,
and tenant improvement intangible was 8.6 years, 6.2 years, 10.1 years, 11.2 years and 14.2 years, respectively.
F-18
Amortization of Lease Intangibles
The following table presents the estimated net impact during the next five years and thereafter related to the amortization of in-place lease intangibles, and
above-market and below-market lease intangibles for properties held in investment.
December 31,
(In thousands)
2024
2025
$
17,341
2026
15,567
2027
13,186
2028
10,723
2029
8,645
Thereafter
35,205
Total Future Amortization Expense
$
100,667
NOTE 5 – LEASES
Operating Leases as Lessee
As a lessee we record right-of-use assets and lease liabilities for the two ground leases at our Kerrow Restaurant Operating Business and our corporate
office space. The two ground leases have extension options, which we believe will be exercised and are included in the calculation of our lease liabilities and
right-of-use assets. In calculating the lease obligations under both the ground leases and office lease, we used discount rates estimated to be equal to what the
Company would have to pay to borrow on a collateralized basis over a similar term, for an amount equal to the lease payments, in a similar economic
environment.
Operating Lease Liability
Maturities of operating lease liabilities were as follows:
(In thousands)
December 31, 2024
2025
$
470
2026
310
2027
319
2028
319
2029
319
Thereafter
4,113
Total Payments
5,850
Less: Interest
(1,736 )
Operating Lease Liability
$
4,114
The weighted-average discount rate for operating leases at December 31, 2024 was 4.45%. The weighted-average remaining lease term was 15.8 years.
Rent expense was $918 thousand, $910 thousand, and $890 thousand for the years ended December 31, 2024, 2023, and 2022, respectively.
Operating Leases as Lessor
Our leases consist primarily of single-tenant, net leases, in which the tenants are responsible for making payments to third parties for operating expenses
such as property taxes, insurance, and other costs associated with the properties leased to them. In leases where costs are paid by the Company and reimbursed
by lessees, such payments are considered variable lease payments and recognized in rental revenue.
F-19
The following table shows the components of rental revenue.
Year Ended December 31,
(In thousands)
2024
2023
2022
Lease revenue - operating leases
$
227,588 $
210,433 $
187,026
Variable lease revenue (tenant reimbursements)
9,546
9,448
6,585
Total Rental Revenue
$
237,134 $
219,881 $
193,611
Future Minimum Lease Payments to be Received
The following table presents the scheduled minimum future contractual rent to be received under the remaining non-cancelable term of the operating
leases. The table presents future minimum lease payments due during the initial lease term only as lease renewal periods are exercisable at the option of the
lessee.
(In thousands)
December 31, 2024
2025
$
239,980
2026
239,750
2027
232,034
2028
205,940
2029
179,575
Thereafter
804,026
Total Future Minimum Lease Payments
$
1,901,305
Ground Leases as Lessee
As of December 31, 2024 and December 31, 2023, the Company had finance ground lease assets aggregating $13.9 million and $14.0 million, respectively.
These assets are included in intangible real estate assets, net on the Consolidated Balance Sheets. The Company did not recognize a lease liability as no
payments are due in the future under the leases. The Company’s ground lease assets have remaining terms of 59 years to 94 years. All but two of these leases
have options to extend the lease terms for additional 99 years terms, and all have the option to purchase the assets once certain conditions and contingencies are
met. The weighted average remaining non-cancelable lease term for the ground leases was 89 years at December 31, 2024.
NOTE 6 – DEBT, NET OF DEFERRED FINANCING COSTS
At December 31, 2024, our debt consisted of (1) $515 million of non-amortizing term loans and (2) $625 million of senior unsecured fixed rate notes. At
December 31, 2023, our debt consisted of (1) $430 million of non-amortizing term loans and (2) $675 million of senior unsecured fixed rate notes. The
outstanding borrowings under the revolving credit facility were $5 million and $16 million at December 31, 2024 and 2023, respectively. At December 31, 2024
and 2023, there were no outstanding letters of credit. At December 31, 2024, we had $245.0 million of borrowing capacity under the revolving credit facility.
The weighted average interest rate on the term loans before consideration of the interest rate hedges described in Note 7 - Derivative Financial Instruments was
5.62% and 6.40% at December 31, 2024 and 2023, respectively. The weighted average interest rate on the revolving credit facility was 5.46% and 6.46% at
December 31, 2024 and 2023, respectively.
F-20
Revolving Credit and Term Loan Agreement
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”). The Company utilized the accordion feature of the Third Amended and Restated Revolving Credit and
Term 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. The Term Loan matures in March 2027 with one twelve month extension exercisable at the Company’s option,
subject to certain conditions.
The following table presents the Term Loan balances.
Outstanding Balance
Maturity
Interest
December 31,
(Dollars in thousands)
Date
Rate
2024
2023
Term Loans:
Term loan due 2025
Nov 2025
5.65 % (a)(c) $
150,000 $
150,000
Term loan due 2026
Nov 2026
5.65 %
(a)
100,000
100,000
Term loan due 2027
Jan 2027
5.60 %
(a)
90,000
90,000
Term loan due 2027
Mar 2027
5.60 % (a)(b)
85,000
—
Term loan due 2028
Jan 2028
5.60 %
(a)
90,000
90,000
Total Term Loans
$
515,000 $
430,000
(a)
Loan is a variable-rate loan which resets daily at Daily Simple SOFR + 10 bps + applicable credit spread of 0.95% to 1.00% at December 31, 2024.
(b)
Loan has a 12 month extension exercisable at the Company's option, subject to certain conditions.
(c)
See Note 15 - Subsequent Events for additional information.
Note Purchase Agreements
The following table presents the senior unsecured fixed rate notes balance.
Outstanding Balance
Maturity
Interest
December 31,
(Dollars in thousands)
Date
Rate
2024
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
50,000
Senior unsecured fixed rate note, issued June 2017
Jun 2027
4.93 %
75,000
75,000
Senior unsecured fixed rate note, issued December 2018
Dec 2028
4.76 %
50,000
50,000
Senior unsecured fixed rate note, issued April 2021
Apr 2029
2.74 %
50,000
50,000
Senior unsecured fixed rate note, issued March 2020
Jun 2029
3.15 %
50,000
50,000
Senior unsecured fixed rate note, issued March 2020
Apr 2030
3.20 %
75,000
75,000
Senior unsecured fixed rate note, issued March 2022
Mar 2031
3.09 %
50,000
50,000
Senior unsecured fixed rate note, issued April 2021
Apr 2031
2.99 %
50,000
50,000
Senior unsecured fixed rate note, issued March 2022
Mar 2032
3.11 %
75,000
75,000
Senior unsecured fixed rate note, issued July 2023
Jul 2033
6.44 %
100,000
100,000
Total Notes
$
625,000 $
675,000
The Note Purchase Agreements contain customary events of default, including payment defaults, cross defaults with certain other indebtedness, breaches
of covenants and bankruptcy events. In the case of an event of default, the purchasers may, among other remedies, accelerate the payment of all obligations.
The Note Purchase Agreements have not been and will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), or the
securities laws of any state or other jurisdiction, and may not be offered or sold in the United States or any other jurisdiction absent registration or an applicable
exemption from the registration requirements of the Securities Act and the applicable securities laws of any state or other jurisdiction. FCPT OP offered and sold
the notes.
F-21
Debt Maturities
The following presents scheduled principal payments related to the Company’s debt.
(In thousands)
December 31, 2024
2025
$
155,000
2026
150,000
2027
250,000
2028
140,000
2029
100,000
Thereafter
350,000
Total Scheduled Principal Payments
$
1,145,000
Deferred Financing Costs
At December 31, 2024 and 2023, term loan and revolving credit facility net unamortized deferred financing costs were approximately $3.7 million and
$4.3 million, respectively. During the years ended December 31, 2024, 2023, and 2022, amortization of deferred financing costs was $1.9 million, $1.6 million,
and $1.5 million, respectively.
At December 31, 2024 and 2023, senior unsecured notes net unamortized deferred financing costs were approximately $3.4 million and $4.1 million,
respectively. During the years ended December 31, 2024, 2023, and 2022, amortization of deferred financing costs was $0.7 million, $0.7 million, and $0.6
million, respectively.
Debt Covenants
Under the terms of both the Note Purchase Agreement and Loan Agreement (the “Agreements”), FCPT acts as a guarantor to FCPT OP. The Agreements
contain customary financial covenants, including (1) total indebtedness to consolidated capitalization value (each as defined in the Loan Agreement) not to
exceed 60%, (2) mortgage-secured leverage ratio not to exceed 40%, (3) minimum fixed charge coverage ratio of 1.50 to 1.00, (4) maximum unencumbered
leverage ratio not to exceed 60%, and (5) minimum unencumbered interest coverage ratio not less than 1.75 to 1.00. They also contain restrictive covenants that,
among other things, restrict the ability of FCPT OP, the Company and their subsidiaries to enter into transactions with affiliates, merge, consolidate, create liens
or make certain restricted payments. In addition, the Agreements include provisions providing that certain of such covenants will be automatically amended in
the Note Purchase Agreement to conform to certain amendments that may from time to time be implemented to corresponding covenants under the Loan
Agreement. At December 31, 2024, the Company was in compliance with all debt covenants.
NOTE 7 – DERIVATIVE FINANCIAL INSTRUMENTS
Risk Management Objective of Using Derivatives
We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposures to a wide variety
of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, liquidity, and credit
risk primarily by managing the amount, sources, and duration of our debt funding and the use of derivative financial instruments. Specifically, we enter into
derivative financial instruments to manage exposures that arise from business activities that result in our payment of future cash amounts, the value of which are
determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected
cash payments principally related to our borrowings.
Cash Flow Hedges of Interest Rate Risk
Our objective in using interest rate derivatives is to manage our exposure to interest rate movements. To accomplish this objective, we primarily use
interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable
amounts from a counterparty in exchange for us making fixed- rate payments over the life of the agreements without exchange of the underlying notional
amount. The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded on our Consolidated Balance Sheets in
accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.
During the year ended December 31, 2024, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.
F-22
As of December 31, 2024, $435 million of our variable-rate debt is hedged with notional values totaling $435 million. As of December 31, 2023, $375
million of our variable-rate debt was hedged by swaps with notional values totaling $375 million.
During the year ended December 31, 2024, we entered into seven interest rate swaps to hedge the interest rate variability associated with the term loan
portion of our credit facility.
Product
Fixed Rate
Notional Amount
($ in thousands)
Index
Effective Date
Maturity Date
Swap
0.44 % $
50,000
Daily Simple SOFR + 10 bps
10/25/2022
11/9/2025
Swap
2.70 %
25,000
Daily Simple SOFR + 10 bps
11/9/2022
11/9/2025
Swap
4.12 %
25,000
Daily Simple SOFR + 10 bps
3/9/2023
11/9/2026
Swap
0.82 %
50,000
Daily Simple SOFR + 10 bps
11/9/2023
11/9/2025
Swap
3.65 %
25,000
Daily Simple SOFR + 10 bps
11/9/2023
11/9/2026
Swap
4.25 %
25,000
Daily Simple SOFR + 10 bps
11/9/2023
11/9/2028
Swap
4.42 %
25,000
Daily Simple SOFR + 10 bps
11/13/2023
11/9/2028
Swap
4.04 %
25,000
Daily Simple SOFR + 10 bps
4/9/2024
4/9/2029
Swap
3.91 %
30,000
Daily Simple SOFR + 10 bps
4/9/2024
4/9/2029
Swap
3.88 %
30,000
Daily Simple SOFR + 10 bps
4/9/2024
4/9/2029
Swap
3.97 %
25,000
Daily Simple SOFR + 10 bps
11/9/2024
11/9/2029
Swap
3.81 %
25,000
Daily Simple SOFR + 10 bps
1/31/2025
1/31/2030
Swap
3.80 %
25,000
Daily Simple SOFR + 10 bps
1/31/2025
1/31/2030
Swap
3.09 %
25,000
Daily Simple SOFR + 10 bps
1/31/2025
1/31/2030
Swap
1.48 %
50,000
Daily Simple SOFR + 10 bps
11/10/2025
11/9/2027
Swap
1.54 %
50,000
Daily Simple SOFR + 10 bps
11/10/2025
11/9/2027
Swap
2.25 %
25,000
1 month Term SOFR
11/10/2025
11/9/2028
Swap
1.49 %
50,000
Daily Simple SOFR + 10 bps
11/10/2025
11/9/2028
Swap
2.02 %
50,000
Daily Simple SOFR + 10 bps
11/10/2025
11/9/2028
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. 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. 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. 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. The cash flow hedges had a total notional value of $75 million and were entered into in June 2024 and August 2024 to hedge the interest rate on a
future offering or term loan. 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.
For the years ended December 31, 2024, 2023, and 2022, we did not record hedge ineffectiveness in earnings.
Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made
on our variable-rate debt. We estimate that during 2025 an additional $7.9 million (unaudited) will be reclassified to earnings as a reduction to interest expense.
Non-designated Hedges
We do not use derivatives for trading or speculative purposes. During the years ended December 31, 2024 and 2023, we did not have any derivatives that
were not designated as cash flow hedges for accounting purposes.
F-23
Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheets
The table below presents the fair value of our derivative financial instruments as well as their classification on the Consolidated Balance Sheets.
Derivative Assets
Derivative Liabilities
Fair Value at December 31,
Fair Value at December 31,
(Dollars in thousands)
Balance Sheet
Location
2024
2023
Balance Sheet
Location
2024
2023
Derivatives designated as
hedging instruments:
Interest rate swaps
Derivative
assets
$
20,733
$
20,952
Derivative
liabilities
$
473 $
2,968
Total
$
20,733
$
20,952
$
473 $
2,968
Tabular Disclosure of the Effect of Derivative Instruments on the Consolidated Statements of Comprehensive Income
The table below presents the effect of our interest rate swaps on the Comprehensive Income Statement.
(Dollars in thousands)
Amount of
Gain or
(Loss)
Recognized
in OCI on
Derivative
(Effective
Portion)
Location of
Gain or
(Loss)
Reclassified
from
Accumulated
OCI into
Income
(Effective
Portion)
Amount of
Gain or
(Loss)
Reclassified
from
Accumulated
OCI into
Income
(Effective
Portion)
Location of
Gain or
(Loss)
Recognized in
Income on
Derivative
(Ineffective
Portion and
Amount
Excluded
from
Effectiveness
Testing)
Amount of
Gain or
(Loss)
Recognized in
Income on
Derivative
(Ineffective
Portion and
Amounts
Excluded from
Effectiveness
Testing)
Total Amount
of Interest
Expense
Presented in
the
Consolidated
Income
Statements
Interest rate swaps
Year Ended
December 31, 2024
$
14,306
Interest
expense
$
(12,648 )
Interest
expense
$
— $
49,231
Year Ended
December 31, 2023
1,795
Interest
expense
(10,773 )
Interest
expense
—
44,606
Year Ended
December 31, 2022
39,396
Interest
expense
1,430
Interest
expense
—
36,405
Tabular Disclosure Offsetting Derivatives
The table below presents a gross presentation, the effects of offsetting, and a net presentation of our derivatives. The net amounts of derivative assets or
liabilities can be reconciled to the tabular disclosure of fair value which provides the location that derivative assets and liabilities are presented on the
Consolidated Balance Sheets.
Offsetting of Derivative Assets
Gross Amounts Not Offset in the
Consolidated Balance Sheets
(In thousands)
Gross
Amounts of
Recognized
Assets
Gross Amounts
Offset in the
Consolidated
Balance Sheets
Net Amounts of
Assets
Presented in the
Consolidated
Balance Sheets
Financial
Instruments
Cash Collateral
Received
Net
Amount
December 31, 2024
$
20,733 $
— $
20,733 $
(350 ) $
— $
20,383
December 31, 2023
20,952
—
20,952
(920 )
—
20,032
F-24
Offsetting of Derivative Liabilities
Gross Amounts Not Offset in the
Consolidated Balance Sheets
(In thousands)
Gross
Amounts of
Recognized
Liabilities
Gross Amounts
Offset in the
Consolidated
Balance Sheets
Net Amounts of
Liabilities
Presented in the
Consolidated
Balance Sheets
Financial
Instruments
Cash Collateral
Posted
Net
Amount
December 31, 2024
$
473 $
— $
473 $
(350 ) $
— $
123
December 31, 2023
$
2,968 $
— $
2,968 $
(920 ) $
— $
2,048
Credit-risk-related Contingent Features
The agreement with our derivative counterparties provides that if we default on any of our indebtedness, including default for which repayment of the
indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations.
At December 31, 2024 the fair value of derivative in a net asset position related to these agreements was approximately $20.3 million and at December 31,
2023 the fair value of the derivative in a net asset position related to these agreements was $18.0 million. As of December 31, 2024, we have not posted any
collateral related to these agreements. If we or our counterparty had breached any of these provisions at December 31, 2024, we would have been entitled to the
termination value of approximately $20.3 million.
NOTE 8 – SUPPLEMENTAL DETAIL FOR CERTAIN COMPONENTS OF CONSOLIDATED BALANCE SHEETS
Other Assets
The components of Other assets were as follows:
December 31,
(In thousands)
2024
2023
Restricted cash
$
— $
8,461
Operating lease right-of-use asset
3,402
3,923
Accounts receivable
3,477
2,985
Prepaid acquisition costs and deposits
1,222
1,364
Prepaid assets
1,522
1,176
Inventories
221
238
Other
1,606
1,711
Total Other Assets
$
11,450 $
19,858
Other Liabilities
The components of Other liabilities were as follows:
December 31,
(In thousands)
2024
2023
Tenant deposits
$
1,015 $
7,835
Accrued interest expense
7,498
7,424
Operating lease liability
4,114
4,642
Accrued compensation
2,752
3,020
Accrued tenant property tax
2,505
2,518
Accounts payable
931
1,263
Intangible real estate liabilities, net
989
1,196
Accrued operating expenses
254
262
Other
1,720
2,106
Total Other Liabilities
$
21,778 $
30,266
F-25
NOTE 9 – INCOME TAXES
The income tax expense was composed as follows:
Year Ended December 31,
(In thousands)
2024
2023
2022
Current:
Federal
$
31 $
— $
—
Current state and local
477
389
362
Total current
508
389
362
Deferred:
Federal deferred
(200 )
(259 )
(125 )
State deferred
—
—
—
Total deferred
(200 )
(259 )
(125 )
Total Income Tax Expense
$
308 $
130 $
237
The following table is a reconciliation of the U.S. statutory income tax rate to the effective income tax rate included in the accompanying Consolidated
Income Statements:
Year Ended December 31,
2024
2023
2022
U.S. statutory rate
21.0 %
21.0 %
21.0 %
Current benefit
(20.9 )
(20.9 )
(20.8 )
State and local income taxes, net of federal tax benefits
0.4
0.4
0.3
Benefit of federal income tax credits
(0.2 )
(0.3 )
(0.2 )
Other
—
(0.1 )
(0.1 )
Valuation allowance
—
—
—
Permanent differences
—
—
—
Effective Income Tax Rate
0.3 %
0.1 %
0.2 %
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts for income tax purposes, as well as operating loss and tax credit carryforwards. The Company evaluates the realizability of its
deferred tax assets and recognizes a valuation allowance if, based on the available evidence, both positive and negative, it is more likely than not that some
portion or all of its deferred tax assets will not be realized. When evaluating the realizability of its deferred tax assets, the Company considers, among other
matters, estimates of expected future taxable income, nature of current and cumulative losses, existing and projected book/tax differences, tax planning strategies
available, and the general and industry specific economic outlook. This realizability analysis is inherently subjective, as it requires the Company to forecast its
business and general economic environment in future periods.
The tax effects of temporary differences that gave rise to deferred tax assets and liabilities were as follows:
December 31,
(In thousands)
2024
2023
2022
Compensation and employee benefits
$
35 $
33 $
32
Charitable contribution and credit carryforwards
1,877
1,704
1,366
Net operating losses
—
15
60
Lease payable
147
144
141
UNICAP
13
14
15
Gross deferred tax assets
2,072
1,910
1,614
Prepaid expenses
(13 )
—
(14 )
Buildings and equipment
(611 )
(662 )
(612 )
Gross deferred tax liabilities
(624 )
(662 )
(626 )
Net Deferred Tax Assets
$
1,448 $
1,248 $
988
(1)
These buildings and equipment in 2024, 2023, and 2022 relate to the Kerrow Restaurant Operating Business.
NOTE 10 – EQUITY
Preferred Stock
At December 31, 2024, the Company was authorized to issue 25,000,000 shares of $0.0001 par value per share of preferred stock. There were no shares
issued and outstanding at December 31, 2024 or December 31, 2023.
(1)
F-26
Common Stock
At December 31, 2024, the Company was authorized to issue 500,000,000 shares of $0.0001 par value per share of common stock. Each holder of common
stock is entitled to vote on all matters and is entitled to one vote for each share held.
In March 2024, we declared a dividend of $0.3450 per share, which was paid in April 2024 to common shareholders of record as of March 31, 2024.
In June 2024, we declared a dividend of $0.3450 per share, which was paid in July 2024 to common shareholders of record as of June 28, 2024.
In September 2024, we declared a dividend of $0.3450 per share, which was paid in October 2024 to common shareholders of record as of September 30,
2024.
In November 2024, we declared a dividend of $0.3550 per share, which was payable on January 15, 2025 to common shareholders of record as of
December 31, 2024.
As of December 31, 2024, there were 99,825,119 shares of the Company's common stock issued and outstanding.
Common Stock Issuance Under the At-The-Market Program
On September 17, 2024, the Company 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. 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 $404.8 million through
September 17, 2024. In connection with the Company’s ATM programs, the Company may enter into forward sale agreements with certain financial institutions
acting as forward purchasers whereby, at the Company's discretion, the forward purchasers may borrow and sell shares of common stock. The use of forward
sale agreements allows the Company to lock in a share price on the sale of shares of common stock at the time the respective forward sale agreements are
executed but defer settling the forward sale agreements and receiving the proceeds from the sale of shares until a later date.
The following tables present the Company’s activity under its ATM programs:
December 31, 2024
Shares
Gross Wtd Avg
Sales Price
Net Wtd Avg
Sales Price
Net Proceeds
($ 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
December 31, 2023
Shares
Gross Wtd Avg
Sales Price
Net Wtd Avg
Sales Price
Net Proceeds
($ in thousands)
Executed forward sale agreements
1,907,946
$
27.76
n/a
Physically settled forward sale agreements
4,437,970
$
27.32
$
26.91
$
119,400
Total shares sold and issued under the ATM programs
5,805,334
$
26.90
$
26.42
$
153,400
(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.
At December 31, 2024, there was $413.9 million available for issuance under the ATM programs.
(1)
(1)
F-27
Noncontrolling Interest
At December 31, 2024, there were 114,559 FCPT OP units (“OP units”) outstanding held by third parties. During the year ended December 31, 2024,
FCPT OP did not issue any OP units for consideration in real estate transactions. Generally, OP units participate in net income allocations and distributions and
entitle their holder the right, subject to the terms set forth in the partnership agreement, to require the Operating Partnership to redeem all or a portion of the OP
units held by such limited partner. At FCPT OP’s option, it may satisfy this redemption with cash or by exchanging non-registered shares of FCPT common
stock on a one-for-one basis. Prior to the redemption of units, the limited partners participate in net income allocations and distributions in a manner equivalent
to the common stock holders. The redemption value of outstanding non-controlling interest OP units was $3.1 million, $2.9 million, and $3.0 million as of
December 31, 2024, 2023, and 2022, respectively.
As of December 31, 2024, FCPT is the owner of approximately 99.89% of FCPT’s OP units. The remaining 0.11%, or 114,559, of FCPT’s OP units are
held by unaffiliated limited partners. For the year ended December 31, 2024, FCPT OP distributed $159 thousand to limited partners.
Earnings Per Share
The following table presents the computation of basic and diluted net earnings per common share for the years ended December 31, 2024, 2023, and 2022.
Year Ended December 31,
(In thousands, except share and per share data)
2024
2023
2022
Average common shares outstanding – basic
93,643,129
88,526,343
81,590,124
Net effect of dilutive stock based compensation
421,369
220,685
216,941
Average common shares outstanding – diluted
94,064,498
88,747,028
81,807,065
Net income available to common shareholders
$
100,473 $
95,340 $
97,772
Basic net earnings per share
$
1.07 $
1.08 $
1.20
Diluted net earnings per share
$
1.07 $
1.07 $
1.20
For the years ended December 31, 2024, 2023, and 2022, the number of outstanding equity awards that were anti-dilutive totaled 424,533, 274,384, and
262,600, respectively. Exchangeable OP units have been omitted from the denominator for the purpose of computing diluted earnings per share since FCPT OP,
at its option, may satisfy a redemption with cash or by exchanging non-registered shares of FCPT common stock. The weighted average exchangeable OP units
outstanding for the year ended December 31, 2024, 2023, and 2022, totaled 114,559, 114,559, and 114,559, respectively.
NOTE 11 – STOCK-BASED COMPENSATION
On June 10, 2022, the Board of Directors of FCPT adopted, and FCPT’s stockholders approved, the Amended and Restated Four Corners Property Trust,
Inc. 2015 Omnibus Incentive Plan (the “Amended Plan”) to, among other things, increase the maximum number of shares of our common stock reserved for
issuance under the 2015 Plan by 1,500,000 shares to 3,600,000 shares.
At December 31, 2024, 1,431,588 shares of common stock were available for award under the Plan. The unamortized compensation cost of awards issued
under the Incentive Plan totaled $8.2 million at December 31, 2024 as shown in the following table.
Equity Compensation Costs by Award Type
(In thousands)
Restricted
Stock Units
Restricted
Stock Awards
Performance
Stock Units
Total
Unrecognized compensation cost at January 1, 2024
$
1,672 $
3,142 $
2,648 $
7,462
Equity grants
1,974
3,339
3,064
8,377
Equity grant forfeitures
(322 )
(274 )
(100 )
(696 )
Equity compensation expense
(1,463 )
(3,078 )
(2,446 )
(6,987 )
Unrecognized Compensation Cost at December 31, 2024
$
1,861 $
3,129 $
3,166 $
8,156
At December 31, 2024, the weighted average amortization period remaining for all of our equity awards was 1.8 years.
Restricted Stock Units
RSUs are granted at a value equal to the five-day average closing market price of our common stock on the date of grant and are settled in stock at the end
of their vesting periods, which range between one and five years, at the then market price of our common stock.
F-28
The following table summarizes the activities related to RSUs.
Year Ended December 31,
2024
2023
2022
Units
Weighted
Average
Grant Date
Fair Value
Units
Weighted
Average
Grant Date
Fair Value
Units
Weighted
Average
Grant Date
Fair Value
Outstanding at beginning of period
191,081 $
26.83
206,786 $
26.60
159,524 $
26.53
Units granted
80,997
24.39
53,238
27.00
77,424
26.87
Units vested
(16,621 )
26.78
(68,943 )
26.28
(22,635 )
27.08
Units forfeited
(11,772 )
27.37
—
—
(7,527 )
26.57
Outstanding at End of Period
243,685
26.00
191,081
26.83
206,786
26.60
Expenses related to RSUs were $1.5 million, $1.9 million, and $1.6 million for the years ended December 31, 2024, 2023, and 2022, respectively.
Remaining unrecognized compensation cost related to RSU will be recognized over a weighted average period of less than five years. Restrictions on shares of
restricted stock outstanding lapse through 2029. The Company expects all RSUs to vest.
Restricted Stock Awards
The following table summarizes the activities related to RSAs.
Year Ended December 31,
2024
2023
2022
Units
Weighted
Average
Grant Date
Fair Value
Units
Weighted
Average
Grant Date
Fair Value
Units
Weighted
Average
Grant Date
Fair Value
Outstanding at beginning of period
198,636 $
27.67
157,030 $
27.25
113,695 $
27.58
Units granted
137,983
24.14
128,852
28.14
119,471
26.99
Units vested
(100,447 )
27.31
(86,213 )
27.61
(72,101 )
27.33
Units forfeited
(10,590 )
25.92
(1,033 )
27.66
(4,035 )
27.24
Outstanding at End of Period
225,582
25.75
198,636
27.67
157,030
27.25
Expenses related to RSAs were $3.1 million, $2.9 million, and $2.4 million for the years ended December 31, 2024, 2023, and 2022, respectively. The
remaining unrecognized compensation cost will be recognized over a weighted average period of less than three years. Restrictions on shares of RSAs
outstanding lapse through 2027. The Company expects all RSAs to vest.
Performance-Based Restricted Stock Awards
During the years ended December 31, 2024, 2023, and 2022, there were 95,682, 87,700, and 66,369 PSUs as well as dividend equivalent rights granted
under the Plan, respectively. The performance period of these grants runs from January 1, 2024 through December 31, 2026, January 1, 2023 through December
31, 2025, and from January 1, 2022 through December 31, 2024, respectively. Pursuant to the performance share award agreement, each participant is eligible to
vest in and receive shares of the Company's common stock based on the initial target number of shares granted multiplied by a percentage range between 0%
and 200%. The percentage range is based on the attainment of a total shareholder return of the Company compared to certain specified peer groups of companies
during the performance period. The fair value of the performance shares were estimated on the date of grant using a Monte Carlo Simulation model.
During the years ended December 31, 2024, 2023, and 2022, PSUs were granted at a weighted average fair value of $32.48, $37.50, and $18.63 per unit,
respectively. During the year ended December 31, 2024, 3,309 PSUs were forfeited. During the year ended December 31, 2024, 73,023 PSUs vested at 0%,
resulting in the distribution of no shares. The Company expects all PSUs to vest.
The grant date fair values of PSUs were determined through Monte-Carlo simulations using the following assumptions: our common stock closing price at
the grant date, the average closing price of our common stock price for the 20 trading days prior to the grant date and a range of performance-based vesting
based on estimated total shareholder return over three years from the grant date. For the 2024 PSU grant, the Company used an implied volatility assumption of
21.9% (based on historical volatility), risk free rate of 4.09%, and a 0% dividend yield (the mathematical equivalent to reinvesting the dividends over the three-
year performance period as is consistent with the terms of the PSUs). For the 2023 PSU grant, the Company used an implied volatility assumption of 51.2%
(based on historical volatility), normalized risk free rate of 3.76%, and a 0% dividend yield (the mathematical equivalent to reinvesting the dividends over the
three years performance period as is consistent with the terms of the PSUs). For the 2022 PSU grant, the Company used an implied volatility assumption of
49.5% (based on historical volatility), normalized risk free rate of 2.50%, and a 0% dividend yield (the
F-29
mathematical equivalent to reinvesting the dividends over the three years performance period as is consistent with the terms of the PSUs).
Expenses related to PSUs were $2.4 million, $1.5 million, and $1.0 million for the years ended December 31, 2024, 2023, and 2022, respectively.
NOTE 12 – FAIR VALUE MEASUREMENTS
The carrying amounts of certain of the Company’s financial instruments including cash equivalents, accounts receivable, accounts payable, accrued
liabilities, and derivative financial instruments approximate fair value due either to length of maturity or interest rates that approximate prevailing market rates.
Determining which category an asset or liability falls within the hierarchy requires significant judgment. We evaluate hierarchy disclosures each reporting
period. The following table presents the derivative assets recorded that are reported at fair value on our Consolidated Balance Sheets on a recurring basis.
Derivative Assets and Liabilities Measured at Fair Value on a Recurring Basis
(In thousands)
Level 1
Level 2
Level 3
Total
Derivative Assets
December 31, 2024
$
— $
20,733 $
— $
20,733
December 31, 2023
—
20,952
—
20,952
Derivative Liabilities
December 31, 2024
$
— $
473 $
— $
473
December 31, 2023
—
2,968
—
2,968
Derivative Financial Instruments
Currently, we use interest rate swaps to manage our interest rate risk associated with our note payable. The valuation of these instruments is determined
using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the
contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied
volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or
payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future
interest rates (forward curves) derived from observable market interest rate curves.
The fair values of interest rate options will be determined using the market standard methodology of discounting the future expected cash receipts that
would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are
based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.
To comply with the provisions of ASC 820, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the
respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of
nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and
guarantees.
Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit
valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by
ourselves and our counterparties. We have determined that the significance of the impact of the credit valuation adjustments made to our derivative contracts,
which determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of our derivatives held as
of December 31, 2024 were classified as Level 2 of the fair value hierarchy.
F-30
The following table presents the carrying value and fair value of certain financial liabilities that are recorded on our Consolidated Balance Sheets.
Fair Value of Certain Financial Liabilities
December 31, 2024
December 31, 2024
December 31, 2023
(In thousands)
Carrying
Value
Fair Value
Carrying
Value
Fair Value
Term loan due November 2025
$
150,000 $
149,913
$
150,000 $
149,496
Term loan due November 2026
100,000
100,112
100,000
99,799
Term loan due January 2027
90,000
89,902
90,000
89,524
Term loan due March 2027
85,000
86,027
—
—
Term loan due January 2028
90,000
90,744
90,000
89,208
Senior fixed note due June 2024
—
—
50,000
49,641
Senior note due December 2026
50,000
49,432
50,000
49,227
Senior note due June 2027
75,000
74,248
75,000
74,282
Senior note due December 2028
50,000
48,788
50,000
49,195
Senior note due April 2029
50,000
45,003
50,000
44,742
Senior note due June 2029
50,000
45,566
50,000
45,473
Senior note due April 2030
75,000
67,137
75,000
67,262
Senior note due March 2031
50,000
42,733
50,000
43,313
Senior note due April 2031
50,000
43,172
50,000
43,441
Senior note due March 2032
75,000
63,965
75,000
64,818
Senior note due July 2033
100,000
105,308
100,000
109,521
Outstanding revolver borrowings
5,000
4,997
16,000
15,946
(1)
Term loan and senior note liabilities exclude deferred financing costs
The fair value of the Notes payable (Level 2) is determined using the present value of the contractual cash flows, discounted at the current market cost of
debt.
NOTE 13 – COMMITMENTS AND CONTINGENCIES
Litigation
We are subject to private lawsuits, administrative proceedings and claims that arise in the ordinary course of our business. A number of these lawsuits,
proceedings and claims may exist at any given time. These matters typically involve claims from guests, employee wage and hour claims and others related to
operational issues common to the restaurant industry. We record our best estimate of a loss when the loss is considered probable. When a liability is probable
and there is a range of estimated loss with no best estimate in the range, we record the minimum estimated liability related to the lawsuits, proceedings or claims.
While the resolution of a lawsuit, proceeding or claim may have an impact on our financial results for the period in which it is resolved, we believe that the
maximum liability related to probable lawsuits, proceedings and claims in which we are currently involved, individually and in the aggregate, will not have a
material adverse effect on our financial position, results of operations or liquidity.
(1)
(1)
F-31
NOTE 14 – SEGMENTS
During 2024, 2023, and 2022, we operated in two segments: real estate operations and restaurant operations. In our real estate operations, we lease
properties to tenants through net lease arrangements under which the tenants are primarily responsible for ongoing costs relating to the properties, including
utilities, property taxes, insurance, common area maintenance charges, and maintenance and repair costs. In our restaurant operations, we operate seven
LongHorn Steakhouse restaurants located in the San Antonio, Texas area.
Our chief operating decision maker evaluates performance of the real estate operations based on Adjusted Funds from Operations (“AFFO”) and evaluates
performance of the restaurant operations based on Earnings Before Interest, Taxes, Depreciation, and Amortization ("EBITDA") in order to determine how to
allocate resources to these segments. We define AFFO as total real estate operations segment revenues, less total segment operating expenses. We define
EBITDA as total restaurant operations segment revenues less total segment operating expenses. We consider these respective measures useful because they
allow investors, analysts and our management to measure our year-over-year ability to fund dividend distribution from operating activities. In order to facilitate
a clear understanding of our historical consolidated operating results, AFFO and EBITDA should be examined in conjunction with net income as presented in
our Consolidated Financial Statements and other financial data included elsewhere in this Annual Report.
Our segments are based on our organizational and management structure, which aligns with how our results are monitored and performance is assessed.
The accounting policies of the reportable segments are the same as those described in Note 2 - Summary of Significant Accounting Policies.
The following table presents financial information for the real estate operations segment.
Year Ended December 31,
(In thousands)
2024
2023
2022
Revenues:
Real estate operations revenue
$
236,264 $
217,276 $
190,236
Segment revenue
236,264
217,276
190,236
Operating expenses:
Interest expense
46,634
42,295
34,301
Other segment items, net
27,723
27,267
22,718
AFFO
$
161,907 $
147,714 $
133,217
Reconciliation to Segment net income:
Depreciation and amortization
(53,607 )
(49,996 )
(40,762 )
Realized gain on sale, net
—
2,341
8,139
Stock-based compensation
(6,987 )
(6,271 )
(4,978 )
Straight-line rent
3,810
5,523
6,372
Non-cash amortization of deferred financing costs
(2,597 )
(2,311 )
(2,104 )
Other non-cash revenue adjustments
(2,072 )
(2,061 )
(2,151 )
Segment net income
$
100,454 $
94,939 $
97,733
(1)
Other segment items, net includes: compensation and related expenses, external services, other operating costs, property expenses, other income, net, and income tax expense
The following table presents financial information for the restaurant operations segment.
Year Ended December 31,
(In thousands)
2024
2023
2022
Revenues:
Restaurant operations revenue
$
30,939 $
30,725 $
29,583
Segment revenue
30,939
30,725
29,583
Operating expenses:
Cost of goods sold
24,305
24,033
23,418
Other segment items, net
5,587
5,531
5,250
EBITDA
$
1,047 $
1,161 $
915
Reconciliation to Segment net income:
Depreciation and amortization
(907 )
(735 )
(709 )
Income tax (expense) benefit
1
97
(31 )
Segment net income
$
141 $
523 $
175
F-32
The following table reconciles the segment revenues to our total revenues.
Year Ended December 31,
(In thousands)
2024
2023
2022
Revenues:
Real estate operations revenue
$
236,264
$
217,276
$
190,236
Restaurant operations revenue
30,939
30,725
29,583
Other
870
2,605
3,375
Total revenues
$
268,073 $
250,606
$
223,194
The following table reconciles the segment net incomes to our net income.
Year Ended December 31,
(In thousands)
2024
2023
2022
Segment net income:
Real estate operations
$
100,454
$
94,939
$
97,733
Restaurant operations
141
523
175
Net income
$
100,595 $
95,462
$
97,908
The following table presents supplemental information by segment.
Supplemental Segment Information at December 31, 2024
(In thousands)
Real Estate
Operations
Restaurant
Operations
Total
Total real estate investments
$
3,175,813 $
22,831 $
3,198,644
Accumulated depreciation
(767,716 )
(7,789 )
(775,505 )
Total real estate investments, net
$
2,408,097 $
15,042 $
2,423,139
Cash and cash equivalents
2,985
1,096 $
4,081
Total assets
2,631,171
21,855 $
2,653,026
Total debt, net of deferred financing costs
1,137,889
— $
1,137,889
Supplemental Segment Information at December 31, 2023
(In thousands)
Real Estate
Operations
Restaurant
Operations
Total
Total real estate investments
$
2,926,425 $
22,996 $
2,949,421
Accumulated depreciation
(731,345 )
(7,601 )
(738,946 )
Total real estate investments, net
$
2,195,080 $
15,395 $
2,210,475
Cash and cash equivalents
14,776
1,546 $
16,322
Total assets
2,429,136
22,498 $
2,451,634
Total debt, net of deferred financing costs
1,112,689
— $
1,112,689
Capital expenditures in our Consolidated Statements of Cash Flows relate to the real estate operations segment.
NOTE 15 – SUBSEQUENT EVENTS
The Company reviewed its subsequent events and transactions that have occurred after December 31, 2024, the date of the Consolidated Balance Sheet,
through February 13, 2025, and noted the following:
Capital Resources
On January 31, 2025, the Company entered into a Fourth Amended and Restated Revolving Credit and Term Loan Agreement with a group of existing
lenders (the “Credit Agreement”). The Credit Agreement increases the overall size of the facility from $765 million to $940 million by increasing the revolving
credit facility capacity to $350 million and entering into a new $225 million term loan (the “Amended Term Loan”). Both the Amended Term Loan and
revolving credit facility mature in February 2029, and feature a one-year extension option at the Company’s discretion, subject to certain conditions. The
Amended Term Loan was used, in part, to pay down $150 million of loans maturing in November 2025.
F-33
Additionally, FCPT’s lenders agreed to provide a one-year extension option for the $100 million of term loans maturing in November 2026 at the
Company’s discretion, subject to certain conditions. The outstanding balances and maturities for the $90 million term loan maturing in 2027, the $85 million
term loan maturing in 2027, and the $90 million loan maturing in 2028 were not impacted by the extension.
Acquisitions & Disposals
The Company invested $9.7 million in the acquisition of two net lease properties with an investment yield of approximately 6.45%, and approximately
12.8 years of lease term remaining. The Company funded the acquisitions with cash on hand. The Company anticipates accounting for the transactions as asset
acquisitions in accordance with U.S. GAAP. There was no contingent liability associated with the transactions at December 31, 2024.
FOUR CORNERS PROPERTY TRUST, INC.
SCHEDULE III
SCHEDULE OF REAL ESTATE ASSETS AND ACCUMLATED DEPRECIATION
DECEMBER 31, 2024
(Dollars in thousands)
F-34
Initial Cost to Company
Cost Capitalized Since Acquisition
Gross Carrying Value
Life on which
Depreciation
in latest
Statement
Tenant Industry and
State
Nbr
Properti
es
Land
Buildings and
Improvements
Equipment
Land
Building
and
Improvem
ents
Equipme
nt
Land
Building
and
Improvem
ents
Equipme
nt
Total
Accumulated
Depreciation
Construction
Date (Range)
Acquisition
Date (Range)
of Income is
Computed
Quick Service
Alabama
18
17,464
10,103
—
—
—
—
17,46
4
10,103
—
27,56
7
2,319
1976-2019
2018-2021
5 - 45
Arizona
2
2,288
1,402
—
—
—
—
2,288
1,402
—
3,690
46
2007-2023
2021-2023
10 - 35
California
1
979
—
—
—
—
—
979
—
—
979
—
2004
2018
−
Colorado
4
3,615
467
—
(127 )
—
—
3,488
467
—
3,955
154
1978-1996
2016-2019
5 - 40
Connecticut
3
5,383
995
—
—
—
—
5,383
995
—
6,378
110
1998-2021
2018-2021
14 - 49
Delaware
1
2,081
—
—
—
—
—
2,081
—
—
2,081
—
2013
2019
−
Florida
4
4,624
1,529
—
—
—
—
4,624
1,529
—
6,153
326
1986-2018
2016-2022
10 - 40
Georgia
6
6,674
5,174
—
—
—
—
6,674
5,174
—
11,84
8
1,232
1983-2024
2016-2024
10 - 52
Illinois
12
8,300
9,869
—
—
64
—
8,300
9,933
—
18,23
3
1,614
1970-2023
2016-2024
5 - 45
Indiana
25
18,229
16,114
—
—
—
—
18,22
9
16,114
—
34,34
3
3,737
1970-2019
2016-2024
5 - 54
Iowa
5
5,694
—
—
—
—
—
5,694
—
—
5,694
—
1979-2016
2018-2019
−
Kansas
2
4,071
5,883
—
—
9
—
4,071
5,892
—
9,963
437
1995-2003
2022-2023
10 - 30
Kentucky
10
9,211
5,013
—
—
—
—
9,211
5,013
—
14,22
4
1,153
1966-2008
2016-2023
7 - 45
Maryland
2
1,502
2,834
—
—
—
—
1,502
2,834
—
4,336
505
1989-2014
2018-2019
10 - 51
Michigan
15
6,758
12,364
—
—
—
—
6,758
12,364
—
19,12
2
2,996
1979-2017
2016-2020
3 - 43
Mississippi
8
6,046
10,480
—
—
—
—
6,046
10,480
—
16,52
6
1,959
1998-2016
2016-2020
10 - 54
Missouri
3
3,263
1,362
—
—
—
—
3,263
1,362
—
4,625
80
1985-2023
2020-2023
10 - 30
New Mexico
1
307
—
—
—
—
—
307
—
—
307
—
1995
2019
−
New York
2
2,858
2,559
—
—
—
—
2,858
2,559
—
5,417
369
2002-2019
2017-2021
13 - 53
North Carolina
11
8,334
12,051
—
—
—
—
8,334
12,051
—
20,38
5
2,544
1982-2019
2016-2023
9 - 50
Ohio
6
5,555
3,536
—
—
—
—
5,555
3,536
—
9,091
739
1971-2020
2018-2021
5 - 51
Oklahoma
3
2,487
2,479
—
—
(90 )
—
2,487
2,389
—
4,876
272
2004-2022
2016-2023
10 - 54
Rhode Island
1
1,343
—
—
—
—
—
1,343
—
—
1,343
—
1999
2019
−
South Carolina
7
7,811
4,619
—
—
—
—
7,811
4,619
—
12,43
0
805
1980-2019
2017-2023
10 - 50
Tennessee
8
5,620
9,489
—
—
—
—
5,620
9,489
—
15,10
9
1,870
1987-2015
2016-2020
5 - 55
Texas
8
8,270
10,034
—
—
—
—
8,270
10,034
—
18,30
4
1,783
1995-2017
2016-2024
10 - 54
Utah
3
2,977
1,157
—
26
—
—
3,003
1,157
—
4,160
203
1980-1997
2019-2021
5 - 40
Virginia
3
2,175
2,269
—
—
—
—
2,175
2,269
—
4,444
281
1993-2018
2016-2024
10 - 50
Wisconsin
10
5,470
10,282
—
—
—
—
5,470
10,282
—
15,75
2
2,383
1972-2021
2016-2021
5 - 45
Casual Dining
Alabama
12
16,334
11,054
434
—
3,963
1,609
16,33
4
15,017
2,043
33,39
4
11,206
1986-2018
1986-2022
2 - 44
Arizona
13
12,439
18,563
1,202
—
2,592
1,291
12,43
9
21,155
2,493
36,08
7
13,128
1993-2011
1993-2024
2 - 46
Arkansas
8
8,009
9,799
1,144
766
3,059
908
8,775
12,858
2,052
23,68
5
9,914
1989-2014
1989-2019
2 - 46
California
13
11,950
14,676
931
1,231
7,324
2,298
13,18
1
22,000
3,229
38,41
0
18,483
1987-2004
1987-2018
2 - 49
Colorado
18
19,788
16,656
538
571
7,104
1,923
20,35
9
23,760
2,461
46,58
0
14,924
1985-2007
1991-2022
2 - 50
Connecticut
1
1,669
—
—
—
—
—
1,669
—
—
1,669
—
1993
2018
−
Delaware
3
1,942
4,046
222
—
1,461
656
1,942
5,507
878
8,327
4,300
1991-1993
1991-2017
2 - 50
Florida
69
103,34
4
89,882
4,013
3,053
33,581
11,88
7
106,3
97
123,46
3
15,90
0
245,7
60
77,724
1985-2019
1985-2024
2 - 53
Georgia
50
59,135
69,110
4,351
634
12,885
4,790
59,76
9
81,995
9,141
150,9
05
49,409
1986-2023
1987-2024
2 - 50
(1)
FOUR CORNERS PROPERTY TRUST, INC.
SCHEDULE III
SCHEDULE OF REAL ESTATE ASSETS AND ACCUMLATED DEPRECIATION
DECEMBER 31, 2024
(Dollars in thousands)
F-35
Initial Cost to Company
Cost Capitalized Since Acquisition
Gross Carrying Value
Life on which
Depreciation
in latest
Statement
Tenant Industry and
State
Nbr
Properti
es
Land
Buildings and
Improvements
Equipment
Land
Building
and
Improvem
ents
Equipme
nt
Land
Building
and
Improvem
ents
Equipme
nt
Total
Accumulated
Depreciation
Construction
Date (Range)
Acquisition
Date (Range)
of Income is
Computed
Idaho
3
2,846
2,500
207
—
1,136
691
2,846
3,636
898
7,380
3,466
1991-2008
1991-2021
2 - 42
Illinois
32
48,318
41,711
1,090
912
6,637
2,619
49,23
0
48,348
3,709
101,2
87
22,833
1986-2022
1988-2024
2 - 50
Indiana
21
18,970
28,350
973
—
12,453
3,603
18,97
0
40,803
4,576
64,34
9
23,751
1978-2016
1985-2023
2 - 50
Iowa
15
13,393
16,394
1,447
1,130
4,052
1,353
14,52
3
20,446
2,800
37,76
9
13,083
1988-2013
1988-2019
2 - 49
Kansas
5
4,294
7,789
598
—
3,286
1,066
4,294
11,075
1,664
17,03
3
8,703
1990-2010
1990-2010
2 - 47
Kentucky
14
16,058
25,655
1,074
2,095
2,540
1,197
18,15
3
28,195
2,271
48,61
9
12,222
1992-2010
1992-2024
2 - 47
Louisiana
11
12,622
18,534
1,013
—
2,554
944
12,62
2
21,088
1,957
35,66
7
10,969
1985-2009
1992-2024
2 - 50
Maine
2
1,217
1,120
96
—
1,027
282
1,217
2,147
378
3,742
1,982
1993-2009
1993-2020
2 - 42
Maryland
21
32,896
20,261
863
—
6,041
2,200
32,89
6
26,302
3,063
62,26
1
17,011
1990-2019
1991-2023
2 - 50
Massachusetts
2
2,381
2,097
90
—
665
175
2,381
2,762
265
5,408
2,383
1997-2018
1997-2021
2 - 35
Michigan
22
17,802
32,611
1,369
1,639
12,287
3,786
19,44
1
44,898
5,155
69,49
4
34,435
1988-2018
1988-2020
2 - 54
Minnesota
9
7,182
13,353
989
—
3,795
1,423
7,182
17,148
2,412
26,74
2
15,235
1988-2006
1988-2020
2 - 41
Mississippi
9
10,715
16,824
1,280
34
1,107
407
10,74
9
17,931
1,687
30,36
7
8,760
1996-2013
1996-2019
2 - 50
Missouri
9
9,990
10,361
452
—
4,032
1,393
9,990
14,393
1,845
26,22
8
10,037
1989-2004
1989-2024
2 - 42
Montana
1
479
1,107
89
—
775
301
479
1,882
390
2,751
1,836
1993
1993
2 - 42
Nebraska
2
1,517
3,008
171
—
1,859
488
1,517
4,867
659
7,043
4,040
1991-2002
1991-2002
2 - 42
Nevada
10
8,900
13,185
365
1,215
5,927
2,183
10,11
5
19,112
2,548
31,77
5
12,951
1986-2004
1986-2024
2 - 50
New Hampshire
3
2,713
3,270
225
—
1,756
721
2,713
5,026
946
8,685
4,474
1994-2000
1994-2007
2 - 42
New Jersey
5
9,213
8,120
388
—
603
301
9,213
8,723
689
18,62
5
3,523
1995-2015
1995-2022
2 - 47
New Mexico
4
4,679
7,383
476
—
146
138
4,679
7,529
614
12,82
2
3,346
1991-2010
2003-2018
2 - 50
New York
17
21,557
18,624
1,299
—
5,650
2,089
21,55
7
24,274
3,388
49,21
9
17,738
1990-2015
1990-2023
2 - 50
North Carolina
17
20,642
22,755
1,648
—
5,455
2,313
20,64
2
28,210
3,961
52,81
3
18,557
1990-2013
1990-2024
2 - 55
North Dakota
3
2,356
5,413
597
—
726
319
2,356
6,139
916
9,411
3,955
1989-2013
1989-2013
2 - 48
Ohio
46
44,927
59,758
3,005
2,126
18,027
6,499
47,05
3
77,785
9,504
134,3
42
52,099
1971-2020
1986-2023
2 - 51
Oklahoma
13
17,092
16,553
969
—
2,661
934
17,09
2
19,214
1,903
38,20
9
10,580
1987-2018
1987-2020
22 - 50
Oregon
1
761
1,486
91
—
356
200
761
1,842
291
2,894
1,668
1998
1998
2 - 38
Pennsylvania
19
21,726
24,108
1,520
—
7,717
2,717
21,72
6
31,825
4,237
57,78
8
21,678
1989-2020
1989-2021
2 - 50
South Carolina
20
28,658
18,886
703
1,731
3,073
1,218
30,38
9
21,959
1,921
54,26
9
11,898
1990-2020
1990-2024
2 - 53
South Dakota
2
1,212
3,194
330
—
919
220
1,212
4,113
550
5,875
3,023
1992-2011
1992-2011
2 - 46
Tennessee
26
37,306
50,365
2,151
892
3,764
1,565
38,19
8
54,129
3,716
96,04
3
20,408
1988-2014
1988-2023
2 - 51
Texas
83
98,585
107,905
6,390
6,650
36,673
14,01
8
105,2
35
144,57
8
20,40
8
270,2
21
92,391
1986-2021
1986-2024
2 - 53
Utah
3
3,479
714
128
24
805
284
3,503
1,519
412
5,434
1,608
1991-2009
1991-2019
2 - 40
Virginia
20
22,875
27,310
986
250
5,894
2,196
23,12
5
33,204
3,182
59,51
1
18,887
1990-2016
1990-2023
2 - 49
Washington
6
4,975
6,092
339
409
1,682
768
5,384
7,774
1,107
14,26
5
6,324
1990-2001
1990-2021
2 - 40
West Virginia
6
5,204
9,316
772
—
1,564
647
5,204
10,880
1,419
17,50
3
7,000
1991-2012
1991-2017
2 - 50
Wisconsin
11
8,963
12,256
984
114
5,034
1,721
9,077
17,290
2,705
29,07
2
13,473
1990-2013
1990-2023
2 - 45
Medical Retail
Alabama
8
6,745
10,047
—
—
—
—
6,745
10,047
—
16,79
2
31
1994-2017
2024
10 - 40
Alaska
1
255
461
—
—
—
—
255
461
—
716
44
2007
2023
10 - 20
Arizona
1
410
1,256
—
—
—
—
410
1,256
—
1,666
110
1960
2022
10 - 35
Arkansas
2
1,401
2,500
—
—
16
—
1,401
2,516
—
3,917
182
2007-2023
2021-2023
10 - 35
Connecticut
1
1,265
1,917
—
—
—
—
1,265
1,917
—
3,182
—
1963
2024
10 - 35
(1)
FOUR CORNERS PROPERTY TRUST, INC.
SCHEDULE III
SCHEDULE OF REAL ESTATE ASSETS AND ACCUMLATED DEPRECIATION
DECEMBER 31, 2024
(Dollars in thousands)
F-36
Initial Cost to Company
Cost Capitalized Since Acquisition
Gross Carrying Value
Life on which
Depreciation
in latest
Statement
Tenant Industry and
State
Nbr
Properti
es
Land
Buildings and
Improvements
Equipment
Land
Building
and
Improvem
ents
Equipme
nt
Land
Building
and
Improvem
ents
Equipme
nt
Total
Accumulated
Depreciation
Construction
Date (Range)
Acquisition
Date (Range)
of Income is
Computed
Florida
3
2,121
4,150
—
—
—
—
2,121
4,150
—
6,271
373
1983-2020
2021-2024
10 - 35
Georgia
1
336
2,024
—
—
—
—
336
2,024
—
2,360
111
1998
2023
10 - 35
Illinois
7
8,642
24,187
—
—
66
—
8,642
24,253
—
32,89
5
1,374
1910-2006
2021-2023
10 - 40
Indiana
10
10,739
21,559
—
—
44
—
10,73
9
21,603
—
32,34
2
819
1929-2023
2021-2024
10 - 40
Iowa
4
2,397
6,684
—
—
—
—
2,397
6,684
—
9,081
117
1961-2023
2024
10 - 35
Kansas
2
2,072
2,877
—
—
—
—
2,072
2,877
—
4,949
279
1999-2013
2022
10 - 40
Louisiana
10
7,596
12,670
—
—
95
—
7,596
12,765
—
20,36
1
1,027
1998-2023
2021-2024
5 - 45
Michigan
5
2,691
7,801
—
—
—
—
2,691
7,801
—
10,49
2
535
1962-2023
2022-2024
10 - 50
Minnesota
1
554
716
—
—
—
—
554
716
—
1,270
139
1940
2021
10 - 20
Missouri
4
2,453
7,160
—
—
67
—
2,453
7,227
—
9,680
429
1974-2017
2022-2024
10 - 40
New Hampshire
1
3,120
5,403
—
—
—
—
3,120
5,403
—
8,523
196
2023
2023
15 - 45
New Mexico
1
279
1,498
—
—
—
—
279
1,498
—
1,777
70
2018
2023
10 - 45
New York
5
5,246
6,356
—
—
3
—
5,246
6,359
—
11,60
5
472
2019-2023
2021-2023
10 - 45
North Carolina
1
1,309
1,953
—
—
57
—
1,309
2,010
—
3,319
188
2004
2022
10 - 35
Ohio
5
5,108
8,854
—
—
—
—
5,108
8,854
—
13,96
2
593
2008-2022
2022
10 - 39
Oklahoma
1
755
902
—
—
—
—
755
902
—
1,657
136
1999
2021
5 - 35
Pennsylvania
2
4,491
8,602
—
—
—
—
4,491
8,602
—
13,09
3
383
2014-2021
2023-2024
10 - 35
South Carolina
1
912
1,086
—
—
—
—
912
1,086
—
1,998
67
2018
2023
10 - 40
Tennessee
4
4,918
11,361
—
—
—
—
4,918
11,361
—
16,27
9
270
2004-2023
2023-2024
10 - 45
Texas
2
6,629
5,499
—
—
—
—
6,629
5,499
—
12,12
8
281
2015-2016
2023
10 - 35
Utah
1
562
1,100
—
—
—
—
562
1,100
—
1,662
128
1972
2021
10 - 35
Virginia
1
130
979
—
—
—
—
130
979
—
1,109
74
1960
2023
10 - 25
Washington
1
356
1,104
—
—
—
—
356
1,104
—
1,460
75
1996
2023
10 - 25
Wisconsin
3
2,004
4,803
—
—
—
—
2,004
4,803
—
6,807
429
1974-2018
2021-2023
7 - 35
Auto Service
Alabama
3
3,561
3,856
—
—
—
—
3,561
3,856
—
7,417
54
2020-2023
2024
10 - 45
Alaska
1
617
693
—
—
—
—
617
693
—
1,310
119
1999
2022
5 - 20
Arkansas
3
2,748
1,647
—
—
—
—
2,748
1,647
—
4,395
63
2006-2024
2022-2024
10 - 45
Colorado
3
4,817
2,174
—
—
63
—
4,817
2,237
—
7,054
103
1962-2020
2020-2024
10 - 40
Florida
4
7,817
4,959
—
—
—
—
7,817
4,959
—
12,77
6
288
2006-2023
2022-2024
10 - 44
Georgia
16
18,480
17,574
—
—
71
—
18,48
0
17,645
—
36,12
5
1,259
1990-2024
2021-2024
5 - 45
Illinois
12
16,751
12,554
—
—
10
—
16,75
1
12,564
—
29,31
5
1,127
1948-2018
2020-2024
3 - 40
Indiana
14
18,513
15,736
—
—
24
—
18,51
3
15,760
—
34,27
3
1,299
1968-2023
2020-2024
10 - 49
Iowa
3
3,382
1,255
—
—
22
—
3,382
1,277
—
4,659
158
1970-1998
2019-2023
5 - 30
Kansas
1
535
795
—
—
—
—
535
795
—
1,330
71
1995
2022
10 - 30
Kentucky
2
1,141
1,920
—
—
—
—
1,141
1,920
—
3,061
140
1982-2011
2022-2023
10 - 35
Louisiana
7
8,853
7,171
—
—
—
—
8,853
7,171
—
16,02
4
483
2004-2023
2021-2024
5 - 45
Maryland
5
3,512
1,396
—
—
—
—
3,512
1,396
—
4,908
154
1964-2007
2020-2021
10 - 35
Michigan
6
2,448
7,402
—
—
81
7
2,448
7,483
7
9,938
766
1945-1999
2022-2023
5 - 30
Minnesota
1
1,464
1,096
—
—
—
—
1,464
1,096
—
2,560
156
2001
2020
10 - 40
Mississippi
7
6,667
5,745
—
—
—
—
6,667
5,745
—
12,41
2
671
1970-2003
2021-2022
10 - 40
(1)
FOUR CORNERS PROPERTY TRUST, INC.
SCHEDULE III
SCHEDULE OF REAL ESTATE ASSETS AND ACCUMLATED DEPRECIATION
DECEMBER 31, 2024
(Dollars in thousands)
F-37
Initial Cost to Company
Cost Capitalized Since Acquisition
Gross Carrying Value
Life on which
Depreciation
in latest
Statement
Tenant Industry and
State
Nbr
Properti
es
Land
Buildings and
Improvements
Equipment
Land
Building
and
Improvem
ents
Equipme
nt
Land
Building
and
Improvem
ents
Equipme
nt
Total
Accumulated
Depreciation
Construction
Date (Range)
Acquisition
Date (Range)
of Income is
Computed
Missouri
9
10,017
9,392
—
—
—
—
10,01
7
9,392
—
19,40
9
895
1990-2015
2020-2022
10 - 40
Nebraska
2
1,372
1,347
—
—
—
—
1,372
1,347
—
2,719
152
1998
2022-2023
3 - 30
New Jersey
2
1,824
1,682
—
—
—
—
1,824
1,682
—
3,506
112
1961-1969
2022-2024
10 - 30
New Mexico
1
515
982
—
—
—
—
515
982
—
1,497
79
2006
2022
10 - 40
New York
6
5,666
6,984
—
—
458
—
5,666
7,442
—
13,10
8
639
1940-2023
2021-2024
5 - 40
North Carolina
4
2,795
4,080
—
—
—
—
2,795
4,080
—
6,875
393
1974-1999
2022-2023
10 - 40
Ohio
21
21,644
19,491
—
—
468
—
21,64
4
19,959
—
41,60
3
2,546
1967-2024
2021-2024
5 - 45
Oklahoma
5
8,130
2,667
—
—
—
—
8,130
2,667
—
10,79
7
138
1984-2024
2020-2024
10 - 45
Pennsylvania
2
2,218
1,898
—
—
—
—
2,218
1,898
—
4,116
271
1980-2019
2019-2021
5 - 35
South Carolina
1
2,580
1,232
—
—
—
—
2,580
1,232
—
3,812
125
2023
2023
10 - 25
Tennessee
2
2,621
5,543
—
—
—
—
2,621
5,543
—
8,164
362
1989-2022
2022-2024
10 - 45
Texas
6
5,797
7,392
—
—
—
—
5,797
7,392
—
13,18
9
654
1978-2024
2021-2024
10 - 45
Virginia
5
4,759
4,863
—
—
71
—
4,759
4,934
—
9,693
383
1952-2006
2021-2023
10 - 41
Wisconsin
5
3,451
5,731
—
—
13
—
3,451
5,744
—
9,195
838
1953-2001
2020-2022
2 - 44
Multi-Tenant & Other
Alabama
5
7,022
1,675
—
—
6
—
7,022
1,681
—
8,703
462
1985-2013
2016-2022
8 - 48
California
1
1,060
4,281
—
—
125
—
1,060
4,406
—
5,466
545
2000
2020
35
Colorado
2
4,958
458
—
—
14
—
4,958
472
—
5,430
49
1982-1993
2021-2022
10 - 35
Florida
3
2,386
4,258
—
—
10
—
2,386
4,268
—
6,654
331
1985-2016
2020-2024
5 - 40
Idaho
1
578
1,164
—
—
—
—
578
1,164
—
1,742
139
1985
2020
10 - 50
Illinois
11
17,799
17,912
—
—
51
—
17,79
9
17,963
—
35,76
2
1,562
1979-2021
2019-2022
5 - 54
Indiana
5
8,362
5,154
—
—
—
—
8,362
5,154
—
13,51
6
437
1993-2022
2019-2023
10 - 54
Iowa
1
1,318
—
—
—
—
—
1,318
—
—
1,318
—
2000
2019
−
Kansas
2
3,090
2,324
—
—
—
—
3,090
2,324
—
5,414
333
1999-2000
2020-2022
5 - 35
Louisiana
1
1,739
—
—
—
—
—
1,739
—
—
1,739
—
2021
2021
−
Maine
1
3,355
—
—
—
—
—
3,355
—
—
3,355
—
2005
2019
−
Maryland
2
2,847
5,379
—
—
—
—
2,847
5,379
—
8,226
591
1962-1974
2020-2022
10 - 49
Michigan
8
9,333
15,296
—
—
19
—
9,333
15,315
—
24,64
8
1,228
1970-2023
2017-2023
10 - 54
Missouri
1
512
556
—
—
—
—
512
556
—
1,068
63
1985
2021
10 - 35
New Jersey
2
917
1,433
—
—
—
—
917
1,433
—
2,350
89
1974
2023
10 - 30
New Mexico
2
2,728
2,413
—
—
26
—
2,728
2,439
—
5,167
260
1997-2019
2020-2021
10 - 49
New York
3
2,272
4,756
—
—
30
—
2,272
4,786
—
7,058
314
1997-2023
2021-2023
10 - 50
North Carolina
1
941
—
—
—
—
—
941
—
—
941
—
1998
2022
−
Ohio
7
8,826
7,272
—
—
—
—
8,826
7,272
—
16,09
8
681
1969-2019
2019-2023
10 - 49
Oklahoma
2
1,836
598
—
—
—
—
1,836
598
—
2,434
92
1999-2001
2020-2021
10 - 35
Pennsylvania
3
3,822
5,139
—
—
—
—
3,822
5,139
—
8,961
169
1998-2019
2020-2024
10 - 49
Rhode Island
1
951
1,469
—
—
—
—
951
1,469
—
2,420
133
2009
2021
10 - 45
South Carolina
3
3,194
567
—
—
—
—
3,194
567
—
3,761
108
2003-2016
2020-2022
11 - 46
Tennessee
2
4,852
3,669
—
—
—
—
4,852
3,669
—
8,521
50
1993-2008
2022-2024
10 - 30
Texas
3
7,819
7,637
—
—
—
—
7,819
7,637
—
15,45
6
710
1970-2003
2019-2023
10 - 54
Virginia
2
8,543
—
—
—
—
—
8,543
—
—
8,543
—
1990-2016
2022
−
West Virginia
1
757
862
—
—
—
—
757
862
—
1,619
128
1996
2021
5 - 35
Wisconsin
2
2,887
1,726
—
—
—
—
2,887
1,726
—
4,613
267
1995-2017
2020
10 - 47
1,335,3
97
1,454,982
48,002
25,37
5
246,54
0
88,34
8
1,360,
772
1,701,5
22
136,3
50
3,198
,644
775,505
(1)
Amounts shown as reductions to cost capitalized since acquisition represent provisions recorded for impairment of real estate or partial dispositions.
(1)
FOUR CORNERS PROPERTY TRUST, INC.
SCHEDULE III
SCHEDULE OF REAL ESTATE ASSETS AND ACCUMLATED DEPRECIATION
DECEMBER 31, 2024
(Dollars in thousands)
F-38
Tax Cost
The aggregate gross cost of the Company’s properties for federal income tax purposes approximated $3.2 billion (unaudited) as of December 31, 2024.
F-39
SCHEDULE III
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
(Dollars in thousands)
December 31, 2024
December 31, 2023
Carrying Costs
Balance - beginning of period
$
2,949,421 $
2,655,702
Additions placed in service
249,923
310,787
Movement: Held for Sale
—
—
Dispositions and other
(700 )
(17,068 )
Balance - end of year
$
3,198,644 $
2,949,421
Accumulated Depreciation
Balance - beginning of year
$
(738,946 ) $
(706,702 )
Depreciation expense
(37,106 )
(33,983 )
Movement: Held for Sale
—
—
Dispositions and other
547
1,739
Balance - end of year
$
(775,505 ) $
(738,946 )
E-1
INDEX TO EXHIBITS
Description
Exhibit Number
3.1
Articles of Amendment and Restatement of Four Corners Property Trust, Inc. (incorporated by reference to Exhibit 3.1 to the
Company’s Current Report on Form 8-K filed on October 27, 2015).
3.2
Four Corners Property Trust, Inc. Second Amended and Restated Bylaws, as amended on May 30, 2023 (incorporated by reference to
Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on May 31, 2023).
4.1
Specimen Stock Certificate of Four Corners Property Trust, Inc. (incorporated by reference to Exhibit 4.1 to the Company Registration
Statement on Form 10/A filed on October 5, 2015).
4.2
Description of Securities Registered Pursuant to Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.2 to the
Company’s Annual Report on Form 10-K for the year ended December 31, 2019).
10.1
Amended and Restated Agreement of Limited Partnership of Four Corners Operating Partnership, L.P., dated November 7, 2016
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 10, 2016).
10.2
Amended and Restated Employment Agreement, dated March 7, 2024, by and between Four Corners Property Trust, Inc. and William
H. Lenehan (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on March 7, 2024).
10.3
Transition Agreement, dated March 7, 2024, by and between Four Corner Property Trust, Inc. and Gerald R. Morgan (incorporated by
reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 7, 2024).
10.4
Amended and Restated Employment Agreement, dated March 7, 2024, by and between Four Corners Property Trust, Inc. and James L.
Brat (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on March 7, 2024).
10.5
Tax Matters Agreement, dated as of November 9, 2015, by and between Darden Restaurants, Inc. and Four Corners Property Trust, Inc.
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 10, 2015).
10.6
Third Amended and Restated Revolving Credit and Term Loan Agreement, dated October 25, 2022, among Four Corners Operating
Partnership, LP, Four Corners Property Trust, Inc., certain lenders party thereto and JPMorgan Chase Bank, N.A. as administrative
agent (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K (File No. 001-37538) filed with the
Securities and Exchange Commission on October 25, 2022).
10.7
Third Amended and Restated Parent Guaranty, dated October 25, 2022, by Four Corners Property Trust, Inc. and Four Corners GP,
LLC, for the benefit of JPMorgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on
Form 8-K (File No. 001-37538) filed with the Securities and Exchange Commission on October 25, 2022).
10.8
Amended and Restated Four Corners Property Trust, Inc. 2015 Omnibus Incentive Plan (incorporated by reference to Annex B of the
Company’s Definitive Proxy Statement dated April 22, 2022).
10.10
Form of Lease (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form 10/A filed on October 5,
2015).
10.11
Form of Guaranty by Darden Restaurants, Inc. in respect of certain Leases (incorporated by reference to Exhibit 10.2 to the Company’s
Registration Statement on Form 10/A filed on October 5, 2015).
10.12
Form of Franchise Agreement (incorporated by reference to Exhibit 10.11 to the Company’s Registration Statement on Form 10/A filed
on October 5, 2015).
10.13
Form of Restricted Stock Unit Award Agreement for Non-Employee Directors (incorporated by reference to Exhibit 10.14 to the
Company’s Annual Report on Form 10-K for the year ended December 31, 2017).
10.14
Form of FY 2015 Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report
on Form 8-K filed on December 24, 2015).
10.15
Amendment to Form of FY 2015 Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.3 to the Company’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2016).
E-2
10.16
Form of Performance-based Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed on February 9, 2016).
10.17
Amendment to Form of Performance-based Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.5 to the
Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016).
10.18
Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K
filed on February 9, 2016).
10.19
Amendment to Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on
Form 10-Q for the quarter ended March 31, 2016).
10.20
Note Purchase Agreement, dated April 19, 2017, among Four Corners Operating Partnership, LP, Four Corners Property Trust, Inc. and
the purchasers party thereto (incorporated be reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 20,
2017).
10.21
Form of FY 2020 Performance Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.24 to the Company’s
Annual Report on Form 10-K for the year ended December 31, 2019).
10.22
Form of FY 2020 Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.25 to the Company’s Annual Report
on Form 10-K for the year ended December 31, 2019).
10.23
Second Amendment to Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.26 to the Company’s
Annual Report on Form 10-K for the year ended December 31, 2019).
10.24
Second Amendment to Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.27 to the Company’s
Annual Report on Form 10-K for the year ended December 31, 2019).
10.25*
Form of FY 2025 Restricted Stock Unit Award Agreement
10.26*
Form of FY 2025 Restricted Stock Award Agreement
10.27*
Form of FY 2025 Performance Based Restricted Stock Award Agreement
10.28*
Form of FY 2025 Performance Restricted Stock Unit Award Agreement
10.29*
Form of FY 2025 Restricted Stock Unit Award Agreement
10.30
Employment Agreement, dated April 24, 2024, by and between Four Corners Property Trust, Inc. and Patrick L. Wernig (incorporated
by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on May 6, 2024).
10.31
Waiver and Incremental Amendment No. 1 to Third Amended and Restated Revolving Credit and Term Loan Agreement, dated March
14, 2024, among Four Corners Operating Partnership, LP., Four Corners Property Trust, Inc., Four Corners GP, LLC, certain lenders
party thereto, JPMorgan Chase Bank, N.A. as administrative agent, and Barclays Bank PLC, as lead arranger (incorporated by reference
to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 14, 2024).
10.32
Fourth Amended and Restated Revolving Credit and Term Loan Agreement, dated January 31, 2025, among Four Corners Operating
Partnership, LP, Four Corners Property Trust, Inc., certain lenders party thereto and JPMorgan Chase Bank, N.A. as administrative
agent (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on January 31, 2025).
10.33
First Amendment to Transition Agreement, dated September 17, 2024, by and between Four Corners Property Trust, Inc. and Gerald R.
Morgan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on September 17, 2024).
19.1*
Insider Trading Compliance Policy
21.1*
List of Subsidiaries of Four Corners Property Trust, Inc.
23.1*
Consent of Independent Accountants
31 (a)*
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31 (b)*
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32 (a)*
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
E-3
32 (b)*
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
97
Policy for Recovery of Erroneously Awarded Compensation (incorporated by reference to Exhibit 97 to the Company's Annual Report
on Form 10-K for the year ended December 31, 2023).
99.1
Form of Lease (incorporated by reference to Exhibit 99.1 to the Company’s Annual Report on Form 10-K for the year ended December
31, 2015).
101.INS*
Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded
within the Inline XBRL document
101.SCH*
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104
Cover page formatted as Inline XBRL and contained in Exhibit 101
* Filed herewith.
E-4
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
FOUR CORNERS PROPERTY TRUST, INC.
Dated:
February 13, 2025
By: /s/ William H. Lenehan
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/S/ WILLIAM H. LENEHAN
Director and Chief Executive Officer
February 13, 2025
William H. Lenehan
(Principal Executive Officer)
/S/ PATRICK L. WERNIG
Chief Financial Officer
February 13, 2025
Patrick L. Wernig
(Principal Financial Officer)
/S/ NICCOLE M. STEWART
Chief Accounting Officer
February 13, 2025
Niccole M. Stewart
(Principal Accounting Officer)
/S/ JOHN S. MOODY
Director and Chairman of the
February 13, 2025
John S. Moody
Board of Directors
/S/ DOUGLAS B. HANSEN
Director
February 13, 2025
Douglas B. Hansen
/S/ CHARLES L. JEMLEY
Director
February 13, 2025
Charles L. Jemley
/S/ BARBARA JESUELE
Director
February 13, 2025
Barbara Jesuele
/S/ MARRAN H. OGILVIE
Director
February 13, 2025
Marran H. Ogilvie
/S/ TONI STEELE
Director
February 13, 2025
Toni Steele
/S/ ELIZABETH TENNICAN
Director
February 13, 2025
Elizabeth Tennican
AMENDED AND RESTATED
FOUR CORNERS PROPERTY TRUST, INC.
2015 OMNIBUS INCENTIVE PLAN
FY [ ] RESTRICTED STOCK UNIT AWARD AGREEMENT
(United States)
This Restricted Stock Unit Award Agreement (the “Agreement”) is between Four Corners Property Trust, Inc., a Maryland
corporation (the “Company” or “Corporation”), and you, a person notified by the Company, and identified in the Company’s records,
as the recipient of an Award of Restricted Stock Units during the Company’s fiscal year [ ]. This Agreement is effective as of the
Grant Date communicated to you and set forth in the Company’s records.
The Company wishes to award to you a number of Restricted Stock Units, subject to certain restrictions as provided in this
Agreement, in order to carry out the purpose of the Company’s Amended and Restated 2015 Omnibus Incentive Plan (the “Plan”).
Accordingly, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the
Company and you hereby agree as follows:
1. Award of Restricted Stock Units.
(a)
The Company hereby grants to you, effective as of the Grant Date, an Award of Restricted Stock Units (the
“Award”) for that number of Restricted Stock Units communicated to you and set forth in the Company’s records (the “RSUs”), on
the terms and conditions set forth in such communications, this Agreement and the Plan. Each RSU represents the right to receive on
the vesting date or dates set forth in Sections 3 and 4 hereof, one share of Stock.
(b)
The Company hereby grants to you an award of Dividend Equivalent Rights with respect to each RSU
granted pursuant to this Agreement for all dividends and distributions in cash, Stock or other property which are paid to all or
substantially all holders of the outstanding shares of Stock and that have a record date between the Grant Date and the date when the
RSU is distributed or paid to you or is forfeited or expires. The Dividend Equivalent Rights award for each RSU shall be equal to the
amount of cash and the Fair Market Value of Stock or other property which is paid as a dividend or distribution on one share of
Stock. All such Dividend Equivalent Rights shall be credited to you and shall be deemed to be reinvested in additional RSUs as of the
date of payment of any such dividend or distribution based on the Fair Market Value of a share of Stock on such date. Each additional
RSU which results from such deemed reinvestment of Dividend Equivalent Rights granted hereunder shall be subject to the same
vesting, distribution or payment, adjustment and other provisions which apply to the underlying RSU to which such additional RSU
relates.
2. Rights with Respect to the RSUs and Dividend Equivalent Rights.
The RSUs and Dividend Equivalent Rights granted hereunder do not and shall not give you any of the rights and privileges
of a shareholder of Stock. Your rights with respect to the RSUs and Dividend Equivalent Rights shall remain forfeitable at all times
prior to the date or dates on
2
which such rights become vested, and the restrictions with respect to the RSUs and Dividend Equivalent Rights lapse, in accordance
with Sections 3 or 4 hereof.
3. Vesting.
Subject to the terms and conditions of this Agreement, the RSUs shall vest, and the restrictions with respect to the RSUs
shall lapse, 100% on the [ ] anniversary of the Grant Date if you remain continuously employed by the Company or an Affiliate
until the vesting date. Each additional RSU which results from deemed reinvestments of Dividend Equivalent Rights pursuant to
Section 1(b) hereof shall vest whenever the underlying RSU to which such additional RSU relates vests.
4. Early Vesting; Forfeiture.
If you cease to be employed by the Company or an Affiliate prior to the vesting of the RSUs pursuant to Section 3 hereof,
your rights to all of the unvested RSUs and Dividend Equivalent Rights shall be immediately and irrevocably forfeited, except that:
(a)
If, within two years after the date of the consummation of a Change in Control that occurs after the Grant
Date, the Company terminates your employment for any reason other than for Cause, death or Disability, or you terminate
employment for Good Reason, you shall become immediately and unconditionally vested in all RSUs and Dividend Equivalent
Rights and the restrictions with respect to all of the RSUs and Dividend Equivalent Rights shall lapse. The treatment set forth in this
Section 4(a) is subject to and conditioned upon your timely execution, delivery and non-revocation of a general release of claims in
the form attached to your employment or service agreement with the Company, or in the absence of any such agreement (or if or such
agreement exists but does not contain a general release of claims), in a form prescribed by the Company (in any case, the “Release”).
The Company may update the Release to the extent necessary to reflect changes in law. For the avoidance of doubt, any RSUs shall
remain outstanding and eligible to vest following the date of any such termination of employment and shall actually vest upon the
effective date of the Release.
(b)
If you die prior to the vesting of the RSUs pursuant to Section 3 hereof, you shall become immediately and
unconditionally vested in all RSUs and Dividend Equivalent Rights and the restrictions with respect to all RSUs and Dividend
Equivalent Rights shall lapse on the date of your death. No transfer by will or the Applicable Laws of descent and distribution of any
RSUs or Dividend Equivalent Rights which vest by reason of your death shall be effective to bind the Company unless the Committee
administering the Plan shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as
the Committee may deem necessary to establish the validity of the transfer; or
(c)
If you become Disabled (as defined below) prior to the vesting of the RSUs pursuant to Section 3 hereof, you
shall become immediately and unconditionally vested in all RSUs and Dividend Equivalent Rights and the restrictions with respect to
all RSUs and Dividend Equivalent Rights shall lapse on the date on which the Committee administering the Plan makes the
determination that you are Disabled. For purposes of this Agreement, “Disabled” or “Disability” means you have a disability due to
illness or injury which is expected to be permanent
3
in nature and which prevents you from performing the material duties required by your regular occupation, all as determined by the
Committee administering the Plan.
(d)
For purposes of this Agreement, “Good Reason” shall have the meaning set forth in your employment or
service agreement with the Company, and in the absence of any such agreement (or if or such agreement exists but does not contain a
definition of Good Reason (or term of similar effect)), “Good Reason” means the occurrence of, without your express written
consent, a material reduction in your base salary or target annual bonus opportunity as in effect immediately prior to the date of the
consummation of a Change in Control, other than an inadvertent failure remedied by the Company promptly after receipt of notice
thereof given by you.
You shall only have Good Reason if (A) you have provided notice of termination to the Company of any of the foregoing
conditions within ninety (90) days of the initial existence of the condition, (B) the Company has been given at least thirty (30) days
following receipt of such notice to cure such condition, and (C) if such condition is not cured within such thirty (30) day period, you
actually terminate employment within sixty (60) days after the notice of termination. Your mental or physical incapacity following
the occurrence of an event described above shall not affect your ability to terminate employment for Good Reason and your death
following delivery of a notice of termination for Good Reason shall not affect your estate’s entitlement to settlement of the RSUs or
Dividend Equivalent Rights as provided hereunder upon a termination of employment for Good Reason.
5. Restriction on Transfer.
Except as contemplated by Section 4(b) hereof, none of the RSUs or Dividend Equivalent Rights may be sold, assigned,
transferred, pledged, attached or otherwise encumbered, and no attempt to transfer the RSUs or Dividend Equivalent Rights, whether
voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to the
RSUs or Dividend Equivalent Rights,
6. Financial Restatements.
To the extent that you are subject to Section 16 of the Exchange Act, (i) the Award, the RSUs, the Dividend Equivalent
Rights and any Stock issuable thereunder shall be subject to (x) any clawback or recoupment policy of the Company required in order
to comply with applicable law, including the Company’s Policy for Recovery of Erroneously Awarded Compensation and (y) any
clawback or recoupment policy of the Company approved by the Board or Committee which applies to the Company’s senior
executives; and (ii) you acknowledge that this Section 6 is not intended to limit any clawback and/or disgorgement of the Award, the
RSUs, the Dividend Equivalent Rights and any Stock issuable thereunder pursuant to Section 304 of the Sarbanes-Oxley Act of 2002.
7. Settlement of RSUs and Dividend Equivalent Rights.
No shares of Stock shall be issued to you (or your beneficiary or, if none, your estate in the event of your death) prior to the
date on which the applicable RSUs vest, in accordance with the terms and conditions communicated to you and set forth in the
Company’s records. After any
4
RSUs vest pursuant to Sections 3 or 4 hereof, the Company shall promptly, but no later than 30 days following the applicable vesting
date, cause to be issued in your name one share of Stock for each RSU (including additional RSU which resulted from such deemed
reinvestment of Dividend Equivalent Rights), in each case less any applicable withholding taxes; provided, however, that any
distribution to any “specified employee” as determined in accordance with procedures adopted by the Company that reflect the
requirements of Code Section 409A(a)(2)(B)(i) (and any applicable guidance thereunder) on account of a separation from service
shall be made as soon as practicable after the first day of the seventh month following such separation from service (or, if earlier, the
date of the specified employee’s death). The Company will not deliver any fractional share of Stock but will pay, in lieu thereof, the
Fair Market Value of such fractional share of Stock.
8. Adjustments.
Subject to and in accordance with Section 16.1 of the Plan, in the event that the Committee administering the Plan shall
determine that any dividend or other distribution (whether in the form of cash, shares of Stock, other securities or other property),
recapitalization, reclassification, stock split, reverse stock split, spin-off, combination, or exchange of shares or other securities of the
Company or other increase or decrease in shares of Stock effected without receipt of consideration by the Company affects the Stock
such that an adjustment of the RSUs is determined by the Committee administering the Plan to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, then the Committee
shall, in such manner as it may deem equitable, in its sole discretion, adjust any or all of the number and type of shares subject to the
RSUs.
9. Taxes.
(a)
You acknowledge that you will consult with your personal tax advisor regarding the income tax
consequences of the grant of the RSUs and Dividend Equivalent Rights, the vesting of the RSUs and Dividend Equivalent Rights and
the receipt of shares of Stock upon the vesting of the RSUs and Dividend Equivalent Rights, and any other matters related to this
Agreement. In order to comply with all applicable federal, state, local or foreign income tax laws or regulations, the Company may
take such action as it deems appropriate to ensure that all applicable federal, state, local or foreign payroll, withholding, income or
other taxes, which are your sole and absolute responsibility, are withheld or collected from you.
(b)
In accordance with the terms of the Plan, and such rules as may be adopted by the Committee administering
the Plan, you may elect to satisfy any applicable tax withholding obligations arising from the vesting of the RSUs and Dividend
Equivalent Rights and the corresponding receipt of shares of Stock by (i) delivering cash (including check, draft, money order or wire
transfer made payable to the order of the Company), (ii) having the Company withhold a portion of the shares of Stock otherwise to
be delivered having a Fair Market Value equal to the amount of such taxes, or (iii) delivering to the Company shares of Stock having
a Fair Market Value equal to the amount of such taxes. The Company will not deliver any fractional share of Stock but will pay, in
lieu thereof, the Fair Market Value of such fractional share of Stock. Your election must be made on or before the date that the
amount of tax to be withheld is determined. The maximum number of shares of Stock that may be withheld to satisfy any applicable
tax withholding obligations arising from the vesting and settlement of the RSUs and Dividend
5
Equivalent Rights may not exceed such number of shares of Stock having a Fair Market Value equal to the maximum statutory
amount required by the Company to be withheld and paid to any federal, state, or local taxing authority with respect to such vesting
and settlement of the RSUs and Dividend Equivalent Rights, or such greater amount as may be permitted under applicable accounting
standards.
10.Restrictive Covenants.
(a)
Non-Disclosure.
(i) During the course of your employment with the Company, before and after the execution of this
Agreement, and as consideration for the restrictive covenants entered into by you herein, you have received and will continue to
receive some or all of the Company’s various Trade Secrets (as defined under Applicable Law) and confidential or proprietary
information, which includes the following whether in physical or electronic form: (1) data and compilations of data related to
Business Opportunities (as defined below), (2) computer software, hardware, network and internet technology utilized, modified or
enhanced by the Company or by you in furtherance of your duties with the Company; (3) compilations of data concerning Company
products, services, customers, and end users including but not limited to compilations concerning projected sales, new project
timelines, inventory reports, sales, and cost and expense reports; (4) compilations of information about the Company’s employees and
independent contracting consultants; (5) the Company’s financial information, including, without limitation, amounts charged to
customers and amounts charged to the Company by its vendors, suppliers, and service providers; (6) proposals submitted to the
Company’s customers, potential customers, wholesalers, distributors, vendors, suppliers and service providers; (7) the Company’s
marketing strategies and compilations of marketing data; (8) compilations of data or information concerning, and communications
and agreements with, vendors, suppliers and licensors to the Company and other sources of technology, products, services or
components used in the Company’s business; (9) the Company’s research and development records and data; and (10) any summary,
extract or analysis of such information together with information that has been received or disclosed to the Company by any third
party as to which the Company has an obligation to treat as confidential (collectively, “Confidential Information”). For purposes of
this Agreement, “Business Opportunities” means all ideas, concepts or information received or developed (in whatever form) by you
concerning any business transaction or potential transaction that constitutes or may constitute an opportunity for the Company to earn
a fee or income, specifically including those relationships that were initiated, nourished or developed at the Company’s expense.
Confidential Information does not include data or information: (1) which has been voluntarily disclosed to the public by the
Company, except where such public disclosure has been made by you without authorization from the Company; (2) which has been
independently developed and disclosed by others; or (3) which has otherwise entered the public domain through lawful means.
(ii) All Confidential Information, Trade Secrets, and all physical and electronic embodiments thereof are
confidential and are and will remain the sole and exclusive property of the Company. During and after the term of your employment
with the Company, you agree that you shall protect any such Confidential Information and Trade Secrets and shall not, except in
connection with the performance of your remaining duties for the Company, use, disclose or otherwise copy, reproduce, distribute or
otherwise disseminate any such Confidential
6
Information or Trade Secrets, or any physical or electronic embodiments thereof, to any third party; provided, however, that you may
make disclosures required by a valid order or subpoena issued by a court or administrative agency of competent jurisdiction, in which
event you will promptly notify the Company of such order or subpoena to provide the Company an opportunity to protect its interests.
Without limiting the generality of the foregoing, you agree that after your termination of employment with the Company, you shall
not disclose to any third party any business developments, investment or business arrangements, negotiations, prospective or existing
commercial agreements, transaction or potential transaction that was considered by the Company prior to the date of your termination
from the Company. You further agree that if you are ever subpoenaed or otherwise required by law to provide any statement or other
assistance to a party to a dispute or litigation with the Company, other than the Company, then you shall provide written notice of the
circumstances requiring such statement or other assistance, including where applicable a copy of the subpoena or other legal writ, in
such a manner and at such a time that allows the Company to timely respond. Nothing herein shall prevent you from cooperating
with co‑defendants in litigation or with inquiry in a government investigation without a need to obtain prior consent or approval from
the Company; provided, however, you shall provide prompt notice of any voluntary giving of oral or written statements to such
parties, and provide to the Company a copy of any written statement so given or a summary of any oral statement provided.
(iii)Upon request by the Company and, in any event, upon termination of your employment with the
Company for any reason, you will promptly deliver to the Company all property belonging to the Company, including but without
limitation, all Confidential Information, Trade Secrets and all electronic and physical embodiments thereof, all Company files,
customer lists, management reports, memoranda, research, Company forms, financial data and reports and other documents
(including but not limited to all such data and documents in electronic form) supplied to or created by you in connection with your
employment with the Company (including all copies of the foregoing) in your possession or control, and all of the Company’s
equipment and other materials in your possession or control. You agree to allow the Company, at its request, to verify return of
Company property and documents and information and/or permanent deletion of the same, through inspection of personal computers,
personal storage media, third party websites, third party e-mail systems, personal digital assistant devices, cell phones and/or social
networking sites on which Company information was stored during your employment with the Company.
(iv)Nothing contained herein shall be in derogation or a limitation of the rights of the Company to enforce
its rights or your duties under the Applicable Law relating to Trade Secrets.
(v) Nothing contained in this Agreement shall prohibit you from (A) communicating directly with,
cooperating with, or providing information to, reporting possible violations of federal law or regulation to or receiving financial
awards from any Federal, state or local governmental agency or entity, including but not limited to the Department of Justice, the
Securities and Exchange Commission, the Occupational Safety and Health Administration, the Equal Employment Opportunity
Commission, the U.S. Commodity Futures Trading Commission, the U.S. National Labor Relations Board or any Inspector General,
or making other disclosures protected under the whistleblower provisions of federal law or regulation; (B) exercising any rights you
may have under Section 7 of the U.S. National Labor Relations Act, such as the right to engage
7
in concerted activity, including collective action or discussion concerning wages or working conditions; or (C) discussing or
disclosing information about unlawful acts in the workplace, such as harassment or discrimination based on a protected characteristic
or any other conduct that you have reason to believe is unlawful. You do not need the prior authorization of the Company to make
any such reports or disclosures and you are not required to notify the Company that you have made such reports or disclosures.
(vi)Notwithstanding anything to the contrary contained in this Agreement, the parties hereto acknowledge
that pursuant to 18 USC § 1833(b), you may not be held liable under any criminal or civil federal or state trade secret law for
disclosure of a trade secret: (i) made in confidence to a Federal, state, or local government official, either directly or indirectly, or to
an attorney, solely for the purpose of reporting or investigating a suspected violation of law or (ii) in a complaint or other document
filed in a lawsuit or other proceeding, if such filing is made under seal. Additionally, the parties hereto acknowledge that if you sue
the Company for retaliation based on the reporting of a suspected violation of law, you may disclose a trade secret to your attorney
and use the trade secret information in the court proceeding, so long as any document containing the trade secret is filed under seal
and you do not disclose the trade secret except pursuant to court order.
(b)
Non-Competition. You agree that, while employed by the Company and for a period of twelve (12) months
following the termination of your employment with the Company for any reason, with or without cause, whether upon the initiative of
either you or the Company (the “Restricted Period”), you will not provide or perform the same or substantially similar services, that
you provided to the Company, on behalf of any Direct Competitor (as defined below), directly (i.e., as an officer or employee) or
indirectly (i.e., as an independent contractor, consultant, advisor, board member, agent, shareholder, investor, joint venturer, or
partner), anywhere within the United States of America (the “Territory”). For purposes of this Agreement, “Direct Competitor”
means any individual, partnership, corporation, limited liability company, association, or other group, however organized, who
competes with the Company in the business of owning, acquiring and leasing restaurant and retail properties.
(i) If you are a resident of California and subject to its laws, the restrictions set forth in this Section 10(b)
above shall only apply to you during your employment with the Company.
(ii) Nothing in this Section 10(b) shall divest you from the right to acquire as a passive investor (with no
involvement in the operations or management of the business) up to 1% of any class of securities which is: (x) issued by any Direct
Competitor, and (y) publicly traded on a national securities exchange or over-the-counter market.
(c)
Non-Solicitation of Customers. You agree that you shall not at any time during your employment with the
Company and during the Restricted Period, on behalf of yourself or any other Person, directly or by assisting others, solicit, induce,
encourage or cause any of the Company’s vendors, suppliers, licensees, or other Persons with whom the Company has a contractual
relationship and with whom you have had Material Contact (as defined below) during the last two years of your employment with the
Company, to cease doing business with the Company or to do business with a Direct Competitor. For purposes of this Agreement,
“Material
8
Contact” means contact between you and a Person: (1) with whom or which you dealt on behalf of the Company; (2) whose dealings
with the Company were coordinated or supervised by you; (3) about whom you obtained Confidential Information in the ordinary
course of business as a result of your association with the Company; or (4) who receives products or services authorized by the
Company, the sale or provision of which results or resulted in compensation, commission, or earnings for you within two years prior
to the date of the termination of your employment with the Company. If you are a resident of California and subject to its laws, the
restrictions set forth in this Section 10(c) shall only apply to you (i) during your employment with the Company or (ii) to the extent
that you use or disclose Trade Secrets to engage in any such restrictions, during the Restricted Period.
(d)
Non-Solicitation of Employees. You agree that during the course of your employment with the Company and
during the Restricted Period, you will not, on behalf of yourself or any other Person, directly or by assisting others, solicit, induce,
persuade, or encourage, or attempt to solicit, induce, persuade, or encourage, any individual employed by the Company, with whom
you have worked, to terminate such employee’s position with the Company, whether or not such employee is a full-time or temporary
employee of the Company and whether or not such employment is pursuant to a written agreement, for a determined period, or at
will. The provisions of this Section 10(d) shall only apply to those individuals employed by the Company at the time of solicitation or
attempted solicitation. For the avoidance of doubt, the provisions of this Section 10(d) shall not apply to outside advisors or other
third‑party service providers to the Company.
(e)
Cooperation. You acknowledge that after the date on which your employment with the Company terminates
(other than due to a termination of employment due to death or disability), you shall, upon the Company’s reasonable request, make
yourself available at reasonable times, intervals and places for interviews, consultations, internal investigations and/or testimony
during which you shall provide to the Company, or its designated attorneys or agents, any and all information then known to you
regarding or relating to the Company or your activities on behalf of the Company pertaining to the subject matter on which your
cooperation is sought. You agree to remain involved for so long as any such matters shall be pending. Any efforts undertaken by you
at the Company’s request pursuant to this Section 10(e) shall be at the Company’s expense (and shall be subject to reasonable
accommodation for your then-current commitments and obligations).
(f)
Non‑Disparagement. You agree that the Company’s reputation and goodwill in the marketplace is of utmost
importance and value to the Company. You further agree that during and after the term of your employment with the Company, you,
other than in the performance of your duties for the Company, will not make, publish or cause to be published any statement or
comments that disparage or defame the reputation, character, image, products, or services of the Company, its subsidiaries or
affiliates, or any of their respective stockholders, partners, members, boards of directors, managers, officers and employees. The
parties hereto acknowledge and agree that the foregoing prohibitions extend to statements to the news media, the Company’s
competitors, vendors, and the Company’s then‑current employees. The parties hereto further acknowledge and agree that the
foregoing prohibitions shall not be violated by (i) truthful statements by you in response to legal process, governmental testimony or
filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection
9
with such proceedings) or (ii) you rebutting false or misleading statements made by others. The parties hereto further understand and
agree that this Section 10(f) is a material provision of this Agreement and that any material and uncured breach of this Section 10(f)
shall be a material breach of this Agreement, and that the Company would be irreparably harmed by violation of this provision.
(g)
Acknowledgements. You acknowledge that the Company is in the business of owning, acquiring and leasing
restaurant, medical, and retail properties (in each case, as directed by the Board) on a nationwide basis and that the Company makes
substantial investments and has established substantial goodwill associated with its business supplier relationships and marketing
programs throughout the United States. You therefore acknowledge and agree that it is fair and reasonable for the Company to take
steps to protect its Confidential Information, Trade Secrets, goodwill, business relationships, employees, economic advantages, and/or
other legitimate business interests from the risk of misappropriation of or harm to its Confidential Information, Trade Secrets,
goodwill, business relationships employees, economic advantages, and/or other legitimate business interests. You acknowledge that
the consideration, including this Agreement, continued employment, specialized training, and the Confidential Information and Trade
Secrets provided to you, gives rise to the Company’s interest in restraining you from competing with the Company and that any
limitations as to time, geographic scope and scope of activity to be restrained are reasonable and do not impose a greater restraint than
is necessary to protect Company’s Confidential Information, Trade Secrets, good will, business relationships, employees, economic
advantages, and/or other legitimate business interests, and will not prevent you from earning a livelihood.
(h)
Survival of Covenants. The provisions and restrictive covenants in this Section 10 of this Agreement shall
survive the expiration or termination of this Agreement for any reason. You agree not to challenge the enforceability or scope of the
provisions and restrictive covenants in this Section 10. You further agree to notify all future persons, or businesses, with which you
become affiliated or employed by, of the provisions and restrictions set forth in this Section 10, prior to the commencement of any
such affiliation or employment.
(i)
Injunctive Relief. You acknowledge that if you breach or threaten to breach any of the provisions of this
Agreement, your actions will cause irreparable harm and damage to the Company which cannot be compensated by damages alone.
Accordingly, if you breach or threaten to breach any of the provisions of this Agreement, the Company shall be entitled to injunctive
relief, in addition to any other rights or remedies the Company may have. You hereby waive the requirement for a bond by the
Company as a condition to seeking injunctive relief. The existence of any claim or cause of action by you against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of your
agreements under this Agreement.
(j)
Forfeiture. In the event that you violate the terms of this Section 10, you understand and agree that in addition
to the Company’s rights to obtain injunctive relief and damages for such violation, any and all rights to the Award under this
Agreement, whether vested or unvested, shall be forfeited and extinguished.
10
11.General Provisions.
(a)
Interpretations. This Agreement is subject in all respects to the terms of the Plan. A copy of the Plan is
available upon your request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms
in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms of the
Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be
determined by the Committee administering the Plan, and such determination shall be final, conclusive and binding upon all parties in
interest. To the extent that any Award granted by the Company is subject to Code Section 409A, such Award shall be subject to terms
and conditions that comply with the requirements of Code Section 409A to avoid adverse tax consequences under Code Section
409A.
(b)
No Right to Employment. Nothing in this Agreement or the Plan shall be construed as giving you the right to
be retained as an employee of the Company or any Affiliate In addition, the Company or an Affiliate may at any time dismiss you
from employment, free from any liability or any claim under this Agreement, unless otherwise expressly provided in this Agreement.
(c)
Reservation of Shares. The Company shall at all times prior to the vesting of the RSUs and the Dividend
Equivalent Rights reserve and keep available such number of shares of Stock as will be sufficient to satisfy the requirements of this
Agreement.
(d)
Securities Matters. The Company shall not be required to deliver any shares of Stock until the requirements
of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be
determined by the Company to be applicable are satisfied.
(e)
Headings. Headings are given to the sections and subsections of this Agreement solely as a convenience to
facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this
Agreement or any provision hereof.
(f)
Arbitration. Except for injunctive relief as set forth herein, the parties agree that any dispute between the
parties regarding this Agreement shall be submitted to binding arbitration in San Francisco, California.
(g)
Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of
Maryland (without giving effect to the conflict of law principles thereof). Subject to Section 11(f) hereof, you agree that the state and
federal courts of Maryland shall have jurisdiction over any litigation between you and the Company regarding this Agreement, and
you expressly submit to the exclusive jurisdiction and venue of the federal and state courts sitting in San Francisco, California.
(h)
Notices. You should send all written notices regarding this Agreement or the Plan to the Company at the
following address:
11
Four Corners Property Trust, Inc.
591 Redwood Highway
Suite 3215 Mill Valley, CA 94941
Attention: General Counsel
(i)
Award Agreement and Related Documents. This RSU Award Agreement shall have no force or effect unless
you have been notified by the Company, and identified in the Company’s records, as the recipient of a RSU Award. YOU MUST
REVIEW AND ACKNOWLEDGE ACCEPTANCE OF THE TERMS OF THIS AGREEMENT, INCLUDING SPECIFICALLY
THE RESTRICTIVE COVENANTS, BY EXECUTING THIS AGREEMENT ELECTRONICALLY VIA YOUR ESTABLISHED
ACCOUNT ON THE PLAN MANAGEMENT CORPORATION WEBSITE WITHIN 60 DAYS OF THE DATE OF GRANT;
PROVIDED, HOWEVER, THAT THE COMMITTEE MAY, AT ITS DISCRETION, EXTEND THIS DATE. FAILURE TO
ACCEPT THE REFERENCED TERMS AND TO EXECUTE THIS AGREEMENT ELECTRONICALLY WILL PRECLUDE YOU
FROM RECEIVING YOUR RSU GRANT. In connection with your RSU grant and this Agreement, the following additional
documents were made available to you electronically, and paper copies are available on request directed to the Company’s
Compensation Department: (i) the Plan; and (ii) a Prospectus relating to the Plan.
AMENDED AND RESTATED
FOUR CORNERS PROPERTY TRUST, INC.
2015 OMNIBUS INCENTIVE PLAN
RESTRICTED STOCK AWARD AGREEMENT
This Restricted Stock Award Agreement (the “Agreement”) is between Four Corners Property Trust, Inc., a Maryland
corporation (the “Company”), and you, a person notified by the Company, and identified in the Company’s records, as the recipient
of an Award of Restricted Stock during the Company’s fiscal year [ ]. This Agreement is effective as of the Grant Date
communicated to you and set forth in the Company’s records.
The Company wishes to award to you a number of shares of Stock, subject to certain restrictions as provided in this
Agreement, in order to carry out the purpose of the Company’s Amended and Restated 2015 Omnibus Incentive Plan (the “Plan”).
Accordingly, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the
Company and you hereby agree as follows:
1. Award of Restricted Stock.
(a)
The Company hereby grants to you, effective as of the Grant Date, an Award of Restricted Stock (the
“Award”) for that number of shares of Stock communicated to you and set forth in the Company’s records (together with any
additional shares of Stock received pursuant to Section 1(b) hereof, the “Shares”), on the terms and conditions set forth in such
communications, this Agreement and the Plan.
(b)
As a condition to receiving the Shares, you hereby agree that all dividends and other distributions paid with
respect to the Shares (whether in cash, property or shares of Stock) shall be reinvested in additional shares of Stock. All such
dividends or distributions shall be credited to you and reinvested in additional shares of Stock as of the date of payment of any such
dividend or distribution based on the Fair Market Value of a share of Stock on such date; provided, however, that if the Shares to
which such dividend or distribution relates vest during the period beginning on the record date of such dividend or distribution and
ending on the day prior to the applicable payment date, such credit shall be based on the Fair Market Value on date immediately
preceding such vesting date. Each additional share of Stock which results from such reinvestment granted hereunder shall be subject
to the same vesting, forfeiture, distribution or payment, adjustment and other provisions which apply to the underlying share of Stock
relates.
2. Rights with Respect to the Shares.
With respect to the Shares, you shall be entitled to exercise the rights and privileges of a shareholder of Stock of the
Company, including the right to vote the Shares and the right to receive dividends and distributions thereon as provided in Section
1(b) of this Agreement, unless and until the Shares are forfeited pursuant to Sections 4 or 6 hereof. Your rights with respect to the
Shares shall remain forfeitable at all times prior to the date or dates on which such rights become vested, and the restrictions with
respect to the Shares lapse, in accordance with Sections 3 or 4 hereof.
2
3. Vesting.
Subject to the terms and conditions of this Agreement, the Shares shall vest, and the restrictions with respect to the Shares
shall lapse, on [ ] if you remain continuously employed by the Company or an Affiliate until the respective vesting date.
4. Early Vesting; Forfeiture.
If you cease to be employed by the Company or an Affiliate prior to the vesting of the Shares pursuant to Section 3 hereof,
your rights to all of the unvested Shares shall be immediately and irrevocably forfeited, including the right to vote such Shares and the
right to receive dividends and distributions on such Shares as provided in Section 1(b) hereof, except that:
(a)
Except as provided in Section 4(b) hereof, if, after the first anniversary of the Grant Date, your employment
with the Company is terminated by the Company without Cause (other than due to your death or Disability (as defined below)) or by
you for Good Reason (as defined below), in any case, then you shall become immediately and unconditionally vested in the number
of Shares equal to (i) the number of Shares issued to you hereunder multiplied by (x) a fraction, the numerator of which is the number
of full months you were employed by the Company during the period commencing on the Grant Date and ending on the date of your
termination of employment plus six months, and (y) the denominator of which is the number of full months in the vesting period,
minus (ii) the number of Shares issued to you hereunder that have vested in accordance with Section 3 above prior to the date of your
termination of employment.
(b)
If, within two years after the date of the consummation of a Change in Control that occurs after the Grant
Date, the Company terminates your employment for any reason other than for Cause, death or Disability, or you terminate
employment for Good Reason, then you shall become immediately and unconditionally vested in all Shares and the restrictions with
respect to all of the Shares shall lapse.
(c)
If you die prior to the vesting of the Shares pursuant to Section 3 hereof, then you shall become immediately
and unconditionally vested in all Shares and the restrictions with respect to all Shares shall lapse on the date of your death. No
transfer by will or the Applicable Laws of descent and distribution of any Shares which vest by reason of your death shall be effective
to bind the Company unless the Committee administering the Plan shall have been furnished with written notice of such transfer and a
copy of the will or such other evidence as the Committee may deem necessary to establish the validity of the transfer.
(d)
If you become Disabled (as defined below) prior to the vesting of the Shares pursuant to Section 3 hereof,
then you shall become immediately and unconditionally vested in all Shares and the restrictions with respect to all Shares shall lapse
on the date on which the Committee administering the Plan makes the determination that you are Disabled. For purposes of this
Agreement, “Disabled” or “Disability” means you have a disability due to illness or injury which is expected to be permanent in
nature and which prevents you from performing the material duties required by your regular occupation, all as determined by the
Committee administering the Plan.
(e)
The treatment set forth in Section 4(a) and in Section 4(b) is subject to and conditioned upon your timely
execution, delivery and non-revocation of a general release of claims
3
in the form attached to your employment or service agreement with the Company, or in the absence of any such agreement (or if or
such agreement exists but does not contain a general release of claims), in a form prescribed by the Company (in any case, the
“Release”). The Company may update the Release to the extent necessary to reflect changes in law. For the avoidance of doubt, any
Shares shall remain outstanding and eligible to vest following the date of any such termination of employment and shall actually vest
upon the effective date of the Release.
(f)
For purposes of this Agreement, “Good Reason” shall have the meaning set forth in your employment or
service agreement with the Company, and in the absence of any such agreement (or if or such agreement exists but does not contain a
definition of Good Reason (or term of similar effect)), “Good Reason” means the occurrence of, without your express written
consent, a material reduction in your base salary or target annual bonus opportunity as in effect immediately prior to the date of the
consummation of a Change in Control, other than an inadvertent failure remedied by the Company promptly after receipt of notice
thereof given by you.
You shall only have Good Reason if (A) you have provided notice of termination to the Company of any of the
foregoing conditions within ninety (90) days of the initial existence of the condition, (B) the Company has been given at least thirty
(30) days following receipt of such notice to cure such condition, and (C) if such condition is not cured within such thirty (30) day
period, you actually terminate employment within sixty (60) days after the notice of termination. Your mental or physical incapacity
following the occurrence of an event described above shall not affect your ability to terminate employment for Good Reason and your
death following delivery of a notice of termination for Good Reason shall not affect your estate’s entitlement to vesting of the Shares
as provided hereunder upon a termination of employment for Good Reason.
5. Restriction on Transfer.
Except as contemplated by Section 4(c) hereof, until the Shares vest pursuant to Sections 3 or 4 hereof, none of the Shares
may be sold, assigned, transferred, pledged, attached or otherwise encumbered, and no attempt to transfer the Shares, whether
voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to the
Shares.
6. Clawback.
(a)
To the extent that you are not subject to Section 16 of the Exchange Act, if (i) the Company is required to
restate its financial statements due to fraud and (ii) the Committee administering the Plan determines that you have knowingly
participated in such fraud, then the Committee may, in its sole and absolute discretion, at any time within two years following such
restatement, require you to, and you shall immediately upon notice of such Committee determination, return to the Company any
Shares that vested under this Agreement and any distributions with respect to the vested Shares (including any cash dividends or other
distributions) received by you or your personal representative and pay to the Company in cash the amount of any proceeds received
by you or your personal representative from the disposition or transfer of any Shares, in each case during the period commencing two
years before the beginning of the restated financial period and ending on the date of such Committee determination. In addition, all
4
of your rights to Shares that are not vested on the date that the Committee makes such determination shall be immediately and
irrevocably forfeited, including the right to vote such Shares and the right to receive dividends and distributions on such Shares as
provided in Section 1(b) of this Agreement. Notwithstanding anything to the contrary in this Section 6(a), the Committee shall have
the authority and discretion to make any determination regarding the specific implementation of this Section 6(a) with respect to you.
(b)
To the extent that you are subject to Section 16 of the Exchange Act, (i) the Award and the Shares shall be
subject to (x) any clawback or recoupment policy of the Company required in order to comply with applicable law, including the
Company’s Policy for Recovery of Erroneously Awarded Compensation and (y) any clawback or recoupment policy of the Company
approved by the Board or Committee which applies to the Company’s senior executives; and (ii) you acknowledge that this Section 6
is not intended to limit any clawback and/or disgorgement of the Award and the Shares pursuant to Section 304 of the Sarbanes-
Oxley Act of 2002.
7. Issuance and Custody of Certificates.
(a)
The Company shall cause the Shares to be issued in your name in such a manner as the Committee, in its sole
discretion, deems appropriate, including by book‑entry or direct registration (including transaction advices) or the issuance
of a stock certificate or certificates, which certificate or certificates shall be held by the Company for your benefit until such
time as such Shares are forfeited to the Company or the restrictions applicable to the Shares lapse and you deliver a stock
power to the Company with respect to each certificate. The Shares shall be restricted from transfer and shall be subject to an
appropriate stop-transfer order. If any certificate is issued, the certificate shall bear a legend that complies with Applicable
Law and makes appropriate reference to the restrictions applicable to the Shares. To the extent that ownership of the Shares
is evidenced by a book-entry registration or direct registration (including transaction advices), such registration shall be
notated to evidence the restrictions imposed on such Shares.
(b)
After any Shares vest pursuant to Sections 3 or 4 hereof, and following payment of the applicable
withholding taxes pursuant to Section 9 hereof, the Company shall promptly cause such vested Shares (less any shares
withheld to pay taxes), free of the restrictions and/or legend described in this Section 7, to be delivered, either by book‑entry
or direct registration (including transaction advices) or in the form of a certificate or certificates evidencing ownership of
such Shares, registered in your name or in the names of your beneficiary or estate, as the case may be.
8. Adjustments and Distributions.
(a)
Subject to and in accordance with Section 16.1 of the Plan, in the event that the Committee administering the
Plan shall determine that any dividend or other distribution (whether in the form of cash, shares of Stock, other securities or other
property), recapitalization, reclassification, stock split, reverse stock split, spin-off, combination, or exchange of shares or other
securities of the Company or other increase or decrease in shares of Stock effected without receipt of consideration by the Company
affects the Stock such that an adjustment of the Shares is determined by the Committee administering the Plan to be appropriate in
order to prevent dilution
5
or enlargement of the benefits or potential benefits intended to be made available under this Agreement, then the Committee shall, in
such manner as it may deem equitable, in its sole discretion, adjust any or all of the number and type of Shares.
9. Taxes.
(a)
You acknowledge that you will consult with your personal tax advisor regarding the income tax
consequences of the grant of the Shares, the payment of dividends on the Shares, the vesting of the Shares and any other matters
related to this Agreement. In order to comply with all applicable federal, state, local or foreign income tax laws or regulations, the
Company may take such action as it deems appropriate to ensure that all applicable federal, state, local or foreign payroll,
withholding, income or other taxes, which are your sole and absolute responsibility, are withheld or collected from you.
(b)
In accordance with the terms of the Plan, and such rules as may be adopted by the Committee administering
the Plan, you may elect to satisfy any applicable tax withholding obligations arising from the receipt of, or the lapse of restrictions
relating to, the Shares by (i) delivering cash (including check, draft, money order or wire transfer made payable to the order of the
Company), (ii) having the Company withhold a portion of the Shares otherwise to be delivered having a Fair Market Value equal to
the amount of such taxes, or (iii) delivering to the Company shares of Stock having a Fair Market Value equal to the amount of such
taxes. The Company will not deliver any fractional Share but will pay, in lieu thereof, the Fair Market Value of such fractional Share.
Your election must be made on or before the date that the amount of tax to be withheld is determined. The maximum number of
shares of Stock that may be withheld to satisfy any applicable tax withholding obligations arising from the vesting of the Shares may
not exceed such number of shares of Stock having a Fair Market Value equal to the maximum statutory amount required by the
Company to be withheld and paid to any federal, state, or local taxing authority with respect to such vesting of the Shares, or such
greater amount as may be permitted under applicable accounting standards.
10.Restrictive Covenants.
(a)
Non-Disclosure.
(i) During the course of your employment with the Company, before and after the execution of this
Agreement, and as consideration for the restrictive covenants entered into by you herein, you have received and will
continue to receive some or all of the Company’s various Trade Secrets (as defined under Applicable Law) and
confidential or proprietary information, which includes the following whether in physical or electronic form: (1)
data and compilations of data related to Business Opportunities (as defined below), (2) computer software,
hardware, network and internet technology utilized, modified or enhanced by the Company or by you in furtherance
of your duties with the Company; (3) compilations of data concerning Company products, services, customers, and
end users including but not limited to compilations concerning projected sales, new project timelines, inventory
reports, sales, and cost and expense reports; (4) compilations of information about the Company’s employees and
independent
6
contracting consultants; (5) the Company’s financial information, including, without limitation, amounts charged to
customers and amounts charged to the Company by its vendors, suppliers, and service providers; (6) proposals
submitted to the Company’s customers, potential customers, wholesalers, distributors, vendors, suppliers and
service providers; (7) the Company’s marketing strategies and compilations of marketing data; (8) compilations of
data or information concerning, and communications and agreements with, vendors, suppliers and licensors to the
Company and other sources of technology, products, services or components used in the Company’s business; (9)
the Company’s research and development records and data; and (10) any summary, extract or analysis of such
information together with information that has been received or disclosed to the Company by any third party as to
which the Company has an obligation to treat as confidential (collectively, “Confidential Information”). For
purposes of this Agreement, “Business Opportunities” means all ideas, concepts or information received or
developed (in whatever form) by you concerning any business, transaction or potential transaction that constitutes
or may constitute an opportunity for the Company to earn a fee or income, specifically including those relationships
that were initiated, nourished or developed at the Company’s expense. Confidential Information does not include
data or information: (1) which has been voluntarily disclosed to the public by the Company, except where such
public disclosure has been made by you without authorization from the Company; (2) which has been
independently developed and disclosed by others; or (3) which has otherwise entered the public domain through
lawful means.
(ii) All Confidential Information, Trade Secrets, and all physical and electronic embodiments thereof are
confidential and are and will remain the sole and exclusive property of the Company. During and after the term of
your employment with the Company, you agree that you shall protect any such Confidential Information and Trade
Secrets and shall not, except in connection with the performance of your remaining duties for the Company, use,
disclose or otherwise copy, reproduce, distribute or otherwise disseminate any such Confidential Information or
Trade Secrets, or any physical or electronic embodiments thereof, to any third party; provided, however, that you
may make disclosures required by a valid order or subpoena issued by a court or administrative agency of
competent jurisdiction, in which event you will promptly notify the Company of such order or subpoena to provide
the Company an opportunity to protect its interests. Without limiting the generality of the foregoing, you agree that
after your termination of employment with the Company, you shall not disclose to any third party any business
developments, investment or business arrangements, negotiations, prospective or existing commercial agreements,
transaction or potential transaction that was considered by the Company prior to the date of your termination from
the Company. You further agree that if you are ever subpoenaed or otherwise required by law to provide any
statement or other assistance to a party to a dispute or litigation with the Company, other than the Company, then
you shall provide written notice of the circumstances requiring such statement or other assistance, including where
applicable a copy of the subpoena or other legal writ, in such a manner and at such a time that allows the Company
to timely respond.
7
Nothing herein shall prevent you from cooperating with co‑defendants in litigation or with inquiry in a government
investigation without a need to obtain prior consent or approval from the Company; provided, however, you shall
provide prompt notice of any voluntary giving of oral or written statements to such parties, and provide to the
Company a copy of any written statement so given or a summary of any oral statement provided.
(iii)Upon request by the Company and, in any event, upon termination of your employment with the
Company for any reason, you will promptly deliver to the Company all property belonging to the Company,
including but without limitation, all Confidential Information, Trade Secrets and all electronic and physical
embodiments thereof, all Company files, customer lists, management reports, memoranda, research, Company
forms, financial data and reports and other documents (including but not limited to all such data and documents in
electronic form) supplied to or created by you in connection with your employment with the Company (including
all copies of the foregoing) in your possession or control, and all of the Company’s equipment and other materials
in your possession or control. You agree to allow the Company, at its request, to verify return of Company property
and documents and information and/or permanent deletion of the same, through inspection of personal computers,
personal storage media, third party websites, third party e-mail systems, personal digital assistant devices, cell
phones and/or social networking sites on which Company information was stored during your employment with the
Company.
(iv)Nothing contained herein shall be in derogation or a limitation of the rights of the Company to enforce
its rights or your duties under the Applicable Law relating to Trade Secrets.
(v) Nothing contained in this Agreement shall prohibit you from (A) communicating directly with,
cooperating with, or providing information to, reporting possible violations of federal law or regulation to or
receiving financial awards from any Federal, state or local governmental agency or entity, including but not limited
to the Department of Justice, the Securities and Exchange Commission, the Occupational Safety and Health
Administration, the Equal Employment Opportunity Commission, the U.S. Commodity Futures Trading
Commission, the U.S. National Labor Relations Board or any Inspector General, or making other disclosures
protected under the whistleblower provisions of federal law or regulation; (B) exercising any rights you may have
under Section 7 of the U.S. National Labor Relations Act, such as the right to engage in concerted activity,
including collective action or discussion concerning wages or working conditions; or (C) discussing or disclosing
information about unlawful acts in the workplace, such as harassment or discrimination based on a protected
characteristic or any other conduct that you have reason to believe is unlawful. You do not need the prior
authorization of the Company to make any such reports or disclosures and you are not required to notify the
Company that you have made such reports or disclosures.
8
(vi)Notwithstanding anything to the contrary contained in this Agreement, the parties hereto acknowledge
that pursuant to 18 USC § 1833(b), you may not be held liable under any criminal or civil federal or state trade
secret law for disclosure of a trade secret: (i) made in confidence to a Federal, state, or local government official,
either directly or indirectly, or to an attorney, solely for the purpose of reporting or investigating a suspected
violation of law or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made
under seal. Additionally, the parties hereto acknowledge that if you sue the Company for retaliation based on the
reporting of a suspected violation of law, you may disclose a trade secret to your attorney and use the trade secret
information in the court proceeding, so long as any document containing the trade secret is filed under seal and you
do not disclose the trade secret except pursuant to court order.
(b)
Non-Competition. You agree that, while employed by the Company and for a period of twelve (12) months
following the termination of your employment with the Company for any reason, with or without cause, whether upon the initiative of
either you or the Company (the “Restricted Period”), you will not provide or perform the same or substantially similar services, that
you provided to the Company, on behalf of any Direct Competitor (as defined below), directly (i.e., as an officer or employee) or
indirectly (i.e., as an independent contractor, consultant, advisor, board member, agent, shareholder, investor, joint venturer, or
partner), anywhere within the United States of America (the “Territory”). For purposes of this Agreement, “Direct Competitor”
means any individual, partnership, corporation, limited liability company, association, or other group, however organized, who
competes with the Company in the business of owning, acquiring and leasing restaurant and retail properties.
(i) If you are a resident of California and subject to its laws, the restrictions set forth in this Section 10(b)
above shall only apply to you during your employment with the Company.
(ii) Nothing in this Section 10(b) shall divest you from the right to acquire as a passive investor (with no
involvement in the operations or management of the business) up to 1% of any class of securities which is: (x)
issued by any Direct Competitor, and (y) publicly traded on a national securities exchange or over-the-counter
market.
(c)
Non-Solicitation of Customers. You agree that you shall not at any time during your employment with the
Company and during the Restricted Period, on behalf of yourself or any other Person, directly or by assisting others, solicit, induce,
encourage or cause any of the Company’s vendors, suppliers, licensees, or other Persons with whom the Company has a contractual
relationship and with whom you have had Material Contact (as defined below) during the last two years of your employment with the
Company, to cease doing business with the Company or to do business with a Direct Competitor. For purposes of this Agreement,
“Material Contact” means contact between you and a Person: (1) with whom or which you dealt on behalf of the Company; (2) whose
dealings with the Company were coordinated or supervised by you; (3) about whom you obtained Confidential Information in the
ordinary course of business as a result of your association with the Company; or (4) who receives products or services authorized by
the Company, the sale or provision of which results or resulted in compensation, commission,
9
or earnings for you within two years prior to the date of the termination of your employment with the Company. If you are a resident
of California and subject to its laws, the restrictions set forth in this Section 10(c) shall only apply to you (i) during your employment
with the Company or (ii) to the extent that you use or disclose Trade Secrets to engage in any such restrictions, during the Restricted
Period.
(d)
Non-Solicitation of Employees. You agree that during the course of your employment with the Company and
during the Restricted Period, you will not, on behalf of yourself or any other Person, directly or by assisting others, solicit, induce,
persuade, or encourage, or attempt to solicit, induce, persuade, or encourage, any individual employed by the Company, with whom
you have worked, to terminate such employee’s position with the Company, whether or not such employee is a full-time or temporary
employee of the Company and whether or not such employment is pursuant to a written agreement, for a determined period, or at
will. The provisions of this Section 10(d) shall only apply to those individuals employed by the Company at the time of solicitation or
attempted solicitation. For the avoidance of doubt, the provisions of this Section 10(d) shall not apply to outside advisors or other
third‑party service providers to the Company.
(e)
Cooperation. You acknowledge that after the date on which your employment with the Company terminates
(other than due to a termination of employment due to death or disability), you shall, upon the Company’s reasonable request, make
yourself available at reasonable times, intervals and places for interviews, consultations, internal investigations and/or testimony
during which you shall provide to the Company, or its designated attorneys or agents, any and all information then known to you
regarding or relating to the Company or your activities on behalf of the Company pertaining to the subject matter on which your
cooperation is sought. You agree to remain involved for so long as any such matters shall be pending. Any efforts undertaken by you
at the Company’s request pursuant to this Section 10(e) shall be at the Company’s expense (and shall be subject to reasonable
accommodation for your then-current commitments and obligations).
(f)
Non‑Disparagement. You agree that the Company’s reputation and goodwill in the marketplace is of utmost
importance and value to the Company. You further agree that during and after the term of your employment with the Company, you,
other than in the performance of your duties for the Company, will not make, publish or cause to be published any statement or
comments that disparage or defame the reputation, character, image, products, or services of the Company, its subsidiaries or
affiliates, or any of their respective stockholders, partners, members, boards of directors, managers, officers and employees. The
parties hereto acknowledge and agree that the foregoing prohibitions extend to statements to the news media, the Company’s
competitors, vendors, and the Company’s then‑current employees. The parties hereto further acknowledge and agree that the
foregoing prohibitions shall not be violated by (i) truthful statements by you in response to legal process, governmental testimony or
filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings) or
(ii) you rebutting false or misleading statements made by others. The parties hereto further understand and agree that this Section
10(f) is a material provision of this Agreement and that any material and uncured breach of this Section 10(f) shall be a material
breach of this Agreement, and that the Company would be irreparably harmed by violation of this provision.
10
(g)
Acknowledgements. You acknowledge that the Company is in the business of owning, acquiring and leasing
restaurant, medical, and retail properties (in each case, as directed by the Board) on a nationwide basis and that the Company makes
substantial investments and has established substantial goodwill associated with its business, supplier relationships and marketing
programs throughout the United States. You therefore acknowledge and agree that it is fair and reasonable for the Company to take
steps to protect its Confidential Information, Trade Secrets, goodwill, business relationships, employees, economic advantages, and/or
other legitimate business interests from the risk of misappropriation of or harm to its Confidential Information, Trade Secrets,
goodwill, business relationships, employees, economic advantages, and/or other legitimate business interests. You acknowledge that
the consideration, including this Agreement, continued employment, specialized training, and the Confidential Information and Trade
Secrets provided to you, gives rise to the Company’s interest in restraining you from competing with the Company and that any
limitations as to time, geographic scope and scope of activity to be restrained are reasonable and do not impose a greater restraint than
is necessary to protect Company’s Confidential Information, Trade Secrets, good will, business relationships, employees, economic
advantages, and/or other legitimate business interests, and will not prevent you from earning a livelihood.
(h)
Survival of Covenants. The provisions and restrictive covenants in this Section 10 of this Agreement shall
survive the expiration or termination of this Agreement for any reason. You agree not to challenge the enforceability or scope of the
provisions and restrictive covenants in this Section 10. You further agree to notify all future persons, or businesses, with which you
become affiliated or employed by, of the provisions and restrictions set forth in this Section 10, prior to the commencement of any
such affiliation or employment.
(i)
Injunctive Relief. You acknowledge that if you breach or threaten to breach any of the provisions of this
Agreement, your actions will cause irreparable harm and damage to the Company which cannot be compensated by damages alone.
Accordingly, if you breach or threaten to breach any of the provisions of this Agreement, the Company shall be entitled to injunctive
relief, in addition to any other rights or remedies the Company may have. You hereby waive the requirement for a bond by the
Company as a condition to seeking injunctive relief. The existence of any claim or cause of action by you against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of your
agreements under this Agreement.
(j)
Forfeiture. In the event that you violate the terms of this Section 10, you understand and agree that in addition
to the Company’s rights to obtain injunctive relief and damages for such violation, any and all rights to the Award under this
Agreement, whether vested or unvested, shall be forfeited and extinguished.
11.No Section 83(b) Election.
You hereby acknowledge and agree that you shall not make an election under Section 83(b) of the Code with respect to the
Shares to include in gross income in the year of transfer of the Shares the amount specified in Section 83(b) of the Code or under any
similar provision of Applicable Law unless expressly permitted by action of the Committee in writing prior to the making of such
election.
11
12.General Provisions
(a)
Interpretations. This Agreement is subject in all respects to the terms of the Plan. A copy of the Plan is
available upon your request. Terms used herein which are defined in the Plan shall have the respective meanings given to
such terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with
the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this
Agreement shall be determined by the Committee administering the Plan, and such determination shall be final, conclusive
and binding upon all parties in interest. To the extent that any Award granted by the Company is subject to Code Section
409A, such Award shall be subject to terms and conditions that comply with the requirements of Code Section 409A to
avoid adverse tax consequences under Code Section 409A.
(b)
No Right to Employment. Nothing in this Agreement or the Plan shall be construed as giving you the right to
be retained as an employee of the Company or any Affiliate. In addition, the Company or an Affiliate may at any time
dismiss you from employment, free from any liability or any claim under this Agreement, unless otherwise expressly
provided in this Agreement.
(c)
Securities Matters. The Company shall not be required to deliver any shares of Stock until the requirements
of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be
determined by the Company to be applicable are satisfied.
(d)
Headings. Headings are given to the sections and subsections of this Agreement solely as a convenience to
facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this
Agreement or any provision hereof.
(e)
Arbitration. Except for injunctive relief as set forth herein, the parties agree that any dispute between the
parties regarding this Agreement shall be submitted to binding arbitration in San Francisco, California.
(f)
Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of
Maryland (without giving effect to the conflict of law principles thereof). Subject to Section 12(e) hereof, you agree that the state and
federal courts of Maryland shall have jurisdiction over any litigation between you and the Company regarding this Agreement, and
you expressly submit to the exclusive jurisdiction and venue of the federal and state courts sitting in San Francisco, California.
(g)
Notices. You should send all written notices regarding this Agreement or the Plan to the Company at the
following address:
Four Corners Property Trust, Inc.
591 Redwood Highway
Suite 3215
12
Mill Valley, CA 94941
Attention: General Counsel
(h)
Award Agreement and Related Documents. This Restricted Stock Award Agreement shall have no force or
effect unless you have been notified by the Company, and identified in the Company’s records, as the recipient of a Restricted Stock
Award. YOU MUST REVIEW AND ACKNOWLEDGE ACCEPTANCE OF THE TERMS OF THIS AGREEMENT,
INCLUDING
SPECIFICALLY
THE
RESTRICTIVE
COVENANTS,
BY
EXECUTING
THIS
AGREEMENT
ELECTRONICALLY VIA YOUR ESTABLISHED ACCOUNT ON THE PLAN MANAGEMENT CORPORATION
WEBSITE WITHIN 60 DAYS OF THE DATE OF GRANT; PROVIDED, HOWEVER, THAT THE COMMITTEE MAY,
AT ITS DISCRETION, EXTEND THIS DATE. FAILURE TO ACCEPT THE REFERENCED TERMS AND TO EXECUTE
THIS AGREEMENT ELECTRONICALLY WILL PRECLUDE YOU FROM RECEIVING YOUR RESTRICTED STOCK
GRANT. In connection with your Restricted Stock grant and this Agreement, the following additional documents were made
available to you electronically, and paper copies are available on request directed to the Company’s Compensation Department: (i)
the Plan; and (ii) a Prospectus relating to the Plan.
AMENDED AND RESTATED
FOUR CORNERS PROPERTY TRUST, INC.
2015 OMNIBUS INCENTIVE PLAN
PERFORMANCE-BASED RESTRICTED STOCK AWARD AGREEMENT
This Performance-Based Restricted Stock Award Agreement (the “Agreement”) is between Four Corners Property Trust,
Inc., a Maryland corporation (the “Company”), and you, a person notified by the Company, and identified in the Company’s records,
as the recipient of an Award of performance-based Restricted Stock during the Company’s fiscal year [ ]. This Agreement is
effective as of the Grant Date communicated to you and set forth in the Company’s records.
The Company wishes to award to you a number of shares of Stock, subject to certain restrictions as provided in this
Agreement, in order to carry out the purpose of the Company’s Amended and Restated 2015 Omnibus Incentive Plan (the “Plan”).
Accordingly, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the
Company and you hereby agree as follows:
1. Award of Performance-based Restricted Stock.
(a)
The Company hereby grants to you, effective as of the Grant Date, an Award of performance-based
Restricted Stock (the “Award”) for that number of shares of Stock communicated to you and set forth in the Company’s records
(together with any additional shares of Stock received pursuant to Section 1(b) hereof, the “Target Shares”), on the terms and
conditions set forth in such communication, this Agreement and the Plan.
(b)
As a condition to receiving the Target Shares, you hereby agree that all dividends and other distributions paid
with respect to the Target Shares (whether in cash, property or shares of Stock) shall be reinvested in additional shares of Stock. All
such dividends or distributions shall be credited to you and reinvested in additional shares of Stock as of the date of payment of any
such dividend or distribution based on the Fair Market Value of a share of Stock on such date. Each additional share of Stock which
results from such reinvestment granted hereunder shall be subject to the same vesting, forfeiture, distribution or payment, adjustment
and other provisions which apply to the underlying Target Shares. Dividends and other distributions shall only be paid with respect to
the Additional Shares (as defined below) beginning on the date of issuance of the Additional Shares.
2. Rights with Respect to the Target Shares.
With respect to the Target Shares, you shall be entitled to exercise the rights and privileges of a shareholder of Stock of the
Company, including the right to vote the Target Shares and the right to receive dividends and distributions thereon as provided in
Section 1(b) of this Agreement, unless and until the Target Shares are forfeited pursuant to Sections 3, 4 or 6 hereof. Your rights with
respect to the Target Shares shall remain forfeitable at all times prior to the date on which such rights become vested, and the
restrictions with respect to the Target Shares lapse, in accordance with Sections 3 or 4 hereof.
2
3. Vesting.
(a)
You shall vest in the number of Target Shares, if any, determined by the Committee following the end of the
period commencing on [ ] (the “Commencement Date”) and ending on [ ] (the “Performance Period”) based on the level of
achievement of the applicable performance goals approved by the Committee, communicated to you and set forth in the Company’s
records, subject to your continued employment with the Company or an Affiliate through the end of the Performance Period. The
number of shares of Stock that may become vested hereunder shall range from zero to two hundred percent (200%) of the Target
Shares, based on the level of achievement of the applicable performance goals during the Performance Period, as determined by the
Committee. If more than 100% of the Target Shares become vested, as determined by the Committee, then the number of additional
shares that become vested (the “Additional Shares” and, together with the Target Shares, the “Shares”) shall be issued to you on the
date on which the Committee certifies the level of achievement of the applicable performance goals (the “Certification Date”).
Subject to Section 4 below, any Shares that are earned based on the achievement of applicable performance goals in accordance with
this Section 3(a) (the “Earned Shares”) shall be deemed to be vested on the Certification Date. Any Target Shares that do not vest
pursuant to the terms of Sections 3 or 4 hereof shall be immediately and irrevocably forfeited, including the right to receive cash
payments and other distributions pursuant to Section 1(b) hereof, as of the Certification Date.
(b)
The Committee administering the Plan shall have the authority to make any determinations regarding
questions arising from the application of the provisions of this Section 3, which determination shall be final, conclusive and binding
on you and the Company.
4. Early Vesting; Forfeiture.
If you cease to be employed by the Company or an Affiliate prior to the end of the Performance Period, your rights to all of
the unvested Target Shares shall be immediately and irrevocably forfeited, including the right to vote such shares and the right to
receive dividends and distributions on such Target Shares as provided in Section 1(b) hereof, and your right to receive any Additional
Shares shall be immediately and irrevocably forfeited, except that:
(a)
Except as provided in Section 4(b) hereof, if, after the first anniversary of the Grant Date, your employment
with the Company is terminated by the Company without Cause (other than due to your death or Disability (as defined below)) or by
you for Good Reason (as defined below), in any case, any Shares that are not Earned Shares as of the date of such termination shall
remain outstanding and eligible to vest on the Certification Date, on a pro-rated basis, based on the achievement of the applicable
performance goals in accordance with Section 3(a). The number of Earned Shares that vest in accordance with the foregoing sentence
(if any) shall be equal to the number of such Earned Shares multiplied by a fraction, the numerator of which is the number of full
calendar months that you remained in continuous employment with the Company during the Performance Period and the denominator
of which is the total number of calendar months in the Performance Period.
(b)
If, within two years after the date of the consummation of a Change in Control that occurs after the Grant
Date, the Company terminates your employment for any reason
3
other than for Cause, death or Disability, or you terminate employment for Good Reason, then you shall become immediately and
unconditionally vested in the number of Target Shares, if any, and you shall be issued the number of Additional Shares, if any,
determined by the Committee based on the level of achievement of the applicable performance goals, provided that such
determination shall be made by the Committee based on the actual level of performance through the date of the Change in Control.
(c)
If you die prior to the vesting or forfeiture of the Target Shares pursuant to Section 3(a), then you shall
become immediately and unconditionally vested in one hundred percent (100%) of the Target Shares granted to you hereunder as of
the date of your death and you shall not be issued any Additional Shares. No transfer by will or the Applicable Laws of descent and
distribution of any Target Shares which vest by reason of your death shall be effective to bind the Company unless the Committee
administering the Plan shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as
the Committee may deem necessary to establish the validity of the transfer.
(d)
If you become Disabled (as defined below) prior to the vesting or forfeiture of the Target Shares pursuant to
Section 3(a), then you shall become immediately and unconditionally vested in one hundred percent (100%) of the Target Shares
granted to you hereunder as of the date on which the Committee makes the determination that you are Disabled and you shall not be
issued any Additional Shares. For purposes of this Agreement, “Disabled” or “Disability” means you have a disability due to illness
or injury which is expected to be permanent in nature and which prevents you from performing the material duties required by your
regular occupation, all as determined by the Committee administering the Plan.
(e)
The treatment set forth in Section 4(a) and in Section 4(b) is subject to and conditioned upon your timely
execution, delivery and non-revocation of a general release of claims in the form attached to your employment or service agreement
with the Company, or in the absence of any such agreement (or if or such agreement exists but does not contain a general release of
claims), in a form prescribed by the Company (in any case, the “Release”). The Company may update the Release to the extent
necessary to reflect changes in law. For the avoidance of doubt, any Shares shall remain outstanding and eligible to vest following
the date of any such termination of employment and shall actually vest upon the effective date of the Release.
(f)
For purposes of this Agreement, “Good Reason” shall have the meaning set forth in your employment or
service agreement with the Company, and in the absence of any such agreement (or if or such agreement exists but does not contain a
definition of Good Reason (or term of similar effect)), “Good Reason” means the occurrence of, without your express written
consent, a material reduction in your base salary or target annual bonus opportunity as in effect immediately prior to the date of the
consummation of a Change in Control, other than an inadvertent failure remedied by the Company promptly after receipt of notice
thereof given by you.
You shall only have Good Reason if (A) you have provided notice of termination to the Company of any of the
foregoing conditions within ninety (90) days of the initial existence of the condition, (B) the Company has been given at least thirty
(30) days following receipt of such notice to cure such condition, and (C) if such condition is not cured within such thirty (30) day
4
period, you actually terminate employment within sixty (60) days after the notice of termination. Your mental or physical incapacity
following the occurrence of an event described above shall not affect your ability to terminate employment for Good Reason and your
death following delivery of a notice of termination for Good Reason shall not affect your estate’s entitlement to vesting of the Shares
as provided hereunder upon a termination of employment for Good Reason.
If, following the end of the Performance Period and prior to the Certification Date, the Company terminates your
employment for Cause, your rights to all of the unvested Target Shares shall be immediately and irrevocably forfeited, including the
right to receive dividends and distributions on such Target Shares as provided in Section 1(b) hereof, and your right to receive any
Additional Shares shall be immediately and irrevocably forfeited.
5. Restriction on Transfer.
Except as contemplated by Section 4(c) hereof, until the Target Shares vest pursuant to Sections 3 or 4 hereof, none of the
Target Shares may be sold, assigned, transferred, pledged, attached or otherwise encumbered, and no attempt to transfer the Target
Shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or
with respect to the Target Shares.
6. Clawback.
(a)
To the extent that you are not subject to Section 16 of the Exchange Act, if (i) the Company is required to
restate its financial statements due to fraud and (ii) the Committee administering the Plan determines that you have knowingly
participated in such fraud, then the Committee may, in its sole and absolute discretion, at any time within two years following such
restatement, require you to, and you shall immediately upon notice of such Committee determination, return to the Company any
Shares that vested under this Agreement and any distributions with respect to the vested Shares (including any cash dividends or other
distributions) received by you or your personal representative and pay to the Company in cash the amount of any proceeds received
by you or your personal representative from the disposition or transfer of any Shares, in each case during the period commencing two
years before the beginning of the restated financial period and ending on the date of such Committee determination. In addition, all of
your rights to Shares that are not vested on the date that the Committee makes such determination shall be immediately and
irrevocably forfeited, including the right to vote such Shares and the right to receive dividends and distributions on such Shares as
provided in Section 1(b) of this Agreement. Notwithstanding anything to the contrary in this Section 6(a), the Committee shall have
the authority and discretion to make any determination regarding the specific implementation of this Section 6(a) with respect to you.
(b)
To the extent that you are subject to Section 16 of the Exchange Act, (i) the Award, the Target Shares and
any Additional Shares shall be subject to (x) any clawback or recoupment policy of the Company required in order to comply with
applicable law, including the Company’s Policy for Recovery of Erroneously Awarded Compensation and (y) any clawback or
recoupment policy of the Company approved by the Board or Committee which applies to the Company’s senior executives; and (ii)
you acknowledge that this Section 6 is not intended to limit
5
any clawback and/or disgorgement of the Award, the Target Shares and any Additional Shares pursuant to Section 304 of the
Sarbanes-Oxley Act of 2002.
7. Issuance and Custody of Certificates
(a)
The Company shall cause the Target Shares to be issued in your name in such a manner as the Committee, in
its sole discretion, deems appropriate, including by book-entry or direct registration (including transaction advices) or the issuance of
a stock certificate or certificates, which certificate or certificates shall be held by the Company for your benefit until such time as such
Target Shares are forfeited to the Company or the restrictions applicable to the Target Shares lapse and you deliver a stock power to
the Company with respect to each certificate. The Target Shares shall be restricted from transfer and shall be subject to an appropriate
stop-transfer order. If any certificate is issued, the certificate shall bear a legend that complies with Applicable Law and makes
appropriate reference to the restrictions applicable to the Target Shares. To the extent that ownership of the Target Shares is
evidenced by a book-entry registration or direct registration (including transaction advices), such registration shall be notated to
evidence the restrictions imposed on such Target Shares.
(b)
After any Shares vest pursuant to Sections 3 or 4 hereof, and following payment of the applicable
withholding taxes pursuant to Section 9 hereof, the Company shall promptly cause such vested Shares (less any shares withheld to
pay taxes), free of the restrictions and/or legend described in this Section 7, to be delivered, either by book‑entry or direct registration
(including transaction advices) or in the form of a certificate or certificates evidencing ownership of such Shares, registered in your
name or in the names of your beneficiary or estate, as the case may be.
8. Adjustments and Distributions.
(a)
Subject to and in accordance with Section 16.1 of the Plan, in the event that the Committee administering the
Plan shall determine that any dividend or other distribution (whether in the form of cash, shares of Stock, other securities or other
property), recapitalization, reclassification, stock split, reverse stock split, spin-off, combination, or exchange of shares or other
securities of the Company or other increase or decrease in shares of Stock effected without receipt of consideration by the Company
affects the Stock such that an adjustment of the Shares is determined by the Committee administering the Plan to be appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, then
the Committee shall, in such manner as it may deem equitable, in its sole discretion, adjust any or all of the number and type of
Target Shares and/or Additional Shares (as applicable).
9. Taxes.
(a)
You acknowledge that you will consult with your personal tax advisor regarding the income tax
consequences of the grant of the Shares, the payment of dividends on the Shares, the vesting of the Shares and any other matters
related to this Agreement. In order to comply with all applicable federal, state, local or foreign income tax laws or regulations, the
Company may take such action as it deems appropriate to ensure that all applicable federal, state,
6
local or foreign payroll, withholding, income or other taxes, which are your sole and absolute responsibility, are withheld or collected
from you.
(b)
In accordance with the terms of the Plan, and such rules as may be adopted by the Committee administering
the Plan, you may elect to satisfy any applicable tax withholding obligations arising from the receipt of, or the lapse of restrictions
relating to, the Shares by (i) delivering cash (including check, draft, money order or wire transfer made payable to the order of the
Company), (ii) having the Company withhold a portion of the Shares otherwise to be delivered having a Fair Market Value equal to
the amount of such taxes, or (iii) delivering to the Company shares of Stock having a Fair Market Value equal to the amount of such
taxes. The Company will not deliver any fractional Share but will pay, in lieu thereof, the Fair Market Value of such fractional Share.
Your election must be made on or before the date that the amount of tax to be withheld is determined. The maximum number of
shares of Stock that may be withheld to satisfy any applicable tax withholding obligations arising from the vesting of the Shares may
not exceed such number of shares of Stock having a Fair Market Value equal to the maximum statutory amount required by the
Company to be withheld and paid to any federal, state, or local taxing authority with respect to such vesting of the Shares, or such
greater amount as may be permitted under applicable accounting standards.
10.Restrictive Covenants.
(a)
Non-Disclosure.
(i) During the course of your employment with the Company, before and after the execution of this
Agreement, and as consideration for the restrictive covenants entered into by you herein, you have received and will
continue to receive some or all of the Company’s various Trade Secrets (as defined under Applicable Law) and
confidential or proprietary information, which includes the following whether in physical or electronic form: (1)
data and compilations of data related to Business Opportunities (as defined below), (2) computer software,
hardware, network and internet technology utilized, modified or enhanced by the Company or by you in furtherance
of your duties with the Company; (3) compilations of data concerning Company products, services, customers, and
end users including but not limited to compilations concerning projected sales, new project timelines, inventory
reports, sales, and cost and expense reports; (4) compilations of information about the Company’s employees and
independent contracting consultants; (5) the Company’s financial information, including, without limitation,
amounts charged to customers and amounts charged to the Company by its vendors, suppliers, and service
providers; (6) proposals submitted to the Company’s customers, potential customers, wholesalers, distributors,
vendors, suppliers and service providers; (7) the Company’s marketing strategies and compilations of marketing
data; (8) compilations of data or information concerning, and communications and agreements with, vendors,
suppliers and licensors to the Company and other sources of technology, products, services or components used in
the Company’s business; (9) the Company’s research and development records and data; and (10) any summary,
extract or analysis of such information together with information that has been received or disclosed to the
7
Company by any third party as to which the Company has an obligation to treat as confidential (collectively,
“Confidential Information”). For purposes of this Agreement, “Business Opportunities” means all ideas, concepts or
information received or developed (in whatever form) by you concerning any business, transaction or potential
transaction that constitutes or may constitute an opportunity for the Company to earn a fee or income, specifically
including those relationships that were initiated, nourished or developed at the Company’s expense. Confidential
Information does not include data or information: (1) which has been voluntarily disclosed to the public by the
Company, except where such public disclosure has been made by you without authorization from the Company; (2)
which has been independently developed and disclosed by others; or (3) which has otherwise entered the public
domain through lawful means.
(ii) All Confidential Information, Trade Secrets, and all physical and electronic embodiments thereof are
confidential and are and will remain the sole and exclusive property of the Company. During and after the term of
your employment with the Company, you agree that you shall protect any such Confidential Information and Trade
Secrets and shall not, except in connection with the performance of your remaining duties for the Company, use,
disclose or otherwise copy, reproduce, distribute or otherwise disseminate any such Confidential Information or
Trade Secrets, or any physical or electronic embodiments thereof, to any third party; provided, however, that you
may make disclosures required by a valid order or subpoena issued by a court or administrative agency of
competent jurisdiction, in which event you will promptly notify the Company of such order or subpoena to provide
the Company an opportunity to protect its interests. Without limiting the generality of the foregoing, you agree that
after your termination of employment with the Company, you shall not disclose to any third party any business
developments, investment or business arrangements, negotiations, prospective or existing commercial agreements,
transaction or potential transaction that was considered by the Company prior to the date of your termination from
the Company. You further agree that if you are ever subpoenaed or otherwise required by law to provide any
statement or other assistance to a party to a dispute or litigation with the Company, other than the Company, then
you shall provide written notice of the circumstances requiring such statement or other assistance, including where
applicable a copy of the subpoena or other legal writ, in such a manner and at such a time that allows the Company
to timely respond. Nothing herein shall prevent you from cooperating with co‑defendants in litigation or with
inquiry in a government investigation without a need to obtain prior consent or approval from the Company;
provided, however, you shall provide prompt notice of any voluntary giving of oral or written statements to such
parties, and provide to the Company a copy of any written statement so given or a summary of any oral statement
provided.
(iii)Upon request by the Company and, in any event, upon termination of your employment with the
Company for any reason, you will promptly deliver to the Company all property belonging to the Company,
including but without limitation, all Confidential Information, Trade Secrets and all electronic and
8
physical embodiments thereof, all Company files, customer lists, management reports, memoranda, research,
Company forms, financial data and reports and other documents (including but not limited to all such data and
documents in electronic form) supplied to or created by you in connection with your employment with the
Company (including all copies of the foregoing) in your possession or control, and all of the Company’s equipment
and other materials in your possession or control. You agree to allow the Company, at its request, to verify return of
Company property and documents and information and/or permanent deletion of the same, through inspection of
personal computers, personal storage media, third party websites, third party e-mail systems, personal digital
assistant devices, cell phones and/or social networking sites on which Company information was stored during your
employment with the Company.
(iv)Nothing contained herein shall be in derogation or a limitation of the rights of the Company to enforce
its rights or your duties under the Applicable Law relating to Trade Secrets.
(v) Nothing contained in this Agreement shall prohibit you from (A) communicating directly with,
cooperating with, or providing information to, reporting possible violations of federal law or regulation to or
receiving financial awards from any Federal, state or local governmental agency or entity, including but not limited
to the Department of Justice, the Securities and Exchange Commission, the Occupational Safety and Health
Administration, the Equal Employment Opportunity Commission, the U.S. Commodity Futures Trading
Commission, the U.S. National Labor Relations Board or any Inspector General, or making other disclosures
protected under the whistleblower provisions of federal law or regulation; (B) exercising any rights you may have
under Section 7 of the U.S. National Labor Relations Act, such as the right to engage in concerted activity,
including collective action or discussion concerning wages or working conditions; or (C) discussing or disclosing
information about unlawful acts in the workplace, such as harassment or discrimination based on a protected
characteristic or any other conduct that you have reason to believe is unlawful. You do not need the prior
authorization of the Company to make any such reports or disclosures and you are not required to notify the
Company that you have made such reports or disclosures.
(vi)Notwithstanding anything to the contrary contained in this Agreement, the parties hereto acknowledge
that pursuant to 18 USC § 1833(b), you may not be held liable under any criminal or civil federal or state trade
secret law for disclosure of a trade secret: (i) made in confidence to a Federal, state, or local government official,
either directly or indirectly, or to an attorney, solely for the purpose of reporting or investigating a suspected
violation of law or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made
under seal. Additionally, the parties hereto acknowledge that if you sue the Company for retaliation based on the
reporting of a suspected violation of law, you may disclose a trade secret to your attorney and use the trade secret
information in
9
the court proceeding, so long as any document containing the trade secret is filed under seal and you do not disclose
the trade secret except pursuant to court order.
(b)
Non-Competition. You agree that, while employed by the Company and for a period of twelve (12) months
following the termination of your employment with the Company for any reason, with or without cause, whether upon the initiative of
either you or the Company (the “Restricted Period”), you will not provide or perform the same or substantially similar services, that
you provided to the Company, on behalf of any Direct Competitor (as defined below), directly (i.e., as an officer or employee) or
indirectly (i.e., as an independent contractor, consultant, advisor, board member, agent, shareholder, investor, joint venturer, or
partner), anywhere within the United States of America (the “Territory”). For purposes of this Agreement, “Direct Competitor”
means any individual, partnership, corporation, limited liability company, association, or other group, however organized, who
competes with the Company in the business of owning, acquiring and leasing restaurant and retail properties.
(i) If you are a resident of California and subject to its laws, the restrictions set forth in this Section 10(b)
above shall only apply to you during your employment with the Company.
(ii) Nothing in this Section 10(b) shall divest you from the right to acquire as a passive investor (with no
involvement in the operations or management of the business) up to 1% of any class of securities which is: (x)
issued by any Direct Competitor, and (y) publicly traded on a national securities exchange or over-the-counter
market.
(c)
Non-Solicitation of Customers. You agree that you shall not at any time during your employment with the
Company and during the Restricted Period, on behalf of yourself or any other Person, directly or by assisting others, solicit, induce,
encourage or cause any of the Company’s vendors, suppliers, licensees, or other Persons with whom the Company has a contractual
relationship and with whom you have had Material Contact (as defined below) during the last two years of your employment with the
Company, to cease doing business with the Company or to do business with a Direct Competitor. For purposes of this Agreement,
“Material Contact” means contact between you and a Person: (1) with whom or which you dealt on behalf of the Company; (2) whose
dealings with the Company were coordinated or supervised by you; (3) about whom you obtained Confidential Information in the
ordinary course of business as a result of your association with the Company; or (4) who receives products or services authorized by
the Company, the sale or provision of which results or resulted in compensation, commission, or earnings for you within two years
prior to the date of the termination of your employment with the Company. If you are a resident of California and subject to its laws,
the restrictions set forth in this Section 10(c) shall only apply to you (i) during your employment with the Company or (ii) to the
extent that you use or disclose Trade Secrets to engage in any such restrictions, during the Restricted Period.
(d)
Non-Solicitation of Employees. You agree that during the course of your employment with the Company and
during the Restricted Period, you will not, on behalf of yourself or any other Person, directly or by assisting others, solicit, induce,
persuade, or encourage, or attempt to solicit, induce, persuade, or encourage, any individual employed by the Company,
10
with whom you have worked, to terminate such employee’s position with the Company, whether or not such employee is a full-time
or temporary employee of the Company and whether or not such employment is pursuant to a written agreement, for a determined
period, or at will. The provisions of this Section 10(d) shall only apply to those individuals employed by the Company at the time of
solicitation or attempted solicitation. For the avoidance of doubt, the provisions of this Section 10(d) shall not apply to outside
advisors or other third‑party service providers to the Company.
(e)
Cooperation. You acknowledge that after the date on which your employment with the Company terminates
(other than due to a termination of employment due to death or disability), you shall, upon the Company’s reasonable request, make
yourself available at reasonable times, intervals and places for interviews, consultations, internal investigations and/or testimony
during which you shall provide to the Company, or its designated attorneys or agents, any and all information then known to you
regarding or relating to the Company or your activities on behalf of the Company pertaining to the subject matter on which your
cooperation is sought. You agree to remain involved for so long as any such matters shall be pending. Any efforts undertaken by you
at the Company’s request pursuant to this Section 10(e) shall be at the Company’s expense (and shall be subject to reasonable
accommodation for your then-current commitments and obligations).
(f)
Non‑Disparagement. You agree that the Company’s reputation and goodwill in the marketplace is of utmost
importance and value to the Company. You further agree that during and after the term of your employment with the Company, you,
other than in the performance of your duties for the Company, will not make, publish or cause to be published any statement or
comments that disparage or defame the reputation, character, image, products, or services of the Company, its subsidiaries or
affiliates, or any of their respective stockholders, partners, members, boards of directors, managers, officers and employees. The
parties hereto acknowledge and agree that the foregoing prohibitions extend to statements to the news media, the Company’s
competitors, vendors, and the Company’s then‑current employees. The parties hereto further acknowledge and agree that the
foregoing prohibitions shall not be violated by (i) truthful statements by you in response to legal process, governmental testimony or
filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings) or
(ii) you rebutting false or misleading statements made by others. The parties hereto further understand and agree that this Section
10(f) is a material provision of this Agreement and that any material and uncured breach of this Section 10(f) shall be a material
breach of this Agreement, and that the Company would be irreparably harmed by violation of this provision.
(g)
Acknowledgements. You acknowledge that the Company is in the business of owning, acquiring and leasing
restaurant, medical, and retail properties (in each case, as directed by the Board) on a nationwide basis and that the Company makes
substantial investments and has established substantial goodwill associated with its business, supplier relationships and marketing
programs throughout the United States. You therefore acknowledge and agree that it is fair and reasonable for the Company to take
steps to protect its Confidential Information, Trade Secrets, goodwill, business relationships, employees, economic advantages, and/or
other legitimate business interests from the risk of misappropriation of or harm to its Confidential Information, Trade Secrets,
goodwill, business relationships, employees, economic advantages, and/or other
11
legitimate business interests. You acknowledge that the consideration, including this Agreement, continued employment, specialized
training, and the Confidential Information and Trade Secrets provided to you, gives rise to the Company’s interest in restraining you
from competing with the Company and that any limitations as to time, geographic scope and scope of activity to be restrained are
reasonable and do not impose a greater restraint than is necessary to protect Company’s Confidential Information, Trade Secrets,
good will, business relationships, employees, economic advantages, and/or other legitimate business interests, and will not prevent
you from earning a livelihood.
(h)
Survival of Covenants. The provisions and restrictive covenants in this Section 10 of this Agreement shall
survive the expiration or termination of this Agreement for any reason. You agree not to challenge the enforceability or scope of the
provisions and restrictive covenants in this Section 10. You further agree to notify all future persons, or businesses, with which you
become affiliated or employed by, of the provisions and restrictions set forth in this Section 10, prior to the commencement of any
such affiliation or employment.
(i)
Injunctive Relief. You acknowledge that if you breach or threaten to breach any of the provisions of this
Agreement, your actions will cause irreparable harm and damage to the Company which cannot be compensated by damages alone.
Accordingly, if you breach or threaten to breach any of the provisions of this Agreement, the Company shall be entitled to injunctive
relief, in addition to any other rights or remedies the Company may have. You hereby waive the requirement for a bond by the
Company as a condition to seeking injunctive relief. The existence of any claim or cause of action by you against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of your
agreements under this Agreement.
(j)
Forfeiture. In the event that you violate the terms of this Section 10, you understand and agree that in addition
to the Company’s rights to obtain injunctive relief and damages for such violation, any and all rights to the Award under this
Agreement, whether vested or unvested, shall be forfeited and extinguished.
11.No Section 83(b) Election.
You hereby acknowledge and agree that you shall not make an election under Section 83(b) of the Code with respect to the
Target Shares to include in gross income in the year of transfer of the Target Shares the amount specified in Section 83(b) of the Code
or under any similar provision of Applicable Law unless expressly permitted by action of the Committee in writing prior to the
making of such election.
12.General Provisions.
(a)
Interpretations. This Agreement is subject in all respects to the terms of the Plan. A copy of the Plan is
available upon your request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms
in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms of the
Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be
determined by the Committee administering the Plan, and such
12
determination shall be final, conclusive and binding upon all parties in interest. To the extent that any Award granted by the Company
is subject to Code Section 409A, such Award shall be subject to terms and conditions that comply with the requirements of Code
Section 409A to avoid adverse tax consequences under Code Section 409A.
(b)
No Right to Employment. Nothing in this Agreement or the Plan shall be construed as giving you the right to
be retained as an employee of the Company or any Affiliate. In addition, the Company or an Affiliate may at any time dismiss you
from employment, free from any liability or any claim under this Agreement, unless otherwise expressly provided in this Agreement.
(c)
Securities Matters. The Company shall not be required to deliver any shares of Stock until the requirements
of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be
determined by the Company to be applicable are satisfied.
(d)
Headings. Headings are given to the sections and subsections of this Agreement solely as a convenience to
facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this
Agreement or any provision hereof.
(e)
Arbitration. Except for injunctive relief as set forth herein, the parties agree that any dispute between the
parties regarding this Agreement shall be submitted to binding arbitration in San Francisco, California.
(f)
Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of
Maryland (without giving effect to the conflict of law principles thereof). Subject to Section 12(e) hereof, you agree that the state and
federal courts of Maryland shall have jurisdiction over any litigation between you and the Company regarding this Agreement, and
you expressly submit to the exclusive jurisdiction and venue of the federal and state courts sitting in San Francisco, California.
(g)
Notices. You should send all written notices regarding this Agreement or the Plan to the Company at the
following address:
Four Corners Property Trust, Inc.
591 Redwood Highway
Suite 3215
Mill Valley, CA 94941
Attention: General Counsel
(h)
Award Agreement and Related Documents. This Performance-Based Restricted Stock Award Agreement
shall have no force or effect unless you have been notified by the Company, and identified in the Company’s records, as the recipient
of a performance-based Restricted Stock Award. YOU MUST REVIEW AND ACKNOWLEDGE ACCEPTANCE OF THE
TERMS OF THIS AGREEMENT, INCLUDING SPECIFICALLY THE RESTRICTIVE COVENANTS, BY EXECUTING
THIS AGREEMENT ELECTRONICALLY VIA YOUR ESTABLISHED ACCOUNT ON THE PLAN
13
MANAGEMENT CORPORATION WEBSITE WITHIN 60 DAYS OF THE DATE OF GRANT; PROVIDED, HOWEVER,
THAT THE COMMITTEE MAY, AT ITS DISCRETION, EXTEND THIS DATE. FAILURE TO ACCEPT THE
REFERENCED TERMS AND TO EXECUTE THIS AGREEMENT ELECTRONICALLY WILL PRECLUDE YOU FROM
RECEIVING YOUR PERFORMANCE-BASED RESTRICTED STOCK GRANT. In connection with your performance-based
Restricted Stock grant and this Agreement, the following additional documents were made available to you electronically, and paper
copies are available on request directed to the Company’s Compensation Department: (i) the Plan; and (ii) a Prospectus relating to the
Plan.
AMENDED AND RESTATED
FOUR CORNERS PROPERTY TRUST, INC.
2015 OMNIBUS INCENTIVE PLAN
FY[ ] PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT
(United States)
This Performance-Based Restricted Stock Unit Award Agreement (the “Agreement”) is between Four Corners Property
Trust, Inc., a Maryland corporation (the “Company” or “Corporation”), and you, a person notified by the Company, and identified
in the Company’s records, as the recipient of an Award of Performance-Based Restricted Stock Units (“PRSUs”) during the
Company’s fiscal year [ ]. This Agreement is effective as of the Grant Date communicated to you and set forth in the Company’s
records.
The Company wishes to award to you a number of PRSUs, subject to certain restrictions as provided in this Agreement, in
order to carry out the purpose of the Company’s Amended and Restated 2015 Omnibus Incentive Plan (the “Plan”).
Accordingly, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the
Company and you hereby agree as follows:
1.
Award of PRSUs.
(a)
The Company hereby grants to you, effective as of the Grant Date, an Award of PRSUs (the “Award”) for
that number of PRSUs communicated to you and set forth in the Company’s records (the “Target PRSUs”), on the terms and
conditions set forth in such communications, this Agreement and the Plan. Each PRSU represents the right to receive, on the
vesting date or dates set forth in Sections 3 and 4 hereof, one share of Stock.
(b)
The Company hereby grants to you an award of Dividend Equivalent Rights with respect to each Target
PRSU granted pursuant to this Agreement for all dividends and distributions in cash, Stock or other property which are paid to all
or substantially all holders of the outstanding shares of Stock and that have a record date between the Grant Date and the date when
the Target PRSU is distributed or paid to you or is forfeited or expires. The Dividend Equivalent Rights award for each Target
PRSU shall be equal to the amount of cash and the Fair Market Value of Stock or other property which is paid as a dividend or
distribution on one share of Stock. All such Dividend Equivalent Rights shall be credited to you and shall be deemed to be
reinvested in additional PRSUs as of the date of payment of any such dividend or distribution based on the Fair Market Value of a
share of Stock on such date. Each additional PRSU which results from such deemed reinvestment of Dividend Equivalent Rights
granted hereunder shall be subject to the same vesting, distribution or payment, adjustment and other provisions which apply to the
underlying Target PRSU to which such additional PRSU relates. Dividends and other distributions shall only be paid with respect
to the Additional PRSUs (as defined below) beginning on the date of issuance of the Additional PRSUs (if any).
2
2.
Rights with Respect to the Target PRSUs and Dividend Equivalent Rights.
The Target PRSUs and Dividend Equivalent Rights granted hereunder do not and shall not give you any of the rights and
privileges of a shareholder of Stock. Your rights with respect to the Target PRSUs and Dividend Equivalent Rights shall remain
forfeitable at all times prior to the date or dates on which such rights become vested, and the restrictions with respect to the Target
PRSUs and Dividend Equivalent Rights lapse, in accordance with Sections 3 or 4 hereof.
3.
Vesting.
(a)
You shall vest in the number of PRSUs, if any, determined by the Committee following the end of the
period commencing on «DATE» (the “Commencement Date”) and ending on «DATE» (the “Expiration Date”) or, if earlier, the
date on which a Change in Control is consummated (the “Performance Period”) based on the level of achievement of the applicable
performance goals approved by the Committee, communicated to you and set forth in the Company’s records (the “Performance
Measures”), subject to your continued employment with the Company or an Affiliate through the end of the Performance Period.
The number of PRSUs that may become vested hereunder shall range from zero to two hundred percent (200%) of the Target
PRSUs, based on the level of achievement of the applicable performance goals during the Performance Period, as determined by
the Committee. If more than 100% of the Target PRSUs become vested, as determined by the Committee, then such number of
additional PRSUs (the “Additional PRSUs”) and the Target PRSUs (collectively, the “Final PRSUs”) shall be deemed to be vested
on the date on which the Committee certifies the level of achievement of the applicable performance goals (the “Certification
Date”) or, if earlier, the date of the Change in Control (the “CIC Date”). Subject to Section 4 below, any Final PRSUs that are
earned based on the achievement of applicable performance goals in accordance with this Section 3(a) (the “Earned PRSUs”) shall
be deemed to be vested on the Certification Date or, if earlier, the CIC Date. Subject to Section 4 below, any Target PRSUs and
Dividend Equivalent Rights that do not vest pursuant to the terms of Sections 3 or 4 hereof shall be immediately and irrevocably
forfeited as of such earlier date.
(b)
The Committee administering the Plan shall have the authority to make any determinations regarding
questions arising from the application of the provisions of this Section 3, which determination shall be final, conclusive and
binding on you and the Company.
4.
Early Vesting; Forfeiture.
If you cease to be employed by the Company or an Affiliate prior to the vesting of the Target PRSUs pursuant to Section
3(a) hereof, your rights to all of the unvested Target PRSUs, including your right to become vested in any Additional PRSUs, and
Dividend Equivalent Rights shall be immediately and irrevocably forfeited, except that:
(a)
Except as provided in Sections 4(b)-(c) hereof, if, after the first anniversary of the Grant Date, your
employment with the Company is terminated by the Company without Cause (other than due to your death or Disability (as
defined below)) or by you for Good Reason (as defined below), in any case, any Final PRSUs that are not Earned PRSUs as of the
date of such termination shall remain outstanding and eligible to vest on the earlier of the Certification Date and the CIC Date, on a
pro-rated basis, based on the achievement of the applicable performance goals in accordance with Section 3(a) or, if applicable, as
set forth in the Performance Measures.
3
The number of Earned PRSUs (and related Dividend Equivalent Rights) that vest in accordance with the foregoing sentence (if
any) shall be equal to the number of such Earned PRSUs multiplied by a fraction, (x) the numerator of which is the number of full
calendar months that you remained in continuous employment with the Company from the first day of the Performance Period
through the date of your termination of employment and (y) the denominator of which is the total number of calendar months from
(and including) the Commencement Date through (and including) the Expiration Date or, if earlier, the CIC Date.
(b)
If you die prior to the vesting of the Target PRSUs pursuant to Section 3(a) hereof, you shall become
immediately and unconditionally vested in one hundred percent (100%) of the Target PRSUs and Dividend Equivalent Rights as of
the date of your death and you shall not be eligible to become vested in any Additional PRSUs. No transfer by will or the
Applicable Laws of descent and distribution of any Target PRSUs or Dividend Equivalent Rights which vest by reason of your
death shall be effective to bind the Company unless the Committee administering the Plan shall have been furnished with written
notice of such transfer and a copy of the will or such other evidence as the Committee may deem necessary to establish the validity
of the transfer.
(c)
If you become Disabled (as defined below) prior to the vesting of the Target PRSUs pursuant to Section
3(a) hereof, you shall become immediately and unconditionally vested in one hundred percent (100%) of the Target PRSUs and
Dividend Equivalent Rights as of the date on which the Committee administering the Plan makes the determination that you are
Disabled and you shall not be eligible to become vested in any Additional PRSUs. For purposes of this Agreement, “Disabled” or
“Disability” means you have a disability due to illness or injury which is expected to be permanent in nature and which prevents
you from performing the material duties required by your regular occupation, all as determined by the Committee administering
the Plan.
(d)
The treatment set forth in Section 4(a) is subject to and conditioned upon your timely execution, delivery
and non-revocation of a general release of claims in the form attached to your employment or service agreement with the
Company, or in the absence of any such agreement (or if or such agreement exists but does not contain a general release of claims),
in a form prescribed by the Company (in any case, the “Release”). The Company may update the Release to the extent necessary to
reflect changes in law. For the avoidance of doubt, any PRSUs shall remain outstanding and eligible to vest following the date of
any such termination of employment and shall actually vest upon the effective date of the Release.
(e)
For purposes of this Agreement, “Good Reason” shall have the meaning set forth in your employment or
service agreement with the Company, and in the absence of any such agreement (or if or such agreement exists but does not
contain a definition of Good Reason (or term of similar effect)), “Good Reason” means the occurrence of, without your express
written consent, a material reduction in your base salary or target annual bonus opportunity as in effect immediately prior to the
date of the consummation of a Change in Control, other than an inadvertent failure remedied by the Company promptly after
receipt of notice thereof given by you.
You shall only have Good Reason if (A) you have provided notice of termination to the Company of any of the foregoing
conditions within ninety (90) days of the initial existence of the condition, (B) the Company has been given at least thirty (30) days
following receipt of such notice to cure such condition, and (C) if such condition is not cured within such thirty (30) day period,
you actually terminate employment within sixty (60) days after the notice of termination. Your
4
mental or physical incapacity following the occurrence of an event described above shall not affect your ability to terminate
employment for Good Reason and your death following delivery of a notice of termination for Good Reason shall not affect your
estate’s entitlement to settlement of the PRSUs or Dividend Equivalent Rights as provided hereunder upon a termination of
employment for Good Reason.
If, following the end of the Performance Period and prior to the Certification Date, the Company terminates your
employment for Cause, your rights to all of the unvested Target PRSUs and Dividend Equivalent Rights shall be immediately and
irrevocably forfeited and your eligibility to become vested in any Additional PRSUs shall be immediately and irrevocably
forfeited.
5.
Restriction on Transfer.
Except as contemplated by Section 4(b) hereof, none of the Target PRSUs or Dividend Equivalent Rights may be sold,
assigned, transferred, pledged, attached or otherwise encumbered, and no attempt to transfer the Target PRSUs or Dividend
Equivalent Rights, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or
right in or with respect to the Target PRSUs or Dividend Equivalent Rights.
6.
Financial Restatements.
To the extent that you are subject to Section 16 of the Exchange Act, (i) the Award, the PRSUs, the Dividend Equivalent
Rights and any Stock issuable thereunder shall be subject to (x) any clawback or recoupment policy of the Company required in
order to comply with applicable law, including the Company’s Policy for Recovery of Erroneously Awarded Compensation and
(y) any clawback or recoupment policy of the Company approved by the Board or Committee which applies to the Company’s
senior executives; and (ii) you acknowledge that this Section 6 is not intended to limit any clawback and/or disgorgement of the
Award, the PRSUs, the Dividend Equivalent Rights and any Stock issuable thereunder pursuant to Section 304 of the Sarbanes-
Oxley Act of 2002.
7.
Settlement of Final PRSUs and Dividend Equivalent Rights.
No shares of Stock shall be issued to you (or your beneficiary or, if none, your estate in the event of your death) prior to
the date on which the applicable PRSUs vest, in accordance with the terms and conditions communicated to you and set forth in
the Company’s records. After any Final PRSUs vest pursuant to Sections 3 or 4 hereof, the Company shall promptly, but no later
than March 15 of the calendar year following the calendar year in which the Performance Period ends, cause to be issued in your
name one share of Stock for each Final PRSU (including additional RSUs which resulted from such deemed reinvestment of
Dividend Equivalent Rights) in each case less any applicable withholding taxes; provided, however, that any distribution to any
“specified employee” as determined in accordance with procedures adopted by the Company that reflect the requirements of Code
Section 409A(a)(2)(B)(i) (and any applicable guidance thereunder) on account of a separation from service shall be made as soon
as practicable after the first day of the seventh month following such separation from service (or, if earlier, the date of the specified
employee’s death). The Company will not deliver any fractional share of Stock but will pay, in lieu thereof, the Fair Market Value
of such fractional share of Stock.
5
8.
Adjustments.
Subject to and in accordance with Section 16.1 of the Plan, in the event that the Committee administering the Plan shall
determine that any dividend or other distribution (whether in the form of cash, shares of Stock, other securities or other property),
recapitalization, reclassification, stock split, reverse stock split, spin-off, combination, or exchange of shares or other securities of
the Company or other increase or decrease in shares of Stock effected without receipt of consideration by the Company, affects the
Stock such that an adjustment of the Target PRSUs (including additional RSUs which resulted from such deemed reinvestment of
Dividend Equivalent Rights) is determined by the Committee administering the Plan to be appropriate in order to prevent dilution
or enlargement of the benefits or potential benefits intended to be made available under this Agreement, then the Committee shall,
in such manner as it may deem equitable, in its sole discretion, adjust any or all of the number and type of shares subject to the
Target PRSUs (including additional RSUs which resulted from such deemed reinvestment of Dividend Equivalent Rights).
9.
Taxes.
(a)
You acknowledge that you will consult with your personal tax advisor regarding the income tax
consequences of the grant of the Target PRSUs and Dividend Equivalent Rights, the vesting of the Final PRSUs and Dividend
Equivalent Rights and the receipt of shares of Stock upon the vesting of the Final PRSUs and Dividend Equivalent Rights, and any
other matters related to this Agreement. In order to comply with all applicable federal, state, local or foreign income tax laws or
regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal, state, local or foreign
payroll, withholding, income or other taxes, which are your sole and absolute responsibility, are withheld or collected from you.
(b)
In accordance with the terms of the Plan, and such rules as may be adopted by the Committee administering
the Plan, you may elect to satisfy any applicable tax withholding obligations arising from the vesting of the Final PRSUs and
Dividend Equivalent Rights and the corresponding receipt of shares of Stock by (i) delivering cash (including check, draft, money
order or wire transfer made payable to the order of the Company), (ii) having the Company withhold a portion of the shares of
Stock otherwise to be delivered having a Fair Market Value equal to the amount of such taxes, or (iii) delivering to the Company
shares of Stock having a Fair Market Value equal to the amount of such taxes. The Company will not deliver any fractional share
of Stock but will pay, in lieu thereof, the Fair Market Value of such fractional share of Stock. Your election must be made on or
before the date that the amount of tax to be withheld is determined. The maximum number of shares of Stock that may be withheld
to satisfy any applicable tax withholding obligations arising from the vesting and settlement of the Final PRSUs and Dividend
Equivalent Rights may not exceed such number of shares of Stock having a Fair Market Value equal to the maximum statutory
amount required by the Company to be withheld and paid to any federal, state, or local taxing authority with respect to such vesting
and settlement of the Final PRSUs and Dividend Equivalent Rights, or such greater amount as may be permitted under applicable
accounting standards.
10.
Restrictive Covenants.
(a)
Non-Disclosure.
6
(i)During the course of your employment with the Company, before and after the execution of this
Agreement, and as consideration for the restrictive covenants entered into by you herein, you have received and
will continue to receive some or all of the Company’s various Trade Secrets (as defined under Applicable Law)
and confidential or proprietary information, which includes the following whether in physical or electronic form:
(1) data and compilations of data related to Business Opportunities (as defined below), (2) computer software,
hardware, network and internet technology utilized, modified or enhanced by the Company or by you in
furtherance of your duties with the Company; (3) compilations of data concerning Company products, services,
customers, and end users including but not limited to compilations concerning projected sales, new project
timelines, inventory reports, sales, and cost and expense reports; (4) compilations of information about the
Company’s employees and independent contracting consultants; (5) the Company’s financial information,
including, without limitation, amounts charged to customers and amounts charged to the Company by its
vendors, suppliers, and service providers; (6) proposals submitted to the Company’s customers, potential
customers, wholesalers, distributors, vendors, suppliers and service providers; (7) the Company’s marketing
strategies and compilations of marketing data; (8) compilations of data or information concerning, and
communications and agreements with, vendors, suppliers and licensors to the Company and other sources of
technology, products, services or components used in the Company’s business; (9) the Company’s research and
development records and data; and (10) any summary, extract or analysis of such information together with
information that has been received or disclosed to the Company by any third party as to which the Company has
an obligation to treat as confidential (collectively, “Confidential Information”). For purposes of this Agreement,
“Business Opportunities” means all ideas, concepts or information received or developed (in whatever form) by
you concerning any business, transaction or potential transaction that constitutes or may constitute an opportunity
for the Company to earn a fee or income, specifically including those relationships that were initiated, nourished
or developed at the Company’s expense. Confidential Information does not include data or information: (1)
which has been voluntarily disclosed to the public by the Company, except where such public disclosure has
been made by you without authorization from the Company; (2) which has been independently developed and
disclosed by others; or (3) which has otherwise entered the public domain through lawful means.
(ii)All Confidential Information, Trade Secrets, and all physical and electronic embodiments thereof are
confidential and are and will remain the sole and exclusive property of the Company. During and after the term
of your employment with the Company, you agree that you shall protect any such Confidential Information and
Trade Secrets and shall not, except in connection with the performance of your remaining duties for the
Company, use, disclose or otherwise copy, reproduce, distribute or otherwise disseminate any such Confidential
Information or Trade Secrets, or any physical or electronic
7
embodiments thereof, to any third party; provided, however, that you may make disclosures required by a valid
order or subpoena issued by a court or administrative agency of competent jurisdiction, in which event you will
promptly notify the Company of such order or subpoena to provide the Company an opportunity to protect its
interests. Without limiting the generality of the foregoing, you agree that after your termination of employment
with the Company, you shall not disclose to any third party any business developments, investment or business
arrangements, negotiations, prospective or existing commercial agreements, transaction or potential transaction
that was considered by the Company prior to the date of your termination from the Company. You further agree
that if you are ever subpoenaed or otherwise required by law to provide any statement or other assistance to a
party to a dispute or litigation with the Company, other than the Company, then you shall provide written notice
of the circumstances requiring such statement or other assistance, including where applicable a copy of the
subpoena or other legal writ, in such a manner and at such a time that allows the Company to timely respond.
Nothing herein shall prevent you from cooperating with co defendants in litigation or with inquiry in a
government investigation without a need to obtain prior consent or approval from the Company; provided,
however, you shall provide prompt notice of any voluntary giving of oral or written statements to such parties,
and provide to the Company a copy of any written statement so given or a summary of any oral statement
provided.
(iii)Upon request by the Company and, in any event, upon termination of your employment with the
Company for any reason, you will promptly deliver to the Company all property belonging to the Company,
including but without limitation, all Confidential Information, Trade Secrets and all electronic and physical
embodiments thereof, all Company files, customer lists, management reports, memoranda, research, Company
forms, financial data and reports and other documents (including but not limited to all such data and documents
in electronic form) supplied to or created by you in connection with your employment with the Company
(including all copies of the foregoing) in your possession or control, and all of the Company’s equipment and
other materials in your possession or control. You agree to allow the Company, at its request, to verify return of
Company property and documents and information and/or permanent deletion of the same, through inspection of
personal computers, personal storage media, third party websites, third party e-mail systems, personal digital
assistant devices, cell phones and/or social networking sites on which Company information was stored during
your employment with the Company.
(iv)Nothing contained herein shall be in derogation or a limitation of the rights of the Company to
enforce its rights or your duties under the Applicable Law relating to Trade Secrets.
(v)Nothing contained in this Agreement shall prohibit you from (A) communicating directly with,
cooperating with, or providing information to, reporting possible violations of federal law or regulation to or
receiving financial awards from any Federal, state or local governmental agency or entity, including but not
limited to the Department of Justice, the Securities and Exchange
8
Commission, the Occupational Safety and Health Administration, the Equal
9
Employment Opportunity Commission, the U.S. Commodity Futures Trading Commission, the U.S. National
Labor Relations Board or any Inspector General, or making other disclosures protected under the whistleblower
provisions of federal law or regulation; (B) exercising any rights you may have under Section 7 of the
U.S. National Labor Relations Act, such as the right to engage in concerted activity, including collective action
or discussion concerning wages or working conditions; or (C) discussing or disclosing information about
unlawful acts in the workplace, such as harassment or discrimination based on a protected characteristic or any
other conduct that you have reason to believe is unlawful. You do not need the prior authorization of the
Company to make any such reports or disclosures and you are not required to notify the Company that you have
made such reports or disclosures.
(vi)Notwithstanding anything to the contrary contained in this Agreement, the parties hereto
acknowledge that pursuant to 18 USC § 1833(b), you may not be held liable under any criminal or civil federal
or state trade secret law for disclosure of a trade secret: (i) made in confidence to a Federal, state, or local
government official, either directly or indirectly, or to an attorney, solely for the purpose of reporting or
investigating a suspected violation of law or (ii) in a complaint or other document filed in a lawsuit or other
proceeding, if such filing is made under seal. Additionally, the parties hereto acknowledge that if you sue the
Company for retaliation based on the reporting of a suspected violation of law, you may disclose a trade secret to
your attorney and use the trade secret information in the court proceeding, so long as any document containing
the trade secret is filed under seal and you do not disclose the trade secret except pursuant to court order.
(b)
Non-Competition. You agree that, while employed by the Company and for a period of twelve (12) months
following the termination of your employment with the Company for any reason, with or without cause, whether upon the initiative
of either you or the Company (the “Restricted Period”), you will not provide or perform the same or substantially similar services,
that you provided to the Company, on behalf of any Direct Competitor (as defined below), directly (i.e., as an officer or employee)
or indirectly (i.e., as an independent contractor, consultant, advisor, board member, agent, shareholder, investor, joint venturer, or
partner), anywhere within the United States of America (the “Territory”). For purposes of this Agreement, “Direct Competitor”
means any individual, partnership, corporation, limited liability company, association, or other group, however organized, who
competes with the Company in the business of owning, acquiring and leasing restaurant and retail properties.
(i)If you are a resident of California and subject to its laws, the restrictions set forth in this Section 10(b)
above shall only apply to you during your employment with the Company.
(ii)Nothing in this Section 10(b) shall divest you from the right to acquire as a passive investor (with no
involvement in the operations or management of the business) up to 1% of any class of securities which is: (x)
issued by any Direct Competitor, and (y) publicly traded on a national securities exchange or over-the-counter
market.
(c)
Non-Solicitation of Customers. You agree that you shall not at any time during your employment with the
Company and during the Restricted Period, on behalf of yourself
10
or any other Person, directly or by assisting others, solicit, induce, encourage or cause any of the Company’s vendors, suppliers,
licensees, or other Persons with whom the Company has a contractual relationship and with whom you have had Material Contact
(as defined below) during the last two years of your employment with the Company, to cease doing business with the Company or
to do business with a Direct Competitor. For purposes of this Agreement, “ Material Contact” means contact between you and a
Person: (1) with whom or which you dealt on behalf of the Company; (2) whose dealings with the Company were coordinated or
supervised by you;
11
(3) about whom you obtained Confidential Information in the ordinary course of business as a result of your association with the
Company; or (4) who receives products or services authorized by the Company, the sale or provision of which results or resulted in
compensation, commission, or earnings for you within two years prior to the date of the termination of your employment with the
Company. If you are a resident of California and subject to its laws, the restrictions set forth in this Section 10(c) shall only apply
to you (i) during your employment with the Company or (ii) to the extent that you use or disclose Trade Secrets to engage in any
such restrictions, during the Restricted Period.
(d)
Non-Solicitation of Employees. You agree that during the course of your employment with the Company
and during the Restricted Period, you will not, on behalf of yourself or any other Person, directly or by assisting others, solicit,
induce, persuade, or encourage, or attempt to solicit, induce, persuade, or encourage, any individual employed by the Company,
with whom you have worked, to terminate such employee’s position with the Company, whether or not such employee is a full-
time or temporary employee of the Company and whether or not such employment is pursuant to a written agreement, for a
determined period, or at will. The provisions of this Section 10(d) shall only apply to those individuals employed by the Company
at the time of solicitation or attempted solicitation. For the avoidance of doubt, the provisions of this Section 10(d) shall not apply
to outside advisors or other third party service providers to the Company.
(e)
Cooperation. You acknowledge that after the date on which your employment with the Company terminates
(other than due to a termination of employment due to death or disability), you shall, upon the Company’s reasonable request,
make yourself available at reasonable times, intervals and places for interviews, consultations, internal investigations and/or
testimony during which you shall provide to the Company, or its designated attorneys or agents, any and all information then
known to you regarding or relating to the Company or your activities on behalf of the Company pertaining to the subject matter on
which your cooperation is sought. You agree to remain involved for so long as any such matters shall be pending. Any efforts
undertaken by you at the Company’s request pursuant to this Section 10(e) shall be at the Company’s expense (and shall be subject
to reasonable accommodation for your then-current commitments and obligations).
(f)
Non Disparagement. You agree that the Company’s reputation and goodwill in the marketplace is of utmost
importance and value to the Company. You further agree that during and after the term of your employment with the Company,
you, other than in the performance of your duties for the Company, will not make, publish or cause to be published any statement
or comments that disparage or defame the reputation, character, image, products, or services of the Company, its subsidiaries or
affiliates, or any of their respective stockholders, partners, members, boards of directors, managers, officers and employees. The
parties hereto
12
acknowledge and agree that the foregoing prohibitions extend to statements to the news media, the Company’s competitors,
vendors, and the Company’s then current employees. The parties hereto further acknowledge and agree that the foregoing
prohibitions shall not be violated by (i) truthful statements by you in response to legal process, governmental testimony or filings,
or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings) or (ii)
you rebutting false or misleading statements made by others. The parties hereto further understand and agree that this Section 10(f)
is a material provision of this Agreement and that any material and uncured breach of this Section 10(f) shall be a material breach
of this Agreement, and that the Company would be irreparably harmed by violation of this provision.
(g)
Acknowledgements. You acknowledge that the Company is in the business of owning, acquiring and
leasing restaurant, medical, and retail properties (in each case, as directed by the Board) on a nationwide basis and that the
Company makes substantial investments and has established substantial goodwill associated with its business, supplier
relationships and marketing programs throughout the United States. You therefore acknowledge and agree that it is fair and
reasonable for the Company to take steps to protect its Confidential Information, Trade Secrets, goodwill, business relationships,
employees, economic advantages, and/or other legitimate business interests from the risk of misappropriation of or harm to its
Confidential Information, Trade Secrets, goodwill, business relationships, employees, economic advantages, and/or other
legitimate business interests. You acknowledge that the consideration, including this Agreement, continued employment,
specialized training, and the Confidential Information and Trade Secrets provided to you, gives rise to the Company’s interest in
restraining you from competing with the Company and that any limitations as to time, geographic scope and scope of activity to be
restrained are reasonable and do not impose a greater restraint than is necessary to protect Company’s Confidential Information,
Trade Secrets, good will, business relationships, employees, economic advantages, and/or other legitimate business interests, and
will not prevent you from earning a livelihood.
(h)
Survival of Covenants. The provisions and restrictive covenants in this Section 10 of this Agreement shall
survive the expiration or termination of this Agreement for any reason. You agree not to challenge the enforceability or scope of
the provisions and restrictive covenants in this Section 10. You further agree to notify all future persons, or businesses, with which
you become affiliated or employed by, of the provisions and restrictions set forth in this Section 10, prior to the commencement of
any such affiliation or employment.
(i)
Injunctive Relief. You acknowledge that if you breach or threaten to breach any of the provisions of this
Agreement, your actions will cause irreparable harm and damage to the Company which cannot be compensated by damages alone.
Accordingly, if you breach or threaten to breach any of the provisions of this Agreement, the Company shall be entitled to
injunctive relief, in addition to any other rights or remedies the Company may have. You hereby waive the requirement for a bond
by the Company as a condition to seeking injunctive relief. The existence of any claim or cause of action by you against the
Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of
your agreements under this Agreement.
(j)
Forfeiture. In the event that you violate the terms of this Section 10, you understand and agree that in
addition to the Company’s rights to obtain injunctive relief and
13
damages for such violation, any and all rights to the Award under this Agreement, whether vested or unvested, shall be forfeited and
extinguished.
11.
General Provisions.
(a)
Interpretations. This Agreement is subject in all respects to the terms of the Plan. A copy of the Plan is
available upon your request. Terms used herein which are defined in the Plan shall have the respective meanings given to such
terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms
of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall
be determined by the Committee administering the Plan, and such determination shall be final, conclusive and binding upon all
parties in interest. To the extent that any Award granted by the Company is subject to Code Section 409A, such Award shall be
subject to terms and conditions that comply with the requirements of Code Section 409A to avoid adverse tax consequences under
Code Section 409A.
(b)
No Right to Employment. Nothing in this Agreement or the Plan shall be construed as giving you the right
to be retained as an employee of the Company or any Affiliate. In addition, the Company or an Affiliate may at any time dismiss
you from employment, free from any liability or any claim under this Agreement, unless otherwise expressly provided in this
Agreement.
(c)
Reservation of Shares. The Company shall at all times prior to the vesting of the PRSUs and the Dividend
Equivalent Rights reserve and keep available such number of shares of Stock as will be sufficient to satisfy the requirements of this
Agreement.
(d)
Securities Matters. The Company shall not be required to deliver any shares of Stock until the requirements
of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be
determined by the Company to be applicable are satisfied.
(e)
Headings. Headings are given to the sections and subsections of this Agreement solely as a convenience to
facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this
Agreement or any provision hereof.
(f)
Arbitration. Except for injunctive relief as set forth herein, the parties agree that any dispute between the
parties regarding this Agreement shall be submitted to binding arbitration in San Francisco, California.
(g)
Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State
of Maryland (without giving effect to the conflict of law principles thereof). Subject to Section 11(f) hereof, you agree that the
state and federal courts of Maryland shall have jurisdiction over any litigation between you and the Company regarding this
Agreement, and you expressly submit to the exclusive jurisdiction and venue of the federal and state courts sitting in San
Francisco, California.
(h)
Notices. You should send all written notices regarding this Agreement or the Plan to the Company at the
following address:
14
Four Corners Property Trust, Inc. 591 Redwood Highway
Suite 3215
Mill Valley, CA 94941 Attention: General Counsel
(i)
Award Agreement and Related Documents. This Agreement shall have no force or effect unless you have
been notified by the Company, and identified in the Company’s records, as the recipient of a PRSU Award. YOU MUST REVIEW
AND ACKNOWLEDGE ACCEPTANCE OF THE TERMS OF THIS AGREEMENT, INCLUDING SPECIFICALLY THE
RESTRICTIVE COVENANTS, BY EXECUTING THIS AGREEMENT ELECTRONICALLY VIA YOUR ESTABLISHED
ACCOUNT ON THE PLAN MANAGEMENT CORPORATION WEBSITE WITHIN 60 DAYS OF THE DATE OF GRANT;
PROVIDED, HOWEVER, THAT THE COMMITTEE MAY, AT ITS DISCRETION, EXTEND THIS DATE. FAILURE TO
ACCEPT THE REFERENCED TERMS AND TO EXECUTE THIS AGREEMENT ELECTRONICALLY WILL PRECLUDE
YOU FROM RECEIVING YOUR
PRSU GRANT. In connection with your PRSU grant and this Agreement, the following additional documents were made available
to you electronically, and paper copies are available on request directed to the Company’s Compensation Department: (i) the Plan;
and (ii) a Prospectus relating to the Plan.
AMENDED AND RESTATED
FOUR CORNERS PROPERTY TRUST, INC.
2015 OMNIBUS INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT FOR NON-EMPLOYEE
DIRECTORS
This Restricted Stock Unit Award Agreement (the “Agreement”) is between Four Corners Property Trust, Inc., a
Maryland corporation (the “Company” or “Corporation”), and you, a person notified by the Company, and identified in the
Company’s records, as the recipient of an Award of Restricted Stock Units. This Agreement is effective as of the Grant Date
communicated to you and set forth in the Company’s records.
The Company wishes to award to you a number of Restricted Stock Units, subject to certain restrictions as provided in
this Agreement, in order to carry out the purpose of the Company’s Amended and Restated 2015 Omnibus Incentive Plan (the
“Plan”).
Accordingly, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the
Company and you hereby agree as follows:
1.
Award of Restricted Stock Units and Dividend Equivalent Rights.
The Company hereby grants to you, effective as of the Grant Date, an Award of Restricted Stock Units for that number of
Restricted Stock Units communicated to you and set forth in the Company’s records (the “RSUs”), on the terms and conditions set
forth in such communications, this Agreement and the Plan. Each RSU represents the right to receive on the vesting date or dates
set forth in Sections 3 and 4 hereof, one share of Stock.
The Company hereby grants to you an award of Dividend Equivalent Rights with respect to each RSU granted pursuant to
this Agreement for all dividends and distributions in cash, Stock or other property which are paid to all or substantially all holders
of the outstanding shares of Stock and that have a record date between the Grant Date and the date when the RSU is distributed or
paid to you or is forfeited or expires. The Dividend Equivalent Rights award for each RSU shall be equal to the amount of cash and
the Fair Market Value of Stock or other property which is paid as a dividend or distribution on one share of Stock. All such
Dividend Equivalent Rights shall be credited to you and shall be deemed to be reinvested in additional RSUs as of the date of
payment of any such dividend or distribution based on the Fair Market Value of a share of Stock on such date. Each additional
RSU which results from such deemed reinvestment of Dividend Equivalent Rights granted hereunder shall be subject to the same
vesting, distribution or payment, adjustment and other provisions which apply to the underlying RSU to which such additional
RSU relates.
2.
Rights with Respect to the RSUs and Dividend Equivalent Rights.
The RSUs and Dividend Equivalent Rights granted hereunder do not and shall not give you any of the rights and
privileges of a shareholder of Stock. Your rights with respect to the RSUs and Dividend Equivalent Rights shall remain forfeitable
at all times prior to the date or dates on which such rights become vested, and the restrictions with respect to the RSUs and
Dividend Equivalent Rights lapse, in accordance with Sections 3 or 4 hereof.
US-DOCS\144327455.1
2
3.
Vesting.
Subject to the terms and conditions of this Agreement, the RSUs shall vest, and the restrictions with respect to the RSUs
shall lapse, on the first anniversary of the Grant Date, subject to your continuous service on the Board through the applicable
vesting date. Each additional RSU which results from deemed reinvestments of Dividend Equivalent Rights pursuant to Section
1(b) hereof shall vest whenever the underlying RSU to which such additional RSU relates vests. Notwithstanding the foregoing,
you shall become immediately and unconditionally vested in all RSUs immediately prior to the occurrence of a Change in Control,
to the extent then-outstanding and unvested, if immediately following such Change in Control, you do not become a member of the
board of the Company or the ultimate parent of the Company.
4.
Early Vesting: Forfeiture.
(a)
If your service on the Board terminates other than by reason of your death or Disability (as defined below)
prior to the vesting of the RSUs pursuant to Section 3 hereof, your rights to all of the unvested RSUs and Dividend Equivalent
Rights shall be immediately and irrevocably forfeited.
(b)
If you die prior to the vesting of the RSUs pursuant to Section 3 hereof, you shall become immediately and
unconditionally vested in all RSUs and Dividend Equivalent Rights and the restrictions with respect to all RSUs and Dividend
Equivalent Rights shall lapse on the date of your death. No transfer by will or the Applicable Laws of descent and distribution of
any RSUs or Dividend Equivalent Rights which vest by reason of your death shall be effective to bind the Company unless the
Committee administering the Plan shall have been furnished with written notice of such transfer and a copy of the will or such
other evidence as the Committee may deem necessary to establish the validity of the transfer.
(c)
If you become Disabled (as defined below) prior to the vesting of the RSUs pursuant to Section 3 hereof,
you shall become immediately and unconditionally vested in all RSUs and Dividend Equivalent Rights and the restrictions with
respect to all RSUs and Dividend Equivalent Rights shall lapse on the date on which the Committee administering the Plan makes
the determination that you are Disabled. For purposes of this Agreement, “Disabled” means you have a disability due to illness or
injury which is expected to be permanent in nature and which prevents you from performing the material duties required by your
regular occupation, all as determined by the Committee administering the Plan.
5.
Restriction on Transfer.
Except as contemplated by Section 4(b) hereof, none of the RSUs or Dividend Equivalent Rights may be sold, assigned,
transferred, pledged, attached or otherwise encumbered, and no attempt to transfer the RSUs or the Dividend Equivalent Rights,
whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with
respect to the RSUs or Dividend Equivalent Rights.
6.
Settlement of RSUs and Dividend Equivalent Rights.
No shares of Stock shall be issued to you prior to the date on which the RSUs vest, in accordance with the terms and
conditions communicated to you and set forth herein. After the
3
RSUs vest pursuant to Sections 3 or 4 hereof, the Company shall promptly, but no later than 30 days following the applicable
vesting date, cause to be issued in your name one share of Stock for each RSU (including additional RSUs which resulted from
such deemed reinvestment of Dividend Equivalent Rights). The Company will not deliver any fractional share of Stock but will
pay, in lieu thereof, the Fair Market Value of such fractional share of Stock. Notwithstanding the foregoing, you may elect to defer
the settlement of the RSUs and Dividend Equivalent Rights beyond the vesting date of the RSUs. Any deferral election must be
made in compliance with such rules and procedures as may be established by the Committee administering the Plan.
7.Distributions and Adjustments. Subject to and in accordance with Section 16.1 of the Plan, in the event that the
Committee administering the Plan shall determine that any dividend or other distribution (whether in the form of cash, shares of
Stock, other securities or other property), recapitalization, reclassification, stock split, reverse stock split, spin-off, combination, or
exchange of shares or other securities of the Company or other increase or decrease in shares of Stock effected without receipt of
consideration by the Company affects the Stock such that an adjustment of the RSUs is determined by the Committee
administering the Plan to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to
be made available under this Agreement, then the Committee shall, in such manner as it may deem equitable, in its sole discretion,
adjust any or all of the number and type of shares subject to the RSUs.
8.
General Provisions.
(a)
Interpretations. This Agreement is subject in all respects to the terms of the Plan. A copy of the Plan is
available upon your request. Terms used herein which are defined in the Plan shall have the respective meanings given to such
terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms
of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall
be determined by the Committee administering the Plan, and such determination shall be final, conclusive and binding upon all
parties in interest. To the extent that any Award granted by the Company is subject to Code Section 409A, such Award shall be
subject to terms and conditions that comply with the requirements of Code Section 409A to avoid adverse tax consequences under
Code Section 409A.
(b)
No Right to Board Service. Nothing in this Agreement or the Plan shall be construed as giving you the
right to continue to serve on the Board.
(c)
Reservation of Shares. The Company shall at all times prior to the vesting of the RSUs and the Dividend
Equivalent Rights reserve and keep available such number of shares of Stock as will be sufficient to satisfy the requirements of this
Agreement.
(d)
Securities Matters. The Company shall not be required to deliver any shares of Stock until the
requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as
may be determined by the Company to be applicable are satisfied.
(e)
Headings. Headings are given to the sections and subsections of this Agreement solely as a convenience to
facilitate reference. Such headings shall not be deemed in
4
any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.
(f)
Arbitration. The parties agree that any dispute between the parties regarding this Agreement shall be
submitted to binding arbitration in San Francisco, California.
(g)
Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State
of Maryland (without giving effect to the conflict of law principles thereof). Subject to Section 8(e) hereof, you agree that the state
and federal courts of Maryland shall have jurisdiction over any litigation between you and the Company regarding this Agreement,
and you expressly submit to the exclusive jurisdiction and venue of the federal and state courts sitting in San Francisco, California.
(h)
Notices. You should send all written notices regarding this Agreement or the Plan to the Company at the
following address:
Four Corners Property Trust, Inc. 591 Redwood Highway
Suite 3215
Mill Valley, CA 94941 Attention: General Counsel
(i)
Award Agreement and Related Documents. This Restricted Stock Unit Award Agreement shall have no
force or effect unless you have been notified by the Company, and identified in the Company’s records, as the recipient of a
Restricted Stock Unit Award grant. You are not required to execute this Agreement, but you will have 60 days from the Grant Date
to notify the Company of any issues regarding the terms and conditions of this Agreement; otherwise, you will be deemed to agree
with them. In connection with your Restricted Stock Unit grant and this Agreement, the following additional documents were made
available to you electronically, and paper copies are available on request directed to the Company’s Compensation Department:
(i) the Plan; and (ii) a Prospectus relating to the Plan.
i
|US-DOCS\101859265.22||
| DATE \@ "MM-dd-yyyy" 10-27-2020 DATE \@ "HH:mm" 09:30|
Four Corners Property Trust, Inc.
Insider Trading Compliance Policy
Contents
Page
I.
Summary
1
II.
Statement of Policies Prohibiting Insider Trading
2
III.
Explanation of Insider Trading
3
IV.
Statement of Procedures to Prevent Insider Trading
7
V.
Additional Prohibited Transactions
11
VI.
Section 16, and Rule 144
12
VII.
Execution and Return of Certification of Compliance
14
Attachment A
Short-Swing Profit Rule Section 16(b) Checklist
15
Attachment B
Certification of Compliance
16
Four Corners Property Trust, Inc.
Insider Trading Compliance Policy
Federal and state laws prohibit trading in the securities of a company while in possession of material nonpublic information
and providing material nonpublic information to others so that they can trade. Violating such laws can undermine investor trust,
harm Four Corners Property Trust, Inc.’s reputation, and result in your dismissal from Four Corners Property Trust, Inc. (the
“Company”) or even serious criminal and civil charges against you and the Company.
This Insider Trading Compliance Policy (this “Policy”) outlines your responsibilities to avoid insider trading and implements
certain procedures to help you avoid even the appearance of insider trading.
I.
Summary
Preventing insider trading is necessary to comply with securities laws and to preserve the reputation and integrity of the
Company. “Insider trading” occurs when any person purchases or sells a security while in possession of material nonpublic
information relating to the security. Insider trading is a crime. The criminal penalties for violating insider trading laws include
imprisonment and fines of up to $5 million for individuals and $25 million for corporations. Insider trading may also result in civil
penalties, including disgorgement of profits and civil fines. Insider trading is also prohibited by this Policy, and violation of this
Policy may result in Company‑imposed sanctions, including removal or dismissal for cause.
This Policy applies to all officers, directors, and employees of the Company. As someone subject to this Policy, you are
responsible for ensuring that members of your household also comply with this Policy. This Policy also applies to any entities you
control, including any corporations, partnerships, or trusts, and transactions by such entities should be treated for the purposes of
this Policy and applicable securities laws as if they were for your own account. The Company may determine that this Policy applies
to additional persons with access to material nonpublic information, such as contractors or consultants. This Policy extends to all
activities within and outside your Company duties. Every officer, director, and employee must review this Policy. Questions
regarding the Policy should be directed to the Company’s General Counsel.
The Company’s General Counsel shall be responsible for the administration of this Policy.
In all cases, as someone subject to this Policy, you bear full responsibility for ensuring your compliance with this Policy, and
also for ensuring that members of your household (and individuals not residing in your household but whose transactions are
subject to your influence or control) and entities under your influence or control are in compliance with this Policy.
Actions taken by the Company, the General Counsel, or any other Company personnel do not constitute legal advice, nor
do they insulate you from the consequences of noncompliance with this Policy.
2
II.
Statement of Policies Prohibiting Insider Trading
No officer, director, or employee (or any other person designated as subject to this Policy) shall purchase or sell any type of
security while in possession of material nonpublic information relating to the security or the issuer of such security, whether the
issuer of such security is the Company or any other company.
Additionally, no officer, director or employee shall purchase or sell any security of the Company during the period
beginning on the 14th calendar day before the end of any fiscal quarter of the Company and ending upon completion of the second
full trading day after the public release of earnings data for such fiscal quarter or during any other trading suspension period
declared by the Company.
These prohibitions do not apply to:
purchases of the Company’s securities from the Company or sales of the Company’s securities to the Company;
exercises of stock options or other equity awards or the surrender of shares to the Company in payment of the
exercise price or in satisfaction of any tax withholding obligations in a manner permitted by the applicable equity
award agreement, or vesting of equity-based awards that, in each case, do not involve a market sale of the
Company’s securities (the “cashless exercise” of a Company stock option through a broker does involve a market
sale of the Company’s securities, and therefore would not qualify under this exception);
bona fide gifts of the Company’s securities; or
purchases or sales of the Company’s securities made pursuant to any binding contract, specific instruction or
written plan entered into while the purchaser or seller, as applicable, was unaware of any material nonpublic
information and which contract, instruction, or plan (i) meets all requirements of the affirmative defense provided
by Rule 10b5-1 (“Rule 10b5-1”) promulgated under the Securities Exchange Act of 1934, as amended (the “1934
Act”), (ii) was precleared in advance pursuant to this Policy and (iii) has not been amended or modified in any
respect after such initial preclearance. For more information about Rule 10b5-1 trading plans, see Section VI
below.
From time to time, events will occur that are material to the Company and cause certain officers, directors, or employees
to be in possession of material nonpublic information. When that happens, the Company will recommend that those in possession
of the material nonpublic information suspend all trading in the Company’s securities until the information is no longer material or
has been publicly disclosed.
3
When such event-specific blackout periods occur, those subject to it will be notified by the Company. The event-specific
blackout period will not be announced to those not subject to it, and those subject to it or otherwise aware of it should not disclose
it to others.
Even if the Company has not notified you that you are subject to an event-specific blackout period, if you are aware of
material nonpublic information about the Company, you should not trade in Company securities. Any failure by the Company to
designate you as subject to an event-specific blackout period, or to notify you of such designation, does not relieve you of your
obligation not to trade in the Company’s securities while possessing material nonpublic information.
No officer, director, or employee shall directly or indirectly communicate (or “tip”) material nonpublic information to
anyone outside the Company (except in accordance with the Company’s policies regarding the protection or authorized external
disclosure of Company information) or to anyone within the Company other than on a “need-to-know” basis.
III. Explanation of Insider Trading
“Insider trading” refers to the purchase or sale of a security while in possession of material nonpublic information relating
to the security.
“Securities” includes stocks, bonds, notes, debentures, options, warrants, and other convertible securities, as well as
derivative instruments.
“Purchase” and “sale” are defined broadly under the federal securities law. “Purchase” includes not only the actual
purchase of a security, but any contract to purchase or otherwise acquire a security. “Sale” includes not only the actual sale of a
security, but any contract to sell or otherwise dispose of a security. These definitions extend to a broad range of transactions,
including conventional cash-for-stock transactions, conversions, the exercise of stock options, and acquisitions and exercises of
warrants or puts, calls, or other derivative securities.
A.
What Facts Are Material?
The materiality of a fact depends upon the circumstances. A fact is considered “material” if there is a substantial likelihood
that a reasonable investor would consider it important in making a decision to buy, sell, or hold a security, or if the fact is likely to
have a significant effect on the market price of the security. Material information can be positive or negative and can relate to
virtually any aspect of a company’s business or to any type of security, debt, or equity. Also, information that something is likely to
happen in the future—or even just that it may happen—could be deemed material.
Examples of material information include (but are not limited to) information about dividends; corporate earnings or
earnings forecasts; possible mergers, acquisitions, tender offers, or dispositions; major new products or product developments;
important business developments such as major contract awards or cancellations, tenant performance, developments regarding
4
strategic collaborators, or the status of regulatory submissions; management or control changes; significant borrowing or financing
developments, including pending public sales or offerings of debt or equity securities; defaults on borrowings; bankruptcies;
cybersecurity or data security incidents; and significant litigation or regulatory actions. Moreover, material information does not
have to be related to a company’s business. For example, the contents of a forthcoming newspaper column that is expected to
affect the market price of a security can be material.
Questions regarding material information should be directed to the Company’s General Counsel. A good rule of thumb:
When in doubt, do not trade.
B.
What Is Nonpublic?
Information is “nonpublic” if it is not available to the general public. In order for information to be considered public, it
must be widely disseminated in a manner making it generally available to investors through newswire services such as Dow Jones,
Reuters, Bloomberg, Business Wire, The Wall Street Journal, Associated Press, or United Press International; a broadcast on widely
available radio or television programs; publication in a widely available newspaper, magazine, or news website; a Regulation FD-
compliant conference call; or public disclosure documents filed with the US Securities and Exchange Commission (the “SEC”) that
are available on the SEC’s website. Note that simply posting information to the Company’s website may not be sufficient disclosure
to make the information public.
The circulation of rumors, even if accurate and reported in the media, does not constitute effective public dissemination.
In addition, even after a public announcement, a reasonable period of time must lapse in order for the market to react to the
information. Generally, one should allow two full trading days following publication as a reasonable waiting period before such
information is deemed to be public.
C.
Who Is an Insider?
“Insiders” include officers, directors, and any employees of a company, or anyone else who has material nonpublic
information about a company. Insiders have independent fiduciary duties to their company and its stockholders not to trade on
material nonpublic information relating to the company’s securities. Insiders may not trade in the Company’s securities while in
possession of material nonpublic information relating to the Company, nor may they tip such information to anyone outside the
Company (except in accordance with the Company’s policies regarding the protection or authorized external disclosure of Company
information) or to anyone within the Company other than on a “need-to-know” basis.
As someone subject to this Policy, you are responsible for ensuring that members of your household also comply with this
Policy. This includes family members residing with you, anyone else living in your household, and any family members not living
with you whose transactions in the Company’s securities are directed by you, or subject to your influence and control. This Policy
also applies to any entities you control, including any corporations, partnerships, or trusts, and
5
transactions by these entities should be treated for the purposes of this Policy and applicable securities laws as if they were for your
own account.
D.
Trading by Persons Other Than Insiders
Insiders may be liable for communicating or tipping material nonpublic information to a third party (“tippee”), and insider
trading violations are not limited to trading or tipping by insiders. Persons other than insiders can also be liable for insider trading,
including tippees who trade on material nonpublic information tipped to them or individuals who trade on material nonpublic
information that has been misappropriated. Insiders may be held liable for tipping even if they receive no personal benefit from
tipping and even if no close personal relationship exists between them and the tippee.
Tippees inherit an insider’s duties and are liable for trading on material nonpublic information illegally tipped to them by an
insider. Similarly, just as insiders are liable for the insider trading of their tippees, so are tippees who pass the information along to
others who trade. In other words, a tippee’s liability for insider trading is no different from that of an insider. Tippees can obtain
material nonpublic information by receiving overt tips from others or through, among other things, conversations at social,
business, or other gatherings.
E.
Penalties for Engaging in Insider Trading
Penalties for trading on or tipping material nonpublic information can extend significantly beyond any profits made or
losses avoided, both for individuals engaging in such unlawful conduct and their employers. The SEC and Department of Justice
have made the civil and criminal prosecution of insider trading violations a top priority. Enforcement remedies available to the
government or private plaintiffs under the federal securities laws include:
SEC administrative sanctions;
securities industry self-regulatory organization sanctions;
civil injunctions;
damage awards to private plaintiffs;
disgorgement of all profits;
civil fines for the violator of up to three times the amount of profit gained or loss avoided;
civil fines for the employer or other controlling person of a violator (i.e., where the violator is an employee or
other controlled person) of up to the greater of $1.425 million or three times the amount of profit gained or loss
avoided by the violator;
6
criminal fines for individual violators of up to $5 million ($25 million for an entity); and
jail sentences of up to 20 years.
In addition, insider trading could result in serious sanctions by the Company, including dismissal. Insider trading violations
are not limited to violations of the federal securities laws. Other federal and state civil or criminal laws, such as the laws prohibiting
mail and wire fraud and the Racketeer Influenced and Corrupt Organizations Act (RICO), may also be violated in connection with
insider trading.
F.
Size of Transaction and Reason for Transaction Do Not Matter
The size of the transaction or the amount of profit received does not have to be significant to result in prosecution. The
SEC has the ability to monitor even the smallest trades, and the SEC performs routine market surveillance. Brokers or dealers are
required by law to inform the SEC of any possible violations by people who may have material nonpublic information. The SEC
aggressively investigates even small insider trading violations.
G.
Examples of Insider Trading
Examples of insider trading cases include actions brought against officers, directors, and employees who traded in a
company’s securities after learning of significant confidential corporate developments; friends, business associates, family
members, and other tippees of such officers, directors, and employees who traded in the securities after receiving such information;
government employees who learned of such information in the course of their employment; and other persons who
misappropriated, and took advantage of, confidential information from their employers.
The following are illustrations of insider trading violations. These illustrations are hypothetical and, consequently, not
intended to reflect on the actual activities or business of the Company or any other entity.
Trading by Insider
An officer of X Corporation learns that earnings to be reported by X Corporation will increase dramatically. Prior
to the public announcement of such earnings, the officer purchases X Corporation’s stock. The officer, an insider,
is liable for all profits as well as penalties of up to three times the amount of all profits. The officer is also subject
to, among other things, criminal prosecution, including up to $5 million in additional fines and 20 years in jail.
Depending upon the circumstances, X Corporation and the individual to whom the officer reports could also be
liable as controlling persons.
7
Trading by Tippee
An officer of X Corporation tells a friend that X Corporation is about to publicly announce that it has concluded an
agreement for a major acquisition. This tip causes the friend to purchase X Corporation’s stock in advance of the
announcement. The officer is jointly liable with his friend for all of the friend’s profits, and each is liable for all civil
penalties of up to three times the amount of the friend’s profits. The officer and his friend are also subject to
criminal prosecution and other remedies and sanctions, as described above.
H.
Prohibition of Records Falsification and False Statements
Section 13(b)(2) of the 1934 Act requires companies subject to the 1934 Act to maintain proper internal books and records
and to devise and maintain an adequate system of internal accounting controls. The SEC has supplemented the statutory
requirements by adopting rules that prohibit (i) any person from falsifying records or accounts subject to the above requirements,
and (ii) officers or directors from making any materially false, misleading, or incomplete statement to any accountant in connection
with any audit or filing with the SEC. These provisions reflect the SEC’s intent to discourage officers, directors, and other persons
with access to the Company’s books and records from taking action that might result in the communication of materially misleading
financial information to the investing public. Falsifying records or accounts or making materially false, misleading, or incomplete
statements in connection with an audit or filing with the SEC could also result in criminal penalties for obstruction of justice.
IV. Statement of Procedures to Prevent Insider Trading
The following procedures have been established, and will be maintained and enforced, by the Company to prevent insider
trading.
A.
Blackout Periods
The period during which the Company prepares quarterly financials is a sensitive time for insider trading purposes, as
Company personnel may be more likely to possess, or be presumed to possess, material nonpublic information. To avoid the
appearance of impropriety and assist Company personnel in planning transactions in the Company’s securities for appropriate
times, no officer, director, or employee shall purchase or sell any security of the Company during the period beginning on the 14th
calendar day before the end of any fiscal quarter of the Company and ending upon completion of the second full trading day after
the public release of earnings data for such fiscal quarter or during any other trading suspension period declared by the Company,
except for:
purchases of the Company’s securities from the Company or sales of the Company’s securities to the Company;
8
exercises of stock options or other equity awards, the surrender of shares to the Company in payment of the
exercise price or in satisfaction of any tax withholding obligations in a manner permitted by the applicable equity
award agreement, or the vesting of equity-based awards that do not involve a market sale of the Company’s
securities (the cashless exercise of a Company stock option through a broker does involve a market sale of the
Company’s securities, and therefore would not qualify under this exception);
bona fide gifts of the Company’s securities; and
purchases or sales of the Company’s securities made pursuant to any binding contract, specific instruction, or
written plan entered into while the purchaser or seller, as applicable, was unaware of any material nonpublic
information and which contract, instruction, or plan (i) meets all requirements of the affirmative defense provided
by Rule 10b5-1, (ii) was precleared in advance pursuant to this Policy, and (iii) has not been amended or modified
in any respect after such initial preclearance without such amendment or modification being precleared in
advance pursuant to this Policy.
Exceptions to the blackout period policy may be approved only by the Company’s General Counsel or, in the case of
exceptions for directors, the Board of Directors.
From time to time, the Company, through the Board of Directors or the Company’s General Counsel, may recommend that
officers, directors, employees, or others suspend trading in the Company’s securities because of developments that have not yet
been disclosed to the public. Subject to the exceptions noted above, all those affected should not trade in the Company’s securities
while the suspension is in effect, and should not disclose to others that the Company has suspended trading.
B.
Preclearance of All Trades by All Officers, Directors and Employees
To provide assistance in preventing inadvertent violations of applicable securities laws and to avoid the appearance of
impropriety in connection with the purchase and sale of the Company’s securities, all transactions in the Company’s securities
(including, without limitation, acquisitions and dispositions of Company stock, the exercise of stock options, elective transactions
under 401(k)/ESPP/deferred compensation plans, and the sale of Company stock issued upon exercise of stock options) by officers,
directors, and employees (each, a “Preclearance Person”) must be precleared by the Company’s General Counsel, except for certain
exempt transactions as explained in Section VI of this Policy. Preclearance does not relieve you of your responsibility under SEC
rules.
A request for preclearance may be oral or in writing (including by e-mail), should be made in advance of the proposed
transaction, and should include the identity of the Preclearance Person, the type of proposed transaction (for example, an open
market purchase, a privately negotiated sale, an option exercise, etc.), the proposed date of the transaction, and the number
9
of shares or other securities to be involved. In addition, the Preclearance Person must execute a certification (in the form approved
by the General Counsel, which may take the form of an email) that he or she is not aware of material nonpublic information about
the Company. The General Counsel shall have sole discretion to decide whether to clear any contemplated transaction. (The Chief
Executive Officer shall have sole discretion to decide whether to clear transactions by the General Counsel or persons or entities
subject to this policy as a result of their relationship with the General Counsel.) All trades that are precleared must be effected
within two business days of receipt of the preclearance, unless a specific exception has been granted by the General Counsel. A
precleared trade (or any portion of a precleared trade) that has not been effected during the two business day period must be
precleared again prior to execution. Notwithstanding receipt of preclearance, if the Preclearance Person becomes aware of
material nonpublic information or becomes subject to a blackout period before the transaction is effected, the transaction may not
be completed.
None of the Company, the General Counsel, or the Company’s other employees will have any liability for any delay in
reviewing, or refusal of, a request for preclearance submitted pursuant to this Section IV.B. Notwithstanding any preclearance of a
transaction pursuant to this Section IV.B, none of the Company, the General Counsel, or the Company’s other employees assumes
any liability for the legality or consequences of such transaction to the person engaging in such transaction.
C.
Post-Termination Transactions
With the exception of the preclearance requirement, this Policy continues to apply to transactions in the Company’s
securities even after termination of service to the Company. If you are in possession of material nonpublic information when your
service terminates, you may not trade in the Company’s securities until that information has become public or is no longer material.
D.
Information Relating to the Company
1.
Access to Information
Access to material nonpublic information about the Company, including the Company’s business, earnings, or prospects,
should be limited to officers, directors, and employees of the Company on a “need-to-know” basis. In addition, such information
should not be communicated to anyone outside the Company under any circumstances (except in accordance with the Company’s
policies regarding the protection or authorized external disclosure of Company information) or to anyone within the Company on an
other than “need-to-know” basis.
In communicating material nonpublic information to employees of the Company, all officers, directors, and employees
must take care to emphasize the need for confidential treatment of such information and adherence to the Company’s policies with
regard to confidential information.
10
2.
Inquiries From Third Parties
Inquiries from third parties, such as industry analysts or members of the media, about the Company should be directed to
info@fcpt.com.
E.
Limitations on Access to Company Information
The following procedures are designed to maintain confidentiality with respect to the Company’s business operations and
activities.
All officers, directors, and employees should take all steps and precautions necessary to restrict access to, and secure,
material nonpublic information by, among other things:
maintaining the confidentiality of Company-related transactions;
conducting their business and social activities so as not to risk inadvertent disclosure of confidential information.
Review of confidential documents in public places should be conducted so as to prevent access by unauthorized
persons;
restricting access to documents and files (including computer files) containing material nonpublic information to
individuals on a “need-to-know” basis (including maintaining control over the distribution of documents and drafts
of documents);
promptly removing and cleaning up all confidential documents and other materials from conference rooms
following the conclusion of any meetings;
disposing of all confidential documents and other papers once there is no longer any business or other legally
required need — through shredders when appropriate;
restricting access to areas likely to contain confidential documents or material nonpublic information;
safeguarding laptop computers, tablets, memory sticks, CDs, and other items that contain confidential
information; and
avoiding the discussion of material nonpublic information in places where the information could be overheard by
others, such as in elevators, restrooms, hallways, restaurants, airplanes, or taxicabs.
Personnel involved with material nonpublic information, to the extent feasible, should conduct their business and activities
in areas separate from other Company activities.
11
V.
Additional Prohibited Transactions
The Company has determined that there is a heightened legal risk and/or the appearance of improper or inappropriate
conduct if the persons subject to this Policy engage in certain types of transactions. Therefore, officers, directors, and employees
shall comply with the following policies with respect to certain transactions in the Company securities:
A.
Short Sales
Short sales of the Company’s securities evidence an expectation on the part of the seller that the securities will decline in
value, and therefore signal to the market that the seller has no confidence in the Company or its short-term prospects. In addition,
short sales may reduce the seller’s incentive to improve the Company’s performance. For these reasons, short sales of the
Company’s securities are prohibited by this Policy. In addition, as noted below, Section 16(c) of the 1934 Act absolutely prohibits
Section 16 reporting persons from making short sales of the Company’s equity securities, i.e., sales of shares that the insider does
not own at the time of sale, or sales of shares against which the insider does not deliver the shares within 20 days after the sale.
B.
Publicly Traded Options
A transaction in options is, in effect, a bet on the short-term movement of the Company’s stock and therefore creates the
appearance that an officer, director, or employee is trading based on material nonpublic information. Transactions in options may
also focus an officer’s, director’s, or employee’s attention on short-term performance at the expense of the Company’s long-term
objectives. Accordingly, transactions in puts, calls, or other derivative securities involving the Company’s equity securities, on an
exchange or in any other organized market, are prohibited by this Policy.
C.
Hedging Transactions
Certain forms of hedging or monetization transactions, such as zero-cost collars and forward sale contracts, allow an
officer, director, or employee to lock in much of the value of his or her stock holdings, often in exchange for all or part of the
potential for upside appreciation in the stock. Such transactions allow the officer, director, or employee to continue to own the
covered securities, but without the full risks and rewards of ownership. When that occurs, the officer, director, or employee may
no longer have the same objectives as the Company’s other stockholders. Therefore, such transactions involving the Company’s
equity securities are prohibited by this Policy.
D.
Purchases of the Company’s Securities on Margin; Pledging the Company’s Securities to Secure Margin or Other
Loans
Purchasing on margin means borrowing from a brokerage firm, bank, or other entity in order to purchase the Company’s
securities (other than in connection with a cashless exercise of
12
stock options under the Company’s equity plans). Margin purchases of the Company’s securities are prohibited by this Policy.
Pledging the Company’s securities as collateral to secure loans is also prohibited.
E.
Director and Executive Officer Cashless Exercises
The Company will not arrange with brokers to administer cashless exercises on behalf of directors and executive officers of
the Company. Directors and executive officers of the Company may use the cashless exercise feature of their equity awards only if
(i) the director or officer retains a broker independently of the Company, (ii) the Company’s involvement is limited to confirming
that it will deliver the stock promptly upon payment of the exercise price, and (iii) the director or officer uses a cashless exercise
arrangement, in which the Company agrees to deliver stock against the payment of the purchase price on the same day the sale of
the stock underlying the equity award settles. Under a cashless exercise, a broker, the issuer, and the issuer’s transfer agent work
together to make all transactions settle simultaneously. This approach is to avoid any inference that the Company has “extended
credit” in the form of a personal loan to the director or executive officer. Questions about cashless exercises should be directed to
the General Counsel.
VI. Section 16, and Rule 144
A.
Section 16: Insider Reporting Requirements, Short-Swing Profits, and Short Sales (Applicable to Officers,
Directors, and 10% Stockholders)
1.
Reporting Obligations Under Section 16(a): SEC Forms 3, 4, and 5
Section 16(a) of the 1934 Act generally requires all officers, directors, and 10% stockholders (“Section 16 Insiders”), within
10 days after becoming a Section 16 Insider, to file with the SEC an “Initial Statement of Beneficial Ownership of Securities” on SEC
Form 3, listing the amount of the Company’s stock, options, and warrants that the Section 16 Insider beneficially owns. Following
the initial filing on SEC Form 3, changes in beneficial ownership of the Company’s stock, options, and warrants must be reported on
SEC Form 4, generally within two days after the date on which such change occurs, or in certain cases on Form 5, within 45 days
after fiscal year-end. The two-day Form 4 deadline begins to run from the trade date rather than the settlement date. A Form 4
must be filed even if, as a result of balancing transactions, there has been no net change in holdings. In certain situations,
purchases or sales of Company stock made within six months prior to the filing of a Form 3 must be reported on Form 4. Similarly,
certain purchases or sales of Company stock made within six months after an officer or director ceases to be a Section 16 Insider
must be reported on Form 4.
2.
Recovery of Profits Under Section 16(b)
For the purpose of preventing the unfair use of information that may have been obtained by a Section 16 Insider, any
profits realized by a Section 16 Insider from any “purchase” and “sale” of Company stock during a six-month period, so called
“short-swing profits,” may be recovered
13
by the Company. When such a purchase and sale occurs, good faith is no defense. The insider is liable, even if compelled to sell for
personal reasons, and even if the sale takes place after full disclosure and without the use of any material nonpublic information.
The Section 16 Insider under Section 16(b) of the 1934 Act is only to the Company itself. The Company, however, cannot
waive its right to short swing profits, and any Company stockholder can bring suit in the name of the Company. Reports of
ownership filed with the SEC on Form 3, Form 4, or Form 5 pursuant to Section 16(a) (discussed above) are readily available to the
public, and certain attorneys carefully monitor these reports for potential Section 16(b) violations. In addition, liabilities under
Section 16(b) may require separate disclosure in the Company’s annual report to the SEC on Form 10-K or its proxy statement for its
annual meeting of stockholders. No suit may be brought more than two years after the date the profit was realized. However, if
the Section 16 Insider fails to file a report of the transaction under Section 16(a), as required, the two-year limitation period does
not begin to run until after the transactions giving rise to the profit have been disclosed. Failure to report transactions and late
filing of reports require separate disclosure in the Company’s proxy statement.
Officers and directors should consult the attached “Short-Swing Profit Rule Section 16(b) Checklist” attached hereto as
“Attachment A” in addition to consulting the General Counsel prior to engaging in any transactions involving the Company’s
securities, including, without limitation, the Company’s stock, options, or warrants.
3.
Short Sales Prohibited Under Section 16(c)
Section 16(c) of the 1934 Act absolutely prohibits Section 16 Insiders from making short sales of the Company’s equity
securities. Short sales include sales of stock that the Section 16 Insider does not own at the time of sale, or sales of stock against
which the Section 16 Insider does not deliver the shares within 20 days after the sale. Under certain circumstances, the purchase or
sale of put or call options, or the writing of such options, can result in a violation of Section 16(c). Section 16 Insiders violating
Section 16(c) face criminal liability.
You should consult the General Counsel if you have any questions regarding reporting obligations, short-swing profits or
short sales under Section 16.
B.
Rule 144 (Applicable to Section 16 Insiders)
Rule 144 provides a safe harbor exemption to the registration requirements of the Securities Act of 1933, as amended, for
certain resales of “restricted securities” and “control securities.” “Restricted securities” are securities acquired from an issuer, or an
affiliate of an issuer, in a transaction, or chain of transactions, not involving a public offering. “Control securities” are any securities
owned by directors, executive officers, or other “affiliates” of the issuer, including stock purchased in the open market and stock
received upon exercise of stock options. Sales of Company securities by affiliates (generally, Section 16 Insiders of the Company)
must comply with the requirements of Rule 144, which are summarized below:
14
Current Public Information. The Company must have filed all SEC-required reports during the last 12 months.
Volume Limitations. Total sales of Company common stock by a covered individual for any three-month period
may not exceed the greater of: (i) 1% of the total number of outstanding shares of Company common stock, as
reflected in the most recent report or statement published by the Company, or (ii) the average weekly reported
volume of such shares traded during the four calendar weeks preceding the filing of the requisite Form 144.
Method of Sale. The shares must be sold either in a “broker’s transaction” or in a transaction directly with a
“market maker.” A “broker’s transaction” is one in which the broker does no more than execute the sale order
and receive the usual and customary commission. Neither the broker nor the selling person can solicit or arrange
for the sale order. In addition, the selling person or member of the Board of Directors must not pay any fee or
commission other than to the broker. A “market maker” includes a specialist permitted to act as a dealer, a dealer
acting in the position of a block positioner, and a dealer who holds himself out as being willing to buy and sell
Company common stock for his own account on a regular and continuous basis.
Notice of Proposed Sale. A notice of the sale (a Form 144) must be filed with the SEC at the time of the sale.
Brokers generally have internal procedures for executing sales under Rule 144, and will assist you in completing
the Form 144 and in complying with the other requirements of Rule 144.
If you are subject to Rule 144, you must instruct your broker who handles trades in Company securities to follow the
brokerage firm’s Rule 144 compliance procedures in connection with all trades.
VII. Execution and Return of Certification of Compliance
After reading this Policy, all officers, directors, and employees should execute and return to the Company’s General
Counsel the Certification of Compliance form attached hereto as “Attachment B.”
Attachment A
15
Short-Swing Profit Rule Section 16(b) Checklist TC "Attachment A Short-Swing Profit Rule Section 16(b) Checklist" \f C \l "2"
Note: ANY combination of PURCHASE AND SALE or SALE AND PURCHASE within six months of each other by an officer,
director, or 10% stockholder (or any family member living in the same household or certain affiliated entities) results in a violation
of Section 16(b), and the “profit” must be recovered by Four Corners Property Trust, Inc. (the “Company”). It makes no difference
how long the shares being sold have been held or, for officers and directors, that you were an insider for only one of the two
matching transactions. The highest priced sale will be matched with the lowest priced purchase within the six-month period.
Sales
If a sale is to be made by an officer, director, or 10% stockholder (or any family member living in the same household or
certain affiliated entities):
1.
Have there been any purchases by the insider (or family members living in the same household or certain affiliated
entities) within the past six months?
2.
Have there been any option grants or exercises not exempt under Rule 16b-3 within the past six months?
3.
Are any purchases (or nonexempt option exercises) anticipated or required within the next six months?
4.
Has a Form 4 been prepared?
Note: If a sale is to be made by an affiliate of the Company, has a Form 144 been prepared and has the broker been
reminded to sell pursuant to Rule 144?
Purchases And Option Exercises
If a purchase or option exercise for Company stock is to be made:
1.
Have there been any sales by the insider (or family members living in the same household or certain affiliated
entities) within the past six months?
2.
Are any sales anticipated or required within the next six months (such as tax-related or year-end transactions)?
3.
Has a Form 4 been prepared?
Before proceeding with a purchase or sale, consider whether you are aware of material nonpublic information that could
affect the price of the Company stock. All transactions in the Company’s securities by officers and directors must be precleared by
contacting the Company’s General Counsel.
Attachment B
16
Certification of Compliance TC "Attachment B
Certification of Compliance" \f C \l "2"
Return by [_________] [insert return deadline]
To:
__________________, [General Counsel]
From:
__________________________
Re:
Insider Trading Compliance Policy of Four Corners Property Trust, Inc.
I have received, reviewed, and understand the above-referenced Insider Trading Compliance Policy and undertake, as a
condition to my present and continued employment (or, if I am not an employee, affiliation with) Four Corners Property Trust, Inc.,
to comply fully with the policies and procedures contained therein.
I hereby certify, to the best of my knowledge, that during the calendar year ending December 31, 20[__], I have complied
fully with all policies and procedures set forth in the above‑referenced Insider Trading Compliance Policy.
___________________________
_______________
Signature
Date
___________________________
Title
Subsidiaries of Four Corners Property Trust, Inc. (a Maryland corporation)
Name of Subsidiary
Jurisdiction of Incorporation/Formation
Four Corners Operating Partnership, LP
Delaware
Kerrow Holdings, LLC
Texas
Kerrow Restaurants, LLC
Texas
FCPT Garden Properties, LLC
Delaware
FCPT Sunshine Properties, LLC
Delaware
FCPT SW Properties, LLC
Delaware
FCPT International Drive, LLC
Delaware
FCPT Keystone Properties 11, LLC
Delaware
Four Corners GP, LLC
Delaware
FCPT Keystone Properties, LLC
Delaware
FCPT Restaurant Properties, LLC
Delaware
FCPT Remington Properties, LLC
Delaware
FCPT Hospitality Properties, LLC
Delaware
FCPT PA Hospitality Properties 11, LLC
Delaware
FCPT PA Hospitality Properties, LLC
Delaware
FCPT Acquisitions, LLC
Delaware
FCPT Holdings, LLC
Delaware
FCPT TRS, LLC
Delaware
FCPT OP Holdings, LP
Delaware
EXHIBIT 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the registration statement (No. 333-268205) on Form S-3ASR and registration statements (Nos.
333-266393 and 333-207970) on Form S-8 of our reports dated February 13, 2025, with respect to the consolidated financial statements of Four
Corners Property Trust, Inc. and the effectiveness of internal control over financial reporting.
San Francisco, California
February 13, 2025
EXHIBIT 31(a)
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, William H. Lenehan, certify that:
1.
I have reviewed this annual report on Form 10-K of Four Corners Property Trust, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date: February 13, 2025
/s/ William H. Lenehan
President and Chief Executive Officer
EXHIBIT 31(b)
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Patrick L. Wernig, certify that:
1.
I have reviewed this annual report on Form 10-K of Four Corners Property Trust, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date: February 13, 2025
/s/ Patrick L. Wernig
Chief Financial Officer
EXHIBIT 32(a)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Four Corners Property Trust, Inc. (“Company”) on Form 10-K for the year ended December 31, 2024, as filed with the
Securities and Exchange Commission on the date hereof (“Report”), I, William H. Lenehan, President and Chief Executive Officer of the Company, certify, to
my knowledge, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 13, 2025
/s/ William H. Lenehan
President and Chief Executive Officer
This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be
incorporated by reference into any filing of Four Corners Property Trust, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.
EXHIBIT 32(b)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Four Corners Property Trust, Inc. (“Company”) on Form 10-K for the year ended December 31, 2024, as filed with the
Securities and Exchange Commission on the date hereof (“Report”), I, Patrick L. Wernig, Chief Financial Officer of the Company, certify, to my knowledge,
pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 13, 2025
/s/ Patrick L. Wernig
Chief Financial Officer
This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be
incorporated by reference into any filing of Four Corners Property Trust, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.