x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland | 47-4456296 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
591 Redwood Highway, Suite 1150 Mill Valley, California | 94941 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer x | Accelerated filer ¨ | Non-accelerated filer ¨ (do not check if a smaller reporting company) |
Smaller reporting company ¨ | Emerging growth company ¨ |
Page | ||
Part I | FINANCIAL INFORMATION | |
Item 1. | Financial Statements: | |
Item 2. | ||
Item 3. | ||
Item 4. | ||
Part II | OTHER INFORMATION | |
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
March 31, 2018 (Unaudited) | December 31, 2017 | |||||||
ASSETS | ||||||||
Real estate investments: | ||||||||
Land | $ | 463,020 | $ | 449,331 | ||||
Buildings, equipment and improvements | 1,121,129 | 1,115,624 | ||||||
Total real estate investments | 1,584,149 | 1,564,955 | ||||||
Less: Accumulated depreciation | (604,055 | ) | (598,846 | ) | ||||
Total real estate investments, net | 980,094 | 966,109 | ||||||
Cash and cash equivalents | 53,066 | 64,466 | ||||||
Straight-line rent adjustment | 23,413 | 21,130 | ||||||
Derivative assets | 10,138 | 4,997 | ||||||
Other assets | 9,040 | 11,957 | ||||||
Total Assets | $ | 1,075,751 | $ | 1,068,659 | ||||
LIABILITIES AND EQUITY | ||||||||
Liabilities: | ||||||||
Long-term debt, net of deferred financing costs | $ | 515,994 | $ | 515,539 | ||||
Dividends payable | 16,855 | 16,843 | ||||||
Rent received in advance | 8,462 | 8,295 | ||||||
Derivative liabilities | — | 8 | ||||||
Other liabilities | 6,447 | 5,706 | ||||||
Total liabilities | 547,758 | 546,391 | ||||||
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, 61,391,187 and 61,329,489 shares issued and outstanding, respectively | 6 | 6 | ||||||
Additional paid-in capital | 474,869 | 473,685 | ||||||
Retained earnings | 35,251 | 36,318 | ||||||
Accumulated other comprehensive income | 10,055 | 4,478 | ||||||
Noncontrolling interest | 7,812 | 7,781 | ||||||
Total equity | 527,993 | 522,268 | ||||||
Total Liabilities and Equity | $ | 1,075,751 | $ | 1,068,659 |
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Revenues: | ||||||||
Rental revenue | $ | 29,589 | $ | 27,764 | ||||
Restaurant revenues | 5,214 | 4,943 | ||||||
Total revenues | 34,803 | 32,707 | ||||||
Operating expenses: | ||||||||
General and administrative | 3,669 | 2,863 | ||||||
Depreciation and amortization | 5,345 | 5,409 | ||||||
Restaurant expenses | 4,870 | 4,668 | ||||||
Interest expense | 4,855 | 4,094 | ||||||
Total expenses | 18,739 | 17,034 | ||||||
Other income | 358 | 5 | ||||||
Income before income taxes | 16,422 | 15,678 | ||||||
Income tax expense | (58 | ) | (45 | ) | ||||
Net income | 16,364 | 15,633 | ||||||
Net income attributable to noncontrolling interest | (109 | ) | (117 | ) | ||||
Net Income Available to Common Shareholders | $ | 16,255 | $ | 15,516 | ||||
Basic net income per share: | $ | 0.27 | $ | 0.26 | ||||
Diluted net income per share: | $ | 0.26 | $ | 0.26 | ||||
Weighted average number of common shares outstanding: | ||||||||
Basic | 61,291,642 | 59,929,276 | ||||||
Diluted | 61,413,978 | 59,995,930 | ||||||
Dividends declared per common share | $ | 0.2750 | $ | 0.2425 |
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Net income | $ | 16,364 | $ | 15,633 | ||||
Other comprehensive income: | ||||||||
Effective portion of change in fair value of derivative instruments: | ||||||||
Effective portion of change in fair value of derivative instruments | 5,384 | 660 | ||||||
Reclassification adjustment of derivative instruments included in net income | (240 | ) | 625 | |||||
Other comprehensive income | 5,144 | 1,285 | ||||||
Comprehensive income | 21,508 | 16,918 | ||||||
Less: comprehensive income attributable to noncontrolling interest | ||||||||
Net income attributable to noncontrolling interest | 109 | 117 | ||||||
Other comprehensive income attributable to noncontrolling interest | 34 | 10 | ||||||
Comprehensive income attributable to noncontrolling interest | 143 | 127 | ||||||
Comprehensive Income Attributable to Common Shareholders | $ | 21,365 | $ | 16,791 |
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income | Noncontrolling Interest | Total | ||||||||||||||||||||||
Shares | Par Value | ||||||||||||||||||||||||||
Balance at December 31, 2017 | 61,329,489 | $ | 6 | $ | 473,685 | $ | 36,318 | $ | 4,478 | $ | 7,781 | $ | 522,268 | ||||||||||||||
ASU 2017-12 cumulative effect adjustment | — | — | — | (467 | ) | 467 | — | — | |||||||||||||||||||
Net income | — | — | — | 16,255 | — | 109 | 16,364 | ||||||||||||||||||||
Other comprehensive income | — | — | — | — | 5,110 | 34 | 5,144 | ||||||||||||||||||||
Dividends and distributions to equity holders | — | — | — | (16,855 | ) | — | (112 | ) | (16,967 | ) | |||||||||||||||||
Stock-based compensation, net | 61,698 | — | 1,184 | — | — | — | 1,184 | ||||||||||||||||||||
Balance at March 31, 2018 | 61,391,187 | $ | 6 | $ | 474,869 | $ | 35,251 | $ | 10,055 | $ | 7,812 | $ | 527,993 |
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Cash flows - operating activities | ||||||||
Net income | $ | 16,364 | $ | 15,633 | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Depreciation and amortization | 5,345 | 5,409 | ||||||
Gain on exchange of nonfinancial assets | (228 | ) | — | |||||
Amortization of financing costs | 455 | 398 | ||||||
Stock-based compensation expense | 1,184 | 494 | ||||||
Deferred income taxes | — | (21 | ) | |||||
Changes in assets and liabilities: | ||||||||
Derivative assets and liabilities | (5 | ) | 52 | |||||
Straight-line rent adjustment | (2,283 | ) | (2,373 | ) | ||||
Rent received in advance | 167 | (2 | ) | |||||
Other assets and liabilities | 751 | (601 | ) | |||||
Net cash provided by operating activities | 21,750 | 18,989 | ||||||
Cash flows - investing activities | ||||||||
Purchases of real estate investments | (21,050 | ) | (11,722 | ) | ||||
Advance deposits on acquisition of operating real estate | (50 | ) | — | |||||
Cash used in investing activities | (21,100 | ) | (11,722 | ) | ||||
Cash flows - financing activities | ||||||||
Net proceeds from equity issuance | — | 984 | ||||||
Payment of dividend to shareholders | (16,843 | ) | (14,519 | ) | ||||
Distribution to non-controlling interests | (112 | ) | — | |||||
Repayment of debt assumed in purchase of real estate investments | — | (2,305 | ) | |||||
Net cash used in financing activities | (16,955 | ) | (15,840 | ) | ||||
Net decrease in cash and cash equivalents | (16,305 | ) | (8,573 | ) | ||||
Cash and cash equivalents, including restricted, at beginning of period | 69,371 | 26,643 | ||||||
Cash and cash equivalents, including restricted, at end of period | $ | 53,066 | $ | 18,070 | ||||
Supplemental disclosures: | ||||||||
Interest paid | $ | 2,872 | $ | 3,941 | ||||
Taxes paid | $ | 152 | $ | 199 | ||||
Non-cash investing and financing activities: | ||||||||
Dividends declared but not paid | $ | 16,855 | $ | 14,536 | ||||
Debt assumed in acquisition of real estate investments | $ | — | $ | 2,305 | ||||
Change in fair value of derivative instruments | $ | 5,149 | $ | 1,233 | ||||
Operating partnership units issued in exchange for real estate investments | $ | — | $ | 3,609 |
March 31, | December 31, | |||||||
(In thousands) | 2018 | 2017 | ||||||
Cash and cash equivalents | $ | 53,066 | $ | 64,466 | ||||
Restricted cash (included in Other Assets) | — | 4,905 | ||||||
Total Cash, Cash Equivalents, and Restricted Cash | $ | 53,066 | $ | 69,371 |
• | Level 1 - Quoted market prices in active markets for identical assets or liabilities; |
• | Level 2 - Inputs other than level one 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. |
March 31, | December 31, | |||||||
(In thousands) | 2018 | 2017 | ||||||
Land | $ | 463,020 | $ | 449,331 | ||||
Buildings and improvements | 983,223 | 977,783 | ||||||
Equipment | 137,906 | 137,841 | ||||||
Total gross real estate investments | 1,584,149 | 1,564,955 | ||||||
Less: accumulated depreciation | (604,055 | ) | (598,846 | ) | ||||
Total Real Estate Investments, Net | $ | 980,094 | $ | 966,109 |
March 31, | ||||
(In thousands) | 2018 | |||
2018 (nine months) | $ | 82,320 | ||
2019 | 111,263 | |||
2020 | 112,804 | |||
2021 | 114,192 | |||
2022 | 115,815 | |||
2023 | 117,197 | |||
Thereafter | 885,479 | |||
Total Future Minimum Lease Payments | $ | 1,539,070 |
March 31, | December 31, | |||||||
(In thousands) | 2018 | 2017 | ||||||
Intangible lease assets, net | $ | 5,950 | $ | 3,914 | ||||
Prepaid acquisition costs | 1,355 | 1,385 | ||||||
Restricted cash | — | 4,905 | ||||||
Prepaid assets | 640 | 616 | ||||||
Accounts receivable | 332 | 383 | ||||||
Inventories | 157 | 186 | ||||||
Other | 606 | 568 | ||||||
Total Other Assets | $ | 9,040 | $ | 11,957 |
March 31, | December 31, | |||||||
(In thousands) | 2018 | 2017 | ||||||
Accrued interest expense | $ | 2,884 | $ | 1,290 | ||||
Accounts payable | 1,182 | 1,055 | ||||||
Deferred lease liability | 680 | 663 | ||||||
Accrued compensation | 625 | 1,543 | ||||||
Accrued operating expenses | 362 | 488 | ||||||
Intangible lease liabilities, net | 108 | — | ||||||
Other | 606 | 667 | ||||||
Total Other Liabilities | $ | 6,447 | $ | 5,706 |
March 31, | December 31, | |||||||
(In thousands) | 2018 | 2017 | ||||||
Acquired in-place lease intangibles | $ | 5,585 | $ | 4,209 | ||||
Above-market leases | 804 | — | ||||||
Lease incentives | 40 | 40 | ||||||
Total | 6,429 | 4,249 | ||||||
Less: Accumulated amortization | (479 | ) | (335 | ) | ||||
Intangible Lease Assets, Net | $ | 5,950 | $ | 3,914 |
March 31, | December 31, | |||||||
(In thousands) | 2018 | 2017 | ||||||
Below-market leases | $ | 115 | $ | — | ||||
Less: Accumulated amortization | (7 | ) | — | |||||
Intangible Lease Liabilities, Net | $ | 108 | $ | — |
March 31, | ||||
(In thousands) | 2018 | |||
2018 (nine months) | $ | 412 | ||
2019 | 549 | |||
2020 | 548 | |||
2021 | 516 | |||
2022 | 438 | |||
2023 | 366 | |||
Thereafter | 3,013 | |||
Total Future Amortization | $ | 5,842 |
Derivative Assets | Derivative Liabilities | |||||||||||||||||||
Balance Sheet Location | Fair Value at | Balance Sheet Location | Fair Value at | |||||||||||||||||
(Dollars in thousands) | March 31, 2018 | December 31, 2017 | March 31, 2018 | December 31, 2017 | ||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||
Interest rate swaps | Derivative assets | $ | 10,138 | $ | 4,997 | Derivative liabilities | $ | — | $ | 8 | ||||||||||
Total | $ | 10,138 | $ | 4,997 | $ | — | $ | 8 |
(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) | Total Amount of Interest expense Presented in the Consolidated Statements Of Income | ||||||||||
Three months ended March 31, 2018 | $ | 5,384 | Interest expense | $ | 240 | $ | 4,855 | |||||||
Three months ended March 31, 2017 | $ | 660 | Interest expense | $ | (625 | ) | $ | 4,094 |
Offsetting of Derivative Assets | ||||||||||||||||||||||||
Gross Amounts of Recognized Assets | Gross Amounts Offset in the Consolidated Balance Sheet | Net Amounts of Assets Presented in the Consolidated Balance Sheet | Gross Amounts Not Offset in the Consolidated Balance Sheet | |||||||||||||||||||||
(In thousands) | Financial Instruments | Cash Collateral Received | Net Amount | |||||||||||||||||||||
March 31, 2018 | $ | 10,138 | $ | — | $ | 10,138 | $ | — | $ | — | $ | 10,138 | ||||||||||||
December 31, 2017 | 4,997 | — | 4,997 | (8 | ) | — | 4,989 |
Offsetting of Derivative Liabilities | ||||||||||||||||||||||||
Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Consolidated Balance Sheet | Net Amounts of Liabilities Presented in the Consolidated Balance Sheet | Gross Amounts Not Offset in the Consolidated Balance Sheet | |||||||||||||||||||||
(In thousands) | Financial Instruments | Cash Collateral Posted | Net Amount | |||||||||||||||||||||
March 31, 2018 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
December 31, 2017 | 8 | — | 8 | (8 | ) | — | — |
Three Months Ended March 31, | ||||||||
(In thousands except for share and per share data) | 2018 | 2017 | ||||||
Average common shares outstanding – basic | 61,291,642 | 59,929,276 | ||||||
Net effect of dilutive equity awards | 122,336 | 66,654 | ||||||
Average common shares outstanding – diluted | 61,413,978 | 59,995,930 | ||||||
Net income available to common shareholders | $ | 16,255 | $ | 15,516 | ||||
Basic net earnings per share | $ | 0.27 | $ | 0.26 | ||||
Diluted net earnings per share | $ | 0.26 | $ | 0.26 |
(In thousands) | Restricted Stock Units | Restricted Stock Awards | Performance Stock Awards | Total | ||||||||||||
Unrecognized compensation cost at January 1, 2018 | $ | 524 | $ | 1,052 | $ | 2,302 | $ | 3,878 | ||||||||
Equity grants | — | 1,582 | 1,180 | 2,762 | ||||||||||||
Equity grant forfeitures | — | — | — | — | ||||||||||||
Equity compensation expense | (183 | ) | (566 | ) | (435 | ) | (1,184 | ) | ||||||||
Unrecognized Compensation Cost at March 31, 2018 | $ | 341 | $ | 2,068 | $ | 3,047 | $ | 5,456 | ||||||||
March 31, 2018 | ||||||||||||||||
(In thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets | ||||||||||||||||
Derivative assets | $ | — | $ | 10,138 | $ | — | $ | 10,138 |
December 31, 2017 | ||||||||||||||||
(In thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets | ||||||||||||||||
Derivative assets | $ | — | $ | 4,997 | $ | — | $ | 4,997 | ||||||||
Liabilities | ||||||||||||||||
Derivative liabilities | $ | — | $ | 8 | $ | — | $ | 8 |
March 31, 2018 | ||||||||
(In thousands) | Carrying Value | Fair Value | ||||||
Liabilities | ||||||||
Term loan, excluding deferred financing costs | $ | 400,000 | $ | 400,402 | ||||
Senior fixed note - 7 year, excluding deferred financing costs | $ | 50,000 | $ | 49,134 | ||||
Senior fixed note - 10 year, excluding deferred financing costs | $ | 75,000 | $ | 73,302 |
December 31, 2017 | ||||||||
(In thousands) | Carrying Value | Fair Value | ||||||
Liabilities | ||||||||
Term loan and revolver balance, excluding deferred financing costs | $ | 400,000 | $ | 406,637 | ||||
Senior fixed note - 7 year, excluding deferred financing costs | $ | 50,000 | $ | 50,043 | ||||
Senior fixed note - 10 year, excluding deferred financing costs | $ | 75,000 | $ | 75,184 |
(In thousands) | March 31, 2018 | |||
2018 (nine months) | $ | 442 | ||
2019 | 550 | |||
2020 | 400 | |||
2021 | 103 | |||
Thereafter | — | |||
Total Future Lease Commitments | $ | 1,495 |
(In thousands) | Real Estate Operations | Restaurant Operations | Intercompany | Total | ||||||||||||
Revenues: | ||||||||||||||||
Rental revenue | $ | 29,589 | $ | — | $ | — | $ | 29,589 | ||||||||
Intercompany rental revenue | 100 | — | (100 | ) | — | |||||||||||
Restaurant revenue | — | 5,214 | — | 5,214 | ||||||||||||
Total revenues | 29,689 | 5,214 | (100 | ) | 34,803 | |||||||||||
Operating expenses: | ||||||||||||||||
General and administrative | 3,669 | — | — | 3,669 | ||||||||||||
Depreciation and amortization | 5,218 | 127 | — | 5,345 | ||||||||||||
Restaurant expenses | — | 4,970 | (100 | ) | 4,870 | |||||||||||
Interest expense | 4,855 | — | — | 4,855 | ||||||||||||
Total operating expenses | 13,742 | 5,097 | (100 | ) | 18,739 | |||||||||||
Other income | 358 | — | — | 358 | ||||||||||||
Income before income taxes | 16,305 | 117 | — | 16,422 | ||||||||||||
Income tax expense | (31 | ) | (27 | ) | — | (58 | ) | |||||||||
Net Income | $ | 16,274 | $ | 90 | $ | — | $ | 16,364 |
(In thousands) | Real Estate Operations | Restaurant Operations | Intercompany | Total | ||||||||||||
Revenues: | ||||||||||||||||
Rental revenue | $ | 27,764 | $ | — | $ | — | $ | 27,764 | ||||||||
Intercompany rental revenue | 99 | — | (99 | ) | — | |||||||||||
Restaurant revenue | — | 4,943 | — | 4,943 | ||||||||||||
Total revenues | 27,863 | 4,943 | (99 | ) | 32,707 | |||||||||||
Operating expenses: | ||||||||||||||||
General and administrative | 2,863 | — | — | 2,863 | ||||||||||||
Depreciation and amortization | 5,253 | 156 | — | 5,409 | ||||||||||||
Restaurant expenses | — | 4,767 | (99 | ) | 4,668 | |||||||||||
Interest expense | 4,094 | — | — | 4,094 | ||||||||||||
Total operating expenses | 12,210 | 4,923 | (99 | ) | 17,034 | |||||||||||
Other income | 5 | — | — | 5 | ||||||||||||
Income before income taxes | 15,658 | 20 | — | 15,678 | ||||||||||||
Income tax expense | — | (45 | ) | — | (45 | ) | ||||||||||
Net Income (Loss) | $ | 15,658 | $ | (25 | ) | $ | — | $ | 15,633 |
(In thousands) | Real Estate Operations | Restaurant Operations | Total | |||||||||
Gross real estate investments | $ | 1,567,411 | $ | 16,738 | $ | 1,584,149 | ||||||
Accumulated depreciation | (597,507 | ) | (6,548 | ) | (604,055 | ) | ||||||
Total real estate investments, net | $ | 969,904 | $ | 10,190 | $ | 980,094 | ||||||
Cash and cash equivalents | $ | 51,436 | $ | 1,630 | $ | 53,066 | ||||||
Total assets | $ | 1,063,336 | $ | 12,415 | $ | 1,075,751 | ||||||
Long-term debt, net of deferred financing costs | $ | 515,994 | $ | — | $ | 515,994 |
(In thousands) | Real Estate Operations | Restaurant Operations | Total | |||||||||
Gross real estate investments | $ | 1,548,259 | $ | 16,696 | $ | 1,564,955 | ||||||
Accumulated depreciation | (592,293 | ) | (6,553 | ) | (598,846 | ) | ||||||
Total real estate investments, net | $ | 955,966 | $ | 10,143 | $ | 966,109 | ||||||
Cash and cash equivalents | $ | 63,229 | $ | 1,237 | $ | 64,466 | ||||||
Total assets | $ | 1,056,500 | $ | 12,159 | $ | 1,068,659 | ||||||
Long-term debt, net of deferred financing costs | $ | 515,539 | $ | — | $ | 515,539 |
• | 527 free-standing properties located in 44 states and representing an aggregate leasable area of 3.7 million square feet; |
• | 99.9% occupancy (based on square feet); |
• | A weighted average remaining lease term of 12.7 years (based on annualized cash rent); |
• | Weighted average annual rent escalation of 1.5% (based on annualized cash rent); and |
• | 87% investment grade tenancy (based on annualized cash rent). |
Three Months Ended March 31, | ||||||||
(In thousands) | 2018 | 2017 | ||||||
Revenues: | ||||||||
Rental revenue | $ | 29,589 | $ | 27,764 | ||||
Restaurant revenue | 5,214 | 4,943 | ||||||
Total revenues | 34,803 | 32,707 | ||||||
Operating expenses: | ||||||||
General and administrative | 3,669 | 2,863 | ||||||
Depreciation and amortization | 5,345 | 5,409 | ||||||
Restaurant expenses | 4,870 | 4,668 | ||||||
Interest expense | 4,855 | 4,094 | ||||||
Total expenses | 18,739 | 17,034 | ||||||
Other income | 358 | 5 | ||||||
Income before provision for income taxes | 16,422 | 15,678 | ||||||
Income tax expense | (58 | ) | (45 | ) | ||||
Net income | 16,364 | 15,633 | ||||||
Net income attributable to noncontrolling interest | (109 | ) | (117 | ) | ||||
Net Income Attributable to Common Shareholders | $ | 16,255 | $ | 15,516 |
Three Months Ended March 31, | ||||||||
(In thousands, except share and per share data) | 2018 | 2017 | ||||||
Net income | $ | 16,364 | $ | 15,633 | ||||
Depreciation and amortization on real estate investments | 5,195 | 5,318 | ||||||
Realized gain on exchange of real estate (1) | (228 | ) | — | |||||
FFO (as defined by NAREIT) | $ | 21,331 | $ | 20,951 | ||||
Straight-line rent | (2,283 | ) | (2,373 | ) | ||||
Non-cash stock-based compensation | 1,184 | 494 | ||||||
Non-cash amortization of deferred financing costs | 455 | 398 | ||||||
Other non-cash interest (income) expense | (5 | ) | 52 | |||||
Non-real estate investment depreciation | 13 | 11 | ||||||
Amortization of capitalized leasing costs | 122 | 80 | ||||||
Amortization of above and below market leases | 15 | — | ||||||
Adjusted Funds from Operations (AFFO) | $ | 20,832 | $ | 19,613 | ||||
Fully diluted shares outstanding (2) | 61,823,298 | 60,423,913 | ||||||
FFO per diluted share | $ | 0.35 | $ | 0.35 | ||||
AFFO per diluted share | $ | 0.34 | $ | 0.32 |
1. | Transaction costs incurred in connection with the acquisition of real estate investments qualifying as businesses |
2. | Straight-line rent revenue adjustment |
3. | Non-cash stock-based compensation expense |
4. | Non-cash amortization of deferred financing costs |
5. | Other non-cash interest expense |
6. | Non-real estate investment depreciation |
7. | Merger, restructuring and other related costs |
8. | Impairment charges |
9. | Amortization of above and below market leases |
10. | Amortization of capitalized leasing costs |
11. | Debt extinguishment gains and losses |
12. | Recurring capital expenditures and tenant improvements |
Exhibit Number | Description | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
FOUR CORNERS PROPERTY TRUST, INC. | |||
Dated: | April 26, 2018 | By: | /s/ William H. Lenehan |
William H. Lenehan | |||
President and Chief Executive Officer | |||
(Principal Executive Officer) | |||
Dated: | April 26, 2018 | By: | /s/ Gerald R. Morgan |
Gerald R. Morgan | |||
Chief Financial Officer | |||
(Principal Financial Officer) | |||
Dated: | April 26, 2018 | By: | /s/ Niccole M. Stewart |
Niccole M. Stewart | |||
Chief Accounting Officer | |||
(Principal Accounting Officer) | |||
1. | I have reviewed this quarterly report on Form 10-Q 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: | April 26, 2018 |
/s/ William H. Lenehan | |
William H. Lenehan | |
President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q 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: | April 26, 2018 |
/s/ Gerald R. Morgan | |
Gerald R. Morgan | |
Chief Financial Officer |
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: | April 26, 2018 |
/s/ William H. Lenehan | |
William H. Lenehan | |
President and Chief Executive Officer |
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: | April 26, 2018 |
/s/ Gerald R. Morgan | |
Gerald R. Morgan | |
Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
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Mar. 31, 2018 |
Apr. 26, 2018 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Four Corners Property Trust, Inc. | |
Entity Central Index Key | 0001650132 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, shares outstanding | 61,391,187 |
CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - $ / shares |
Mar. 31, 2018 |
Dec. 31, 2017 |
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Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in USD per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in USD per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 61,391,187 | 61,329,489 |
Common stock, shares outstanding | 61,391,187 | 61,329,489 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2018 |
Mar. 31, 2017 |
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Statement of Comprehensive Income [Abstract] | ||
Net income | $ 16,364 | $ 15,633 |
Other comprehensive income: | ||
Effective portion of change in fair value of derivative instruments | 5,384 | 660 |
Reclassification adjustment of derivative instruments included in net income | (240) | 625 |
Other comprehensive income | 5,144 | 1,285 |
Comprehensive income | 21,508 | 16,918 |
Less: comprehensive income attributable to noncontrolling interest | ||
Net income attributable to noncontrolling interest | 109 | 117 |
Other comprehensive income attributable to noncontrolling interest | 34 | 10 |
Comprehensive income attributable to noncontrolling interest | 143 | 127 |
Comprehensive Income Attributable to Common Shareholders | $ 21,365 | $ 16,791 |
Organization |
3 Months Ended |
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Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | ORGANIZATION Four Corners Property Trust, Inc. (together with its consolidated 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. 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 owned 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 as well as cash in lieu of any fractional shares of our common stock which they would have otherwise received (the “Spin-Off”). The Spin-Off is intended to qualify as tax-free to Darden shareholders for U.S. federal income tax purposes, except for cash paid in lieu of fractional shares. 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 commencing upon the filing of our 2016 tax return. Any references to “the Company,” “we,” “us,” or “our” refer to FCPT as an independent, publicly traded, self-administered company. |
Summary of Significant Accounting Policies |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Basis of Presentation The accompanying 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. Reclassifications Certain amounts previously reported under specific financial statement captions have been reclassified to be consistent with the current period presentation. 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 as of the date of the combination. 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 balance sheets as a component of buildings, equipment and improvements 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. Other equipment is generally 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 our accompanying consolidated statements of comprehensive income. 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. Since adoption in the fourth quarter of 2016, the Company has determined the land, building, site improvements, and in-places leases (if any) of assets acquired were a single asset 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 a business and are accounted for as asset acquisitions. Related transaction costs are generally capitalized and amortized over the useful life 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. 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, in-place lease intangibles are valued based on the Company’s estimates of costs related to tenant acquisition and the asset carrying costs 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 in the Company’s consolidated statements of income under the ”Depreciation and amortization” caption. 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. 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. 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 or lease our assets. 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 statements of comprehensive income as the original 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. 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 includes escrow deposits 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:
Long-term Debt Long-term debt is carried at unpaid principal balance, net of deferred financing costs. All of our long-term debt is currently unsecured and interest is paid monthly on our non-amortizing term loan and revolving credit facility and semi-annually on our senior fixed rate notes. See Note 6 - Long-term Debt, Net of Deferred Financing Costs for additional information. Deferred Financing Costs Financing costs related to long-term 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 - Long-term 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 sheet 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. 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 United States generally accepted accounting principals (“U.S. 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. In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities.” ASU 2017-12 is intended to simplify hedge accounting by better aligning an entity’s financial reporting for hedging relationships with its risk management activities. We adopted ASU 2017-12 in January 2018, and as a result recorded a cumulative effect adjustment of $467 thousand to retained earnings and other comprehensive income. See Note 7 - Derivative Financial Instruments for additional information. Other Assets and Liabilities Other assets primarily consist of intangible lease assets described above, pre-acquisition costs, prepaid assets, food and beverage inventories, restricted cash (escrow deposits), lease origination fees, and accounts receivable. Other liabilities primarily consist of accrued compensation, accrued interest, accrued operating expenses, intangible lease liabilities, and deferred rent obligations on certain operating leases. Revenue Recognition Effective January 1, 2018, the Company adopted FASB ASU No. 2014-09, “Revenue from Contracts with Customers” using the modified retrospective method. The standard outlines a single comprehensive revenue recognition model for entities to follow in accounting for revenue from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity should recognize revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to receive for those goods or services. Effective January 1, 2018, the Company also adopted FASB ASU No. 2017-15, “Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.” Through the evaluation and implementation process, we have determined FCPT’s key revenue stream that could be impacted by FASB ASU No. 2014-09, as amended by FASB ASU No. 2017-05, is the gain on disposition of real estate reported on the Consolidated Statements of Income and Comprehensive Income. We previously recognized revenue from asset salesat the time of closing (i.e., transfer of asset). After adoption of FASB No. ASU 2014-09, as amended by FASB ASU No. 2017-05, we will evaluate the transaction to determine if control has been transferred to the buyer to determine proper timing of revenue recognition, as well as transaction price allocation. Adoption of this guidance did not have a material impact on our consolidated financial statements or related disclosures. Refer to the Restaurant Revenue section below for details of the impact of FASB ASU No. 2014-09 on the Kerrow Restaurant Operating Business. 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. Lease origination fees are deferred and amortized over the related lease term as an adjustment to rental revenue. Taxes collected from lessees and remitted to governmental authorities are presented on a net basis within rental revenue in our consolidated statements of income and comprehensive income. 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. We assess the collectability of our lease receivables, including deferred rent receivables. We base our assessment of the collectability of rent receivables (other than deferred rent receivables) on several factors, including payment history, the financial strength of the tenant and any guarantors, the value of the underlying collateral, if any, and current economic conditions. If our evaluation of these factors indicates it is probable that we will be unable to recover the full value of the receivable, we provide a reserve against the portion of the receivable that we estimate may not be recovered. We also base our assessment of the collectability of deferred rent receivables on several factors, including among other things, the financial strength of the tenant and any guarantors, the historical operations and operating trends of the property, the historical payment pattern of the tenant and the type of property. If our evaluation of these factors indicates it is probable that we will be unable to receive the rent payments due in the future, we provide a reserve against the recognized deferred rent receivable asset for the portion, up to its full value, that we estimate may not be recovered. If we change our assumptions or estimates regarding the collectability of future rent payments required by a lease, we may adjust our reserve or reduce the rental revenue recognized in the period we make such change in our assumptions or estimates. Restaurant Revenue Restaurant revenue represents food, beverage, and other products sold and is presented net of the following discounts: coupons, employee meals, complimentary meals and gift cards. Revenue from restaurant sales, whether received in cash or by credit card, is recognized when food and beverage products are sold. At March 31, 2018, and December 31, 2017, credit card receivables totaled $86 thousand and $90 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 consolidated statements of income. Prior to adoption of FASB ASU No. 2014-09, we recognized restaurant revenue at the time service was performed. Thus, adoption of FASB ASU No. 2014-09 did not have an impact on our revenue recognition policy. In accordance with the standard, restaurant revenue is disclosed separately in the Consolidated Statements of Income. 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. 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 that we distribute currently to our shareholders. 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 may also be 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 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 8 - Income Taxes for additional information. 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 9 - Stockholders’ Equity 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”), forfeitable dividend equivalent units (“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 three years, less estimated forfeitures. No compensation cost is recognized for awards for which employees do not render the requisite services. Effective January 1, 2018, the Company adopted FASB ASU No. 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.” The amendments in this ASU provide guidance about which changes to the terms or conditions of a share-based payment award require the application of modification accounting in Topic 718. The Company’s adoption of this guidance did not have a material impact on our consolidated financial statements or related disclosures. See Note 10 - 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:
Application of New Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”, which supersedes the existing guidance for lease accounting, Leases (Topic 840). FASB ASU 2016-02 requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early application is permitted for all entities. FASB ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial application, with an option to elect to use certain transition relief. We are currently evaluating the impact of adopting this guidance. Effective January 1, 2018, the Company adopted FASB ASU No. 2016-15, “Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments.” FASB ASU 2016-15 provides guidance on certain specific cash flow issues, including, but not limited to, debt prepayment or extinguishment costs, contingent consideration payments made after a business combination and distributions received from equity method investees. The Company’s adoption of this guidance did not have a material impact on our consolidated financial statements or related disclosures. Effective January 1, 2018, the Company adopted FASB ASU No. 2016-18, “Statement of Cash Flows - Restricted Cash.” FASB No. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and restricted cash. This adoption did not have a material impact on our financial statements and as a result of adoption, restricted cash is included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. |
Concentration of Credit Risk |
3 Months Ended |
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Mar. 31, 2018 | |
Concentration of Credit Risk [Abstract] | |
Concentration of Credit Risk | 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 87% of the scheduled base rents from 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 financial statements for Darden can be found in the Investor Relations section at www.darden.com. We are providing this website address solely for the information of our stockholders. We do not intend this website to be an active link or to otherwise incorporate the information contained on such website into this report or our other filings with the SEC. We also are subject to concentration risk in terms of the restaurant brands that operate our properties. With 297 locations in our portfolio, Olive Garden branded restaurants comprise approximately 56% of our leased properties and approximately 65% of the revenues received under leases. Our properties, including the Kerrow Restaurant Operating Business, are located in 44 states, with concentrations of 10% or greater of total rental revenue in two states: Florida (10.8%) and Texas (10.6%). 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 March 31, 2018, our exposure to risk related to our derivative instruments totaled $10.1 million and the counterparty to such instruments is an investment grade financial institution. Our credit risk exposure with regard to our cash and the $250.0 million available capacity under the revolver portion of our credit facility is spread among a diversified group of investment grade financial institutions. |
Real Estate Investments, Net |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Investments, Net | REAL ESTATE INVESMENTS, NET Real Estate Investments, Net 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 are summarized as follows:
During the three months ended March 31, 2018, the Company invested $21.0 million, including transaction costs, in 12 restaurant properties located in four states, and allocated the investment as follows: $13.5 million to land, $5.4 million to buildings and improvements, and $2.1 million to intangible assets principally related to the value of the in-place leases acquired. 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 9.3 years as of March 31, 2018. Operating Leases The following table presents the scheduled minimum future contractual rent to be received under the remaining non-cancelable term of the operating leases, and because lease renewal periods are exercisable at the option of the lessee, the table presents future minimum lease payments due during the initial lease term only.
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Supplemental Detail for Certain Components of Consolidated Balance Sheets |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Detail for Certain Components of Consolidated Balance Sheets | SUPPLEMENTAL DETAIL FOR CERTAIN COMPONENTS OF CONSOLIDATED BALANCE SHEETS Other Assets The components of other assets were as follows:
Other Liabilities The components of other liabilities were as follows:
Intangible Lease Assets and Liabilities, Net The following tables detail intangible lease assets and liabilities which are included in Other Assets and Other Liabilities, respectively, on our consolidated balance sheets. Acquired in-place lease intangibles are amortized as depreciation and amortization expense. Above-market and below-market leases and lease incentives are amortized over the initial term of the respective leases as an adjustment to rental revenue.
The value of acquired in-place leases amortized and included in depreciation and amortization expense was $122 thousand and $80 thousand for the three months ended March 31, 2018 and 2017, respectively. The value of above-market and below-market leases and lease incentives amortized as an adjustment to revenue was $15 thousand for the three months ended March 31, 2018. There was no amortization for adjustments to revenue for the three months ended March 31, 2017. At March 31, 2018, the weighted average amortization period remaining for our intangible lease assets and liabilities was 14.1 years. At March 31, 2018, the weighted average amortization period remaining for acquired in-place lease intangibles, above-market leases, lease incentives, and below-market leases was 14.1 years, 12.6 years, 18.7 years, and 4.5 years, respectively. The following table presents the estimated impact during the next five years and thereafter related to the amortization of in-place lease intangibles, above-market and below-market lease intangibles, and lease incentives for properties held for investment at March 31, 2018.
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Long-Term Debt, Net of Deferred Financing Costs |
3 Months Ended |
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Mar. 31, 2018 | |
Notes Payable [Abstract] | |
Long-Term Debt, Net of Deferred Financing Costs | At March 31, 2018, and December 31, 2017, our long-term debt consisted of (1) a $400.0 million, non-amortizing term loan and (2) $125.0 million of senior, unsecured, fixed rate notes. At March 31, 2018 and December 31, 2017, net unamortized deferred financing costs were approximately $9 million and $9.5 million, respectively. During the three months ended March 31, 2018 and 2017, amortization of deferred financing costs was $455 thousand and $398 thousand, respectively. The weighted average interest rate on the term loan before consideration of the interest rate hedge described below was 3.07% and 2.79% at March 31, 2018 and December 31, 2017, respectively. At both March 31, 2018, and December 31, 2017, there was no balance outstanding under the revolving credit facility. There were no outstanding letters of credit at March 31, 2018 or December 31, 2017. The Company was in compliance with all debt covenants at March 31, 2018. Loan Agreement On October 2, 2017, the Company and FCPT OP (the “Borrower”), entered into an Amended and Restated Revolving Credit and Term Loan Agreement (the “Loan Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent (the “Agent”), and the lenders (the “Lenders”) and other agents party thereto, which amends and restates in its entirety an existing Revolving Credit and Term Loan Agreement dated as of November 9, 2015 by and among the Company, the Borrower, the Agent, the Lenders and the other agents party thereto. The Loan Agreement provides for borrowings of up to $650 million and consists of (1) a senior, unsecured revolving credit facility in an aggregate principal amount of $250 million and (2) a senior, unsecured term loan facility in an aggregate principal amount of $400 million. The Loan Agreement is a syndicated credit facility that contains an accordion feature allowing the facility to be increased by an additional aggregate amount not to exceed $250 million, subject to certain conditions, including one or more new or existing lenders agreeing to provide commitments for such increased amount. Loans under the Loan Agreement accrue interest at a per annum rate equal to, at the Borrower’s election, either a LIBOR rate plus a margin of 0.85% to 2.15%, or a base rate determined according to a prime rate or federal funds rate plus a margin of 0.00% to 1.15%. In each case, the margin is determined according to, at the Borrower’s election, either (1) the Company’s total leverage ratio in effect from time to time, or (2) at any time after the Company has received an investment grade rating from either Moody’s Investors Service, Inc. or Standard & Poor’s Ratings Services on its senior, unsecured, long-term indebtedness, the credit rating applicable from time to time with respect to such indebtedness. In the event that all or a portion of the principal amount of any loan borrowed pursuant to the Loan Agreement is not paid when due, interest will accrue at the rate that would otherwise be applicable thereto plus 2.00%. So long as the Company continues to determine pricing according to its total leverage ratio, an unused commitment fee at a rate of 0.30% or 0.20%, per annum, depending on the amount of revolving facility utilization, applies to unutilized revolving borrowing capacity under the Loan Agreement. After the Company elects to determine pricing based on the credit rating applicable to its senior, unsecured, long-term indebtedness, a facility fee at a rate of 0.125% to 0.30%, per annum, depending on the credit rating applicable from time to time with respect to such indebtedness, applies to the total revolving commitments outstanding. Amounts owed under the Loan Agreement may be prepaid at any time without premium or penalty, subject to customary breakage costs in the case of borrowings with respect to which a LIBOR rate election is in effect. The revolving credit facility matures on November 9, 2021, and the term loan facility matures on November 9, 2022. No amortization payments are required on the term loan prior to the maturity date. The Borrower has the option to extend the maturity date of the revolving credit facility for up to one year, subject to the payment of an extension fee of 0.075% on the aggregate amount of the then-outstanding revolving commitments for each of two six-month extensions. The obligations under the Loan Agreement are unsecured. Pursuant to an amended and restated parent guaranty entered into on October 2, 2017, which amends and restates in its entirety a parent guaranty dated August 2, 2016, the obligations under the Loan Agreement are guaranteed, on a joint and several basis, by the Company and its subsidiary, FCPT GP, LLC. The Loan Agreement contains customary affirmative and negative covenants that, among other things, require customary reporting obligations, contain obligations to maintain REIT status, and restrict, subject to certain exceptions, incurrence of debt, incurrence of secured debt, the ability of the Borrower 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. In addition, the Borrower will be subject to the following financial covenants: (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) total secured recourse indebtedness not to exceed 5% of consolidated capitalization value, (4) minimum fixed charge coverage ratio of 1.50 to 1.00, (5) minimum consolidated tangible net worth, (6) maximum unencumbered leverage ratio not to exceed 60% and (7) minimum unencumbered interest coverage ratio not less than 1.75 to 1.00. The Loan Agreement contains customary events of default including, among other things, payment defaults, breach of covenants, cross acceleration to material indebtedness, bankruptcy-related defaults, judgment defaults, and the occurrence of certain change of control events. The occurrence of an event of default will limit the ability of the Company and the Borrower to make distributions and may result in the termination of the credit facility, acceleration of repayment obligations and the exercise of remedies by the Lenders with respect to the collateral. Note Purchase Agreement On June 7, 2017, FCPT OP issued $125 million of senior, unsecured, fixed rate notes (the “Notes”) in a private placement pursuant to a Note Purchase Agreement (the “Note Purchase Agreement”) with the various purchasers named therein (the “Purchasers”). The Notes consist of $50 million of notes with a term ending in June 2024 and priced at a fixed interest rate of 4.68%, and $75 million of notes with a term ending in June 2027 and priced at a fixed interest rate of 4.93%, resulting in a weighted average maturity of 8.8 years as of June 7, 2017 and a weighted average fixed interest rate of 4.83%. Under the terms of the Note Purchase Agreement, the Notes have the same guarantors as the Loan Agreement. The Note Purchase Agreement contains customary financial covenants, including a total leverage ratio, a mortgage-secured leverage ratio, a secured recourse leverage ratio, a fixed charge coverage ratio, a minimum net worth requirement, an unencumbered leverage ratio and an unencumbered interest coverage ratio. The Note Purchase Agreement also contains 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. Such financial and restrictive covenants are substantially similar to the corresponding covenants contained in the Loan Agreement. In addition, the Note Purchase Agreement includes 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. The Note Purchase Agreement contains 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 Company used a portion of the net proceeds from the offering to reduce amounts outstanding under the Loan Purchase Agreement, and used the remaining proceeds to fund future acquisitions and for general corporate purposes. The Notes 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 in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. |
Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | 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 receipt or 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 objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish these objectives, 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 change in the fair value of derivatives designated and that qualify as cash flow hedges is recorded on our consolidated balance sheet in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three months ended March 31, 2018, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. As of March 31, 2018, our variable-rate debt of $400 million is hedged by swaps with notional values totaling $400 million through November 9, 2018. From November 9, 2018, through the loan maturity date of the variable-rate debt, November 9, 2022, there are swaps in place with notional amounts totaling $300 million. After the Company’s adoption of ASU 2017-12 in January 2018, it no longer separately measures and reports hedge ineffectiveness prospectively. For the three months ended March 31, 2017, we recorded approximately $4 thousand of income related to hedge ineffectiveness in earnings. The hedge ineffectiveness was attributable to zero-percent floor and rounding mismatches in the hedging relationships. 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 over the next twelve months an additional $2.3 million will be reclassified to earnings as a decrease to interest expense. Non-designated Hedges We do not use derivatives for trading or speculative purposes. During the three months ended March 31, 2018 and 2017, we did not have any derivatives that were not designated as cash flow hedges for accounting purposes. 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 sheet as of March 31, 2018 and December 31, 2017.
Tabular Disclosure of the Effect of Derivative Instruments on the Statements of Comprehensive Income The table below presents the effect of our interest rate swaps on the statements of comprehensive income for the three months ended March 31, 2018 and 2017.
Tabular Disclosure Offsetting Derivatives The table below presents a gross presentation, the effects of offsetting, and a net presentation of our derivatives at March 31, 2018 and December 31, 2017. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheets.
Credit-risk-related Contingent Features The agreement with our derivative counterparty 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 March 31, 2018 and December 31, 2017, the fair value of derivatives in a net asset position related to these agreements was approximately $10.1 million and $5.0 million, respectively. As of March 31, 2018, we have not posted any collateral related to these agreements. If we or our counterparty had breached any of these provisions at March 31, 2018, we would have been entitled to the termination value of $10.1 million. |
Income Taxes |
3 Months Ended |
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Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 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 that we distribute currently to our stockholders. Accordingly, no provision for federal income taxes has been included in the accompanying consolidated financial statements for the three months ended March 31, 2018 related to the REIT. FCPT’s TRSs will generally be subject to federal, state, and local income taxes. During the three months ended March 31, 2018 and 2017, our income tax provision was $58 thousand and $45 thousand, respectively. In December 2017, the Tax Cuts and Jobs Act lowered the federal income tax rate on corporations to 21% effective for taxable years after December 31, 2017. Due to FCPT’s REIT status and the nominal taxable income at our Kerrow Restaurant Operating Business, we do not anticipate a significant impact to our reported results resulting from this change. 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. Based on an assessment of all factors, including historical losses of the Kerrow Restaurants Operating Business, it was determined that full valuation allowances were required on the net deferred tax assets as of March 31, 2018. Changes in estimates of deferred tax asset realizability are included in "Income tax expense" in the consolidated statements of income. |
Equity |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity | EQUITY Preferred Stock At March 31, 2018 and December 31, 2017, the Company was authorized to issue 25,000,000 shares, $0.0001 par value per share of preferred stock. There were no shares issued and outstanding at March 31, 2018 or December 31, 2017. Common Stock At March 31, 2018 and December 31, 2017, the Company was authorized to issue 500,000,000 shares, $0.0001 par value per share, of common stock. In March 2018, we declared a dividend of $0.275 per share, which was paid in April 2018 to common stockholders of record as of March 30, 2018. At March 31, 2018, there were 61,391,187 shares of the Company's common stock issued and outstanding. Common Stock Issuance Under the At-The-Market Program In December 2016, the Company established an “At-the-Market” (“ATM”) equity issuance program under which the Company may, at its discretion, issue and sell its common stock with a sales value of up to a maximum of $150.0 million through ATM offerings on the New York Stock Exchange through broker-dealers. No shares were sold during the three months ended March 31, 2018. At March 31, 2018, there was $116.5 million available for issuance under the ATM program. Noncontrolling Interest At March 31, 2018, there were 409,320 FCPT Operating Partnership Units (“OP units”) outstanding held by third parties. During the three months ended March 31, 2018, 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 OP 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 $9.2 million and $10.6 million as of March 31, 2018 and December 31, 2017, respectively. At March 31, 2018, FCPT is the owner of approximately 99.34% of FCPT’s OP units. The remaining 0.66%, or 409,320 of FCPT’s OP units are held by unaffiliated limited partners. During the three months ended March 31, 2018, FCPT OP distributed $112 thousand to limited partners. Earnings Per Share The following table presents the computation of basic and diluted net earnings per common share for the three months ended March 31, 2018 and 2017.
For the three months ended March 31, 2018 and 2017, the number of outstanding equity awards that were anti-dilutive totaled 349,724 and 240,120, 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 three months ended March 31, 2018 and 2017 were 409,320 and 427,983, respectively. |
Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | STOCK-BASED COMPENSATION On October 20, 2015, the Board of Directors of FCPT adopted, and FCPT’s sole stockholder at such time, Rare Hospitality International, Inc., approved, the Four Corners Property Trust, Inc. 2015 Omnibus Incentive Plan (the “Plan”). The Plan provides for the grant of awards of nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, unrestricted stock, dividend equivalent rights, performance shares and other performance-based awards, other equity-based awards, and cash bonus awards to eligible participants. Subject to adjustment, the maximum number of shares of stock reserved for issuance under the Plan is equal to 2,100,000 shares. At March 31, 2018, 1,653,557 shares of common stock were available for award under the Plan. The unamortized compensation cost of awards issued under the Incentive Plan totaled approximately $5.5 million at March 31, 2018 as shown in the following table.
At March 31, 2018, the weighted average amortization period remaining for all of our equity awards was 1.7 years. Restricted Stock Units RSUs have been granted at a value equal to the five-day average closing market price of our common stock on the date of grant and will be settled in stock at the end of their vesting periods, which range between one and three years. At March 31, 2018 and December 31, 2017, there were 64,983 RSUs outstanding. During the three months ended March 31, 2018, there were no shares of restricted stock granted, no restrictions on RSUs lapsed, and no RSU’s were forfeited. Restrictions on these shares lapse through 2018. Restricted Stock Awards RSAs have been granted at a value equal to the five-day average closing market price of our common stock on the date of grant and will be settled in stock at the end of their vesting periods, which range between one and three years. At March, 31 2018 and December 31, 2017, there were 101,932 and 81,909 RSAs outstanding, respectively. During the three months ended March 31, 2018 there were 66,522 shares of restricted stock granted, restrictions on 46,499 RSUs lapsed and those shares were distributed, and 7,015 RSUs were designated for tax withholdings. Restrictions on these shares lapse through 2021. Performance-Based Restricted Stock Awards During the three months ended March 31, 2018, PSUs with a target number of 68,490 shares were granted. At March 31, 2018 and December 31, 2017, the target number of PSUs that were unvested was 204,068 and 135,578, respectively. The performance period of the grants run from January 1, 2018 through December 31, 2020, from January 1, 2017 through December 31, 2019, and from January 1, 2016 through December 31, 2018. 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 was estimated on the date of grant using a Monte Carlo Simulation model. Based on the grant date fair value, the Company expects to recognize $3.0 million in compensation expense on a straight-line basis over the remaining requisite service period associated with these awards. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | FAIR VALUE MEASUREMENTS The carrying amounts of certain of the Company’s financial instruments including cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value due either to length of maturity or interest rates that approximate prevailing market rates. The carrying value of derivative financial instruments equal fair value in accordance with U.S. GAAP. 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 assets and liabilities recorded that are reported at fair value on our consolidated balance sheets on a recurring basis. Assets and Liabilities Measured at Fair Value on a Recurring Basis
Derivative Financial Instruments Currently, we use interest rate swaps to manage our interest rate risk associated with our notes 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 are 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 at March 31, 2018 and December 31, 2017 were classified as Level 2 of the fair value hierarchy. 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
The fair value of the long-term debt (Level 2) is determined using the present value of the contractual cash flows, discounted at the current market cost of debt. |
Commitments and Contingencies |
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Rentals The annual future lease commitments under non-cancelable operating leases for the five years subsequent to March 31, 2018 and thereafter is as follows:
Rental expense was $175 thousand and $158 thousand for the three months ended March 31, 2018 and 2017, respectively. Litigation We are subject to private lawsuits, administrative proceedings and claims that arise in the ordinary course of our business from time to time. 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. |
Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments | SEGMENTS During the three months ended March 31, 2018 and 2017, we operated 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. Expenses incurred at our corporate office are allocated to real estate operations. The accounting policies of the reportable segments are the same as those described in Note 2 - Summary of Significant Accounting Policies. The following tables present financial information by segment for the three months ended March 31, 2018 and 2017. Three Months Ended March 31, 2018
Three Months Ended March 31, 2017
The following tables present supplemental information by segment at March 31, 2018 and December 31, 2017. Supplemental Segment Information at March 31, 2018
Supplemental Segment Information at December 31, 2017
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Subsequent Events |
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Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS The Company reviewed its subsequent events and transactions that have occurred after March 31, 2018, the date of the consolidated balance sheet, through April 26, 2018. There were no material subsequent events or transactions. |
Summary of Significant Accounting Policies (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The accompanying 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. |
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Reclassification | Reclassifications Certain amounts previously reported under specific financial statement captions have been reclassified to be consistent with the current period presentation. |
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Use of Estimates | 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 as of the date of the combination. Actual results may differ from the estimates and assumptions used in preparing the accompanying consolidated financial statements, and such differences could be material. |
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Real Estate Investments, Net | 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 balance sheets as a component of buildings, equipment and improvements 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. Other equipment is generally 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 our accompanying consolidated statements of comprehensive income. 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. Since adoption in the fourth quarter of 2016, the Company has determined the land, building, site improvements, and in-places leases (if any) of assets acquired were a single asset 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 a business and are accounted for as asset acquisitions. Related transaction costs are generally capitalized and amortized over the useful life 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. 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, in-place lease intangibles are valued based on the Company’s estimates of costs related to tenant acquisition and the asset carrying costs 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 in the Company’s consolidated statements of income under the ”Depreciation and amortization” caption. |
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Impairment of Long-Lived Assets | 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. 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. 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 or lease our assets. 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. |
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Real Estate Held for Sale | 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. |
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Cash, Cash Equivalents, and Restricted Cash | 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 includes escrow deposits 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:
Long-term Debt Long-term debt is carried at unpaid principal balance, net of deferred financing costs. All of our long-term debt is currently unsecured and interest is paid monthly on our non-amortizing term loan and revolving credit facility and semi-annually on our senior fixed rate notes. See Note 6 - Long-term Debt, Net of Deferred Financing Costs for additional information. Deferred Financing Costs Financing costs related to long-term 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 - Long-term Debt, Net of Deferred Financing Costs for additional information. |
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Derivative Instruments and Hedging Activities | 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 sheet 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. 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 United States generally accepted accounting principals (“U.S. 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. |
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Other Assets and Liabilities | Other Assets and Liabilities Other assets primarily consist of intangible lease assets described above, pre-acquisition costs, prepaid assets, food and beverage inventories, restricted cash (escrow deposits), lease origination fees, and accounts receivable. Other liabilities primarily consist of accrued compensation, accrued interest, accrued operating expenses, intangible lease liabilities, and deferred rent obligations on certain operating leases. |
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Revenue Recognition | Revenue Recognition Effective January 1, 2018, the Company adopted FASB ASU No. 2014-09, “Revenue from Contracts with Customers” using the modified retrospective method. The standard outlines a single comprehensive revenue recognition model for entities to follow in accounting for revenue from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity should recognize revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to receive for those goods or services. Effective January 1, 2018, the Company also adopted FASB ASU No. 2017-15, “Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.” Through the evaluation and implementation process, we have determined FCPT’s key revenue stream that could be impacted by FASB ASU No. 2014-09, as amended by FASB ASU No. 2017-05, is the gain on disposition of real estate reported on the Consolidated Statements of Income and Comprehensive Income. We previously recognized revenue from asset salesat the time of closing (i.e., transfer of asset). After adoption of FASB No. ASU 2014-09, as amended by FASB ASU No. 2017-05, we will evaluate the transaction to determine if control has been transferred to the buyer to determine proper timing of revenue recognition, as well as transaction price allocation. Adoption of this guidance did not have a material impact on our consolidated financial statements or related disclosures. Refer to the Restaurant Revenue section below for details of the impact of FASB ASU No. 2014-09 on the Kerrow Restaurant Operating Business. 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. Lease origination fees are deferred and amortized over the related lease term as an adjustment to rental revenue. Taxes collected from lessees and remitted to governmental authorities are presented on a net basis within rental revenue in our consolidated statements of income and comprehensive income. 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. We assess the collectability of our lease receivables, including deferred rent receivables. We base our assessment of the collectability of rent receivables (other than deferred rent receivables) on several factors, including payment history, the financial strength of the tenant and any guarantors, the value of the underlying collateral, if any, and current economic conditions. If our evaluation of these factors indicates it is probable that we will be unable to recover the full value of the receivable, we provide a reserve against the portion of the receivable that we estimate may not be recovered. We also base our assessment of the collectability of deferred rent receivables on several factors, including among other things, the financial strength of the tenant and any guarantors, the historical operations and operating trends of the property, the historical payment pattern of the tenant and the type of property. If our evaluation of these factors indicates it is probable that we will be unable to receive the rent payments due in the future, we provide a reserve against the recognized deferred rent receivable asset for the portion, up to its full value, that we estimate may not be recovered. If we change our assumptions or estimates regarding the collectability of future rent payments required by a lease, we may adjust our reserve or reduce the rental revenue recognized in the period we make such change in our assumptions or estimates. Restaurant Revenue Restaurant revenue represents food, beverage, and other products sold and is presented net of the following discounts: coupons, employee meals, complimentary meals and gift cards. Revenue from restaurant sales, whether received in cash or by credit card, is recognized when food and beverage products are sold. At March 31, 2018, and December 31, 2017, credit card receivables totaled $86 thousand and $90 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 consolidated statements of income. |
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Restaurant Expenses | 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. |
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Income Taxes | 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 that we distribute currently to our shareholders. 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 may also be 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 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. |
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Earnings Per Share | 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. |
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Stock-Based Compensation | 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”), forfeitable dividend equivalent units (“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 three years, less estimated forfeitures. No compensation cost is recognized for awards for which employees do not render the requisite services. Effective January 1, 2018, the Company adopted FASB ASU No. 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.” The amendments in this ASU provide guidance about which changes to the terms or conditions of a share-based payment award require the application of modification accounting in Topic 718. The Company’s adoption of this guidance did not have a material impact on our consolidated financial statements or related disclosures. |
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Fair Value of Financial Instruments | 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:
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Application of New Accounting Standards | Application of New Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”, which supersedes the existing guidance for lease accounting, Leases (Topic 840). FASB ASU 2016-02 requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early application is permitted for all entities. FASB ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial application, with an option to elect to use certain transition relief. We are currently evaluating the impact of adopting this guidance. Effective January 1, 2018, the Company adopted FASB ASU No. 2016-15, “Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments.” FASB ASU 2016-15 provides guidance on certain specific cash flow issues, including, but not limited to, debt prepayment or extinguishment costs, contingent consideration payments made after a business combination and distributions received from equity method investees. The Company’s adoption of this guidance did not have a material impact on our consolidated financial statements or related disclosures. Effective January 1, 2018, the Company adopted FASB ASU No. 2016-18, “Statement of Cash Flows - Restricted Cash.” FASB No. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and restricted cash. This adoption did not have a material impact on our financial statements and as a result of adoption, restricted cash is included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. |
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Fair Value Measurement | 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 assets and liabilities recorded that are reported at fair value on our consolidated balance sheets on a recurring basis. |
Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Cash, Cash Equivalents, and Restricted Cash | 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:
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Real Estate Investments, Net (Tables) |
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Schedule of Property Subject to or Available for Operating Lease | 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 are summarized as follows:
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Schedule of Future Minimum Rental Payments for Operating Leases | The following table presents the scheduled minimum future contractual rent to be received under the remaining non-cancelable term of the operating leases, and because lease renewal periods are exercisable at the option of the lessee, the table presents future minimum lease payments due during the initial lease term only.
The annual future lease commitments under non-cancelable operating leases for the five years subsequent to March 31, 2018 and thereafter is as follows:
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Supplemental Detail for Certain Components of Consolidated Balance Sheets (Tables) |
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Schedule of Components of Other Assets | The components of other assets were as follows:
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Other Liabilities | The components of other liabilities were as follows:
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Schedule of Intangible Liabilities | The following tables detail intangible lease assets and liabilities which are included in Other Assets and Other Liabilities, respectively, on our consolidated balance sheets. Acquired in-place lease intangibles are amortized as depreciation and amortization expense. Above-market and below-market leases and lease incentives are amortized over the initial term of the respective leases as an adjustment to rental revenue.
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Schedule of Intangible Assets | The following tables detail intangible lease assets and liabilities which are included in Other Assets and Other Liabilities, respectively, on our consolidated balance sheets. Acquired in-place lease intangibles are amortized as depreciation and amortization expense. Above-market and below-market leases and lease incentives are amortized over the initial term of the respective leases as an adjustment to rental revenue.
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense |
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Derivative Financial Instruments (Tables) |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The table below presents the fair value of our derivative financial instruments as well as their classification on the consolidated balance sheet as of March 31, 2018 and December 31, 2017.
The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheets.
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Derivative Instruments, Gain (Loss) | The table below presents the effect of our interest rate swaps on the statements of comprehensive income for the three months ended March 31, 2018 and 2017.
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Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table presents the computation of basic and diluted net earnings per common share for the three months ended March 31, 2018 and 2017.
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Stock-Based Compensation (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | The unamortized compensation cost of awards issued under the Incentive Plan totaled approximately $5.5 million at March 31, 2018 as shown in the following table.
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Fair Value Measurements (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis | Assets and Liabilities Measured at Fair Value on a Recurring Basis
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Fair Value Measurements, Nonrecurring | Fair Value of Certain Financial Liabilities
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Commitments and Contingencies (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases | The following table presents the scheduled minimum future contractual rent to be received under the remaining non-cancelable term of the operating leases, and because lease renewal periods are exercisable at the option of the lessee, the table presents future minimum lease payments due during the initial lease term only.
The annual future lease commitments under non-cancelable operating leases for the five years subsequent to March 31, 2018 and thereafter is as follows:
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Segments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following tables present financial information by segment for the three months ended March 31, 2018 and 2017. Three Months Ended March 31, 2018
Three Months Ended March 31, 2017
The following tables present supplemental information by segment at March 31, 2018 and December 31, 2017. Supplemental Segment Information at March 31, 2018
Supplemental Segment Information at December 31, 2017
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Organization (Details) - Darden [Member] $ in Millions |
Nov. 09, 2015
USD ($)
property
brand
|
---|---|
Separation And Spin-Off [Line Items] | |
Equity interest contributed, percentage | 1 |
Number of real estate properties | property | 418 |
Number of brands | 5 |
Stockholder's equity, conversion ratio | 3 |
Revolving Credit and Term Loan [Member] | Secured Debt [Member] | |
Separation And Spin-Off [Line Items] | |
Payment from issuance of long-term debt | $ | $ 315.0 |
Longhorn San Antonio Business [Member] | |
Separation And Spin-Off [Line Items] | |
Number of brands | 6 |
Summary of Significant Accounting Policies Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 53,066 | $ 64,466 | ||
Restricted cash (included in Other Assets) | 0 | 4,905 | ||
Total Cash, Cash Equivalents, and Restricted Cash | $ 53,066 | $ 69,371 | $ 18,070 | $ 26,643 |
Summary of Significant Accounting Policies Derivative Instruments and Hedging Activities (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
AOCI Attributable to Parent [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
ASU 2017-12 cumulative effect adjustment | $ 467 |
AOCI Attributable to Parent [Member] | Accounting Standards Update 2017-12 [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
ASU 2017-12 cumulative effect adjustment | 467 |
Retained Earnings [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
ASU 2017-12 cumulative effect adjustment | (467) |
Retained Earnings [Member] | Accounting Standards Update 2017-12 [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
ASU 2017-12 cumulative effect adjustment | $ (467) |
Summary of Significant Accounting Policies Revenue (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Credit card receivables | $ 86 | $ 90 |
Restricted Stock (Details) - Restricted Stock Units (RSUs) [Member] |
3 Months Ended |
---|---|
Mar. 31, 2018 | |
Minimum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
RSU vesting period (in years) | 1 year |
Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
RSU vesting period (in years) | 3 years |
Predecessor [Member] | Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
RSU vesting period (in years) | 3 years |
Real Estate Investments, Net Operating Leases (Details) $ in Thousands |
Mar. 31, 2018
USD ($)
|
---|---|
Operating Leases, Future Minimum Payments Receivable [Abstract] | |
2018 (nine months) | $ 82,320 |
2018 | 111,263 |
2019 | 112,804 |
2020 | 114,192 |
2021 | 115,815 |
2022 | 117,197 |
Thereafter | 885,479 |
Total Future Minimum Lease Payments | $ 1,539,070 |
Supplemental Detail for Certain Components of Consolidated Balance Sheets Other Assets (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Intangible lease assets, net | $ 5,950 | $ 3,914 |
Prepaid acquisition costs | 1,355 | 1,385 |
Restricted cash (included in Other Assets) | 0 | 4,905 |
Prepaid assets | 640 | 616 |
Accounts receivable | 332 | 383 |
Inventories | 157 | 186 |
Other | 606 | 568 |
Total Other Assets | $ 9,040 | $ 11,957 |
Supplemental Detail for Certain Components of Consolidated Balance Sheets Other Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accrued interest expense | $ 2,884 | $ 1,290 |
Accounts payable | 1,182 | 1,055 |
Deferred lease liability | 680 | 663 |
Accrued compensation | 625 | 1,543 |
Accrued operating expenses | 362 | 488 |
Intangible lease liabilities, net | 108 | 0 |
Other | 606 | 667 |
Total Other Liabilities | $ 6,447 | $ 5,706 |
Supplemental Detail for Certain Components of Consolidated Balance Sheets Intangible Lease Assets, Net (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Intangible lease assets, gross | $ 6,429 | $ 4,249 |
Less: Accumulated amortization | 479 | 335 |
Intangible Lease Assets, Net | 5,950 | 3,914 |
Leases, Acquired-in-Place [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible lease assets, gross | 5,585 | 4,209 |
Above-Market Leases [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible lease assets, gross | 804 | 0 |
Lease Incentives [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible lease assets, gross | $ 40 | $ 40 |
Supplemental Detail for Certain Components of Consolidated Balance Sheets Intagngible Lease Liabilities, Net (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Schedule Of Finite-Lived Intangible Liabilities [Line Items] | ||
Less: Accumulated amortization | $ (7) | $ 0 |
Intangible lease liabilities, net | 108 | 0 |
Below-Market Leases [Member] | ||
Schedule Of Finite-Lived Intangible Liabilities [Line Items] | ||
Intangible lease liabilities, gross | $ 115 | $ 0 |
Supplemental Detail for Certain Components of Consolidated Balance Sheets Amortization Expense (Details) $ in Thousands |
Mar. 31, 2018
USD ($)
|
---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
2018 (nine months) | $ 412 |
2019 | 549 |
2020 | 548 |
2021 | 516 |
2022 | 438 |
2023 | 366 |
Thereafter | 3,013 |
Total Future Amortization | $ 5,842 |
Derivative Financial Instruments Narrative (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Derivative [Line Items] | |||
Estimated reclass to earnings from AOCI | $ 2,300,000 | ||
Derivative fair value | 10,100,000 | $ 5,000,000 | |
Interest Rate Swap [Member] | |||
Derivative [Line Items] | |||
Notional amount | 300,000,000.0 | ||
Credit Risk Contract [Member] | |||
Derivative [Line Items] | |||
Derivative, net liability position, aggregate fair value | 10,100,000 | ||
Designated as Hedging Instrument [Member] | |||
Derivative [Line Items] | |||
Variable-rate debt | 400,000,000.0 | ||
Notional amount | $ 400,000,000.0 | ||
Accounting Standards Update 2017-12 [Member] | |||
Derivative [Line Items] | |||
Gain on cash flow hedge ineffectiveness | $ 4,000 |
Derivatives Balance Sheet (Details) - Designated as Hedging Instrument [Member] - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Other Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value, gross asset | $ 10,138 | $ 4,997 |
Other Assets [Member] | Interest Rate Contract [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value, gross asset | 10,138 | 4,997 |
Other Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value, gross liability | 0 | 8 |
Other Liabilities [Member] | Interest Rate Contract [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value, gross liability | $ 0 | $ 8 |
Derivatives Income Statement (Details) - Interest Rate Contract [Member] - Designated as Hedging Instrument [Member] - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Operating Income (Loss) [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | $ 240 | $ (625) |
Total Amount of Interest expense Presented in the Consolidated Statements Of Income | 4,855 | 4,094 |
Other Comprehensive Income (Loss) [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | $ 5,384 | $ 660 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Provision for (benefit) from income tax | $ 58 | $ 45 |
Equity (Details) - $ / shares |
1 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Equity [Abstract] | ||||
Preferred stock, shares authorized | 25,000,000 | 25,000,000 | 25,000,000 | |
Preferred stock, par value (in USD per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Preferred stock, shares issued | 0 | 0 | 0 | |
Preferred stock, shares outstanding | 0 | 0 | 0 | |
Common stock, shares authorized | 500,000,000 | 500,000,000 | 500,000,000 | |
Common stock, par value (in USD per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Dividends declared per common share (in USD per share) | 0.275 | $ 0.2750 | $ 0.2425 | |
Common stock, dividends paid per share (in USD per share) | $ 0.275 | |||
Common stock, shares issued | 61,391,187 | 61,391,187 | 61,329,489 | |
Common stock, shares outstanding | 61,391,187 | 61,391,187 | 61,329,489 |
Equity At the Market Offering (Details) - USD ($) |
1 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
Oct. 20, 2015 |
Dec. 31, 2016 |
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Subsidiary, Sale of Stock [Line Items] | ||||
Shares, new issues | 2,100,000 | |||
Units of partnership interest, amount | 409,320 | |||
Redemption value | $ 9,200,000 | $ 10,600,000 | ||
Noncontrolling interest, ownership percentage by parent | 99.34% | |||
Noncontrolling interest, ownership percentage by noncontrolling owners | 0.66% | |||
Distribution to limited partners | $ 112,000 | |||
At-The-Market Offering [Member] | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Stock issuance, sales agreement, authorized offering price, maximum | $ 150,000,000.0 | |||
Shares, new issues | 0 | |||
Stock issuance, sales agreement, value available for issuance | $ 116,500,000 |
Equity Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Equity [Abstract] | ||
Weighted average common shares outstanding – basic | 61,291,642 | 59,929,276 |
Effect of dilutive shares underlying stock-based compensation | 122,336 | 66,654 |
Weighted average common shares outstanding – diluted | 61,413,978 | 59,995,930 |
Net income available to common shareholders | $ 16,255 | $ 15,516 |
Basic net income per share (in USD per share) | $ 0.27 | $ 0.26 |
Diluted net income per share (in USD per share) | $ 0.26 | $ 0.26 |
Antidilutive securities excluded from computation of earnings per share, amount | 349,724 | 240,120 |
Weighted average units of partnership interest, amount | 409,320 | 427,983 |
Stock-Based Compensation Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Oct. 20, 2015 |
Mar. 31, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Issuance of common stock in connection with Spin-Off, shares | 2,100,000 | |
Shares available for issuance | 1,653,557 | |
Unrecognized compensation cost | $ 5.5 | |
Period for recognition (in years) | 1 year 8 months 12 days |
Stock-Based Compensation Performance- Based Restricted Stock Awards (Details) - Performance Shares [Member] $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018
USD ($)
shares
|
Dec. 31, 2017
shares
|
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Performance shares granted (in shares) | 68,490 | |
Unvested PSUs (in shares) | 204,068 | 135,578 |
Compensation expense | $ | $ 3.0 | |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Percentage multiplier | 0 | |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Percentage multiplier | 2.00 |
Assets and Liabilities at Fair Value (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Assets | ||
Derivative assets | $ 10,138 | $ 4,997 |
Liabilities | ||
Derivative liabilities | 0 | 8 |
Fair Value, Measurements, Recurring [Member] | ||
Assets | ||
Derivative assets | 10,138 | 4,997 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Assets | ||
Derivative assets | 0 | 0 |
Liabilities | ||
Derivative liabilities | 0 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Assets | ||
Derivative assets | 10,138 | 4,997 |
Liabilities | ||
Derivative liabilities | 8 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Assets | ||
Derivative assets | $ 0 | 0 |
Liabilities | ||
Derivative liabilities | $ 0 |
Financial Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Notes Payable to Banks [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Note payable, carrying value | $ 400,000 | $ 400,000 |
Notes payable, fair value disclosure | 400,402 | 406,637 |
Unsecured Debt [Member] | The Notes, Seven Year Term [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Note payable, carrying value | 50,000 | 50,000 |
Notes payable, fair value disclosure | 49,134 | 50,043 |
Unsecured Debt [Member] | The Notes, Ten Year Term [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Note payable, carrying value | 75,000 | 75,000 |
Notes payable, fair value disclosure | $ 73,302 | $ 75,184 |
Operating Leases (Details) $ in Thousands |
Mar. 31, 2018
USD ($)
|
---|---|
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2018 (nine months) | $ 442 |
2019 | 550 |
2020 | 400 |
2021 | 103 |
Thereafter | 0 |
Total Future Lease Commitments | $ 1,495 |
Ground Leases (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense ground lease | $ 175 | $ 158 |
Segments (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018
state
|
Mar. 31, 2017
segment
|
|
Segment Reporting [Abstract] | ||
Number of operating segments | 2 | 2 |
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